Bombay High Court Ruling on Nicotine Pouches at Duty-Free Shops
The Bombay High Court has upheld the decision of the Drugs Control Department to prohibit the sale of imported nicotine pouches at Mumbai’s Chhatrapati Shivaji Maharaj International Airport, operated by Mumbai Travel Retail Limited, a joint venture involving the Adani Group. The court’s ruling emphasizes that duty-free shops are not exempt from domestic regulatory laws despite their exemption from certain fiscal levies such as customs duties.
A Division Bench consisting of Justice Suman Shyam and Justice Advait M Sethna ruled in the case of Mumbai Travel Retail Ltd v. Union of India & Ors. that duty-free shops (DFS) at international departure terminals are subject to domestic regulatory and public health laws like the Drugs and Cosmetics Act, 1940. The court clarified that while these shops may benefit from exemptions on customs duties and indirect taxes, they remain under the purview of non-fiscal regulatory oversight.
The Bench stated, “The exemption, if any, is limited to fiscal measures such as the levy of customs duty/tax/MVAT, etc. However, if an item is restricted or prohibited under any other law in force, it would be deemed ‘prohibited goods’ under Section 2(33) of the Customs Act of 1962, and the domestic regulatory framework will apply fully.”
The court did not rule on whether tobacco-free nicotine pouches are classified as ‘drugs’ under the Drugs and Cosmetics Act, directing the Central Drugs Standard Control Organisation (CDSCO) to make that determination. This came after a report by CDSCO classified nicotine pouches as ‘drugs’ under Section 3(b) of the Act, necessitating registration certificates and import licenses.
The case followed enforcement action prompted by a complaint from the anti-tobacco advocacy group, Mothers Against Vaping. The retailers contended that the domestic regulations should not apply as the nicotine pouches were intended for outbound travelers, essentially arguing for a re-export scenario.
In September, the court ruled that the ‘import’ of goods occurs once they enter Indian territorial waters, and domestic laws are applicable throughout Indian territory, including customs warehouses and departure lounges.
The court noted that the authorities’ classification of nicotine pouches as drugs lacked clarity, as the retailers had not provided detailed product specifications. Consequently, the court refrained from making a definitive ruling on the matter, stating, “This Court does not have the expertise to conduct such a factual inquiry or to express an opinion. These are not matters that can be resolved in a writ petition.”
The court has granted the retailers four weeks to submit comprehensive representations, including product specifications, to CDSCO, which has been tasked with deciding whether nicotine pouches fall under the category of drugs that require a valid import license and/or registration certificate. The decision is to be made within 30 days through a reasoned order.
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Senior advocates Janak Dwarkadas, Arunabh Chowdhury, Ashish Kamat, and Prakash Shah, along with advocates Simantini Mohite, Abhay Jadeja, Dhanyashree Jadeja, Urvi Gulechha, and Ishani Saxena, represented the retailers. Additional Solicitor General Anil Singh, with advocates Rui Rodrigues, Jainendra Sheth, Adiya Vyas, and Leena Patil, represented the Ministry of Health and Family Welfare, while advocates Siddharth Chandrashekhar and Abhishek R Mishra appeared for the Commissioner of Customs.
