Re-export Not Permissible for Prohibited Goods: Bombay HC Upholds Seizure of Cosmetics Imported Without CDSCO Licence [Read Order]

The Bombay High Court has upheld the seizure of imported cosmetic goods and refused to permit their re-export, holding that goods imported without a valid Central Drugs Standard Control Organization(CDSCO) licence are “prohibited goods” and liable for confiscation under the Customs Act, 1962.

The petitioner, Glamstone Cosmetics Pvt. Ltd, imported consignments of cosmetics and FMCG (Fast Moving Consumer Goods) goods from the United Arab Emirates (UAE) and filed Warehousing Bills of Entry, claiming that the goods were not intended for home consumption but only for storage and re-export.

The Directorate of Revenue Intelligence (DRI) seized the goods under Section 110 of the Customs Act for mis-declaration, undervaluation and import without mandatory regulatory approvals.

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Sujay Kantawala, Counsel for the petitioner contended that the imports were bona fide and that the goods were imported only for the purpose of storage and subsequent re-export under Section 69 of the Customs Act.

It was further contended by the petitioner counsel that the absence of a CDSCO licence was a regulatory issue and did not justify seizure or confiscation of imported goods, when the petitioner was willing to re-export the goods. The continued detention of goods was argued to be arbitrary and causing irreparable loss.

Jitendra B. Mishra, counsel for the respondents submitted that import of cosmetics without CDSCO registration is in clear violation of the Drugs and Cosmetics Act and Cosmetics Rules, rendering the goods “prohibited” under the Customs Act.

It was contended by the respondent counsel that filing of warehouse Bills of Entry does not absolve the importer from mandatory compliance at the time of import and that the petitioner had deliberately attempted to circumvent statutory requirements.

The respondent counsel further contended that the goods were mis-declared and grossly undervalued, and that the request for re-export was to evade investigation.

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Justice G.S. Kulkarni and Justice Aarti Sathe observed that compliance with statutory requirements under the Drugs and Cosmetics Act, 1940 and the Cosmetics Rules, 2020 is mandatory at the time of import, and cannot be bypassed by resorting to warehousing or by subsequently seeking re-export.

The Court held that the non-availability of a CDSCO licence at the time of import rendered the goods “Prohibited” within the meaning of the Customs Act and warehousing provisions are intended to defer payment of duty and do not permit import of goods in violation of statutory restrictions.

The Court further held that re-export is not an absolute right and cannot be permitted where the goods are prima facie liable for confiscation due to illegal import, mis-declaration or non-compliance with mandatory regulations.

Accordingly, the court rejected the petition.

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