Legal principle

Goods brought into a customs warehouse or duty free shop are imported goods; the duty free status removes only duty and tax, not licensing or prohibitions under other Indian laws, which make such goods prohibited goods under Section 2(33).

Court decision

The court held that goods imported into India, even only for warehousing or re-export through a duty free shop, are subject to Indian regulatory laws; the duty free exemption covers only duty and taxes. It did not decide whether nicotine pouches are a drug, as that needs facts about the product. The petitions were disposed of: the shops may file representations with product details within 4 weeks, to be decided by a reasoned order within 30 days.

Facts

Mumbai Travel Retail Ltd and Flemingo Dutyfree Shop Pvt Ltd run duty free shops (DFS) in the departure terminal of Mumbai airport. They imported tobacco free nicotine pouches sold under the brands ZYN and FOX, stored them in a special warehouse licensed under Section 58-A of the Customs Act, 1962, and sold them to outgoing travellers. They held no import licence or registration under the Drugs and Cosmetics Act, 1940. After a complaint, the Assistant Drugs Controller (CDSCO) on 2 April 2026 held the pouches were a drug and asked customs to act. On 8 April 2026 the Assistant Commissioner, DFS Bond, told the shops to stop selling them until they obtained a CDSCO licence. Both shops filed writ petitions, decided by one common judgment.

Key provisions

• Section 2(23), Customs Act, 1962 — Definitions