The Bombay High Court has clarified that the import of cosmetics without a mandatory CDSCO license renders such goods 'prohibited' under the Customs Act, irrespective of the importer's stated intent to re-export. This ruling reinforces that regulatory compliance is non-negotiable at the point of entry into Indian territorial waters, and cannot be circumvented by warehousing arrangements.
Background & Facts
The Dispute
Glamstone Cosmetics Pvt. Ltd. imported three consignments of cosmetics and FMCG from the UAE in November 2025, filing Warehousing Bills of Entry to store the goods in a bonded warehouse in India. The company claimed the goods were never intended for home consumption due to the absence of a Central Drugs Standard Control Organization (CDSCO) license, which is mandatory under the Drugs and Cosmetics Act, 1940. The petitioner argued that warehousing in India was economically advantageous and that the goods would be re-exported once the license was obtained.
Procedural History
- 5 May 2025: Petitioner applied for CDSCO license for the imported cosmetics.
- November 2025: Three consignments arrived at Nhava Sheva port; Warehousing Bills of Entry filed.
- 26 November 2025: Directorate of Revenue Intelligence (DRI) seized the goods under Section 110 of the Customs Act, citing non-compliance with CDSCO requirements and suspected undervaluation.
- December 2025: Petitioner requested permission to re-export the goods; DRI declined without adjudication.
- March 2026: Writ Petition filed under Article 226 seeking quashing of the seizure order.
Relief Sought
The petitioner sought quashing of the seizure memo dated 26 November 2025, and permission to re-export the goods without payment of duty, arguing that the goods were never meant for home consumption and that Section 69 of the Customs Act permitted re-export of warehoused goods.
The Legal Issue
The central question was whether importing cosmetics without a CDSCO license constitutes an 'illegal import' and 'prohibited goods' under Section 2(33) of the Customs Act, 1962, even if the importer intends to re-export the goods rather than clear them for home consumption.
Arguments Presented
For the Petitioner
Dr. Sujay Kantawala argued that filing a Warehousing Bill of Entry negates any intent to clear goods for domestic use, and that Section 69(1) of the Customs Act explicitly permits re-export of warehoused goods without payment of import duty. He contended that the absence of a CDSCO license was a regulatory lapse, not a customs violation, and that seizure and confiscation were disproportionate. He relied on Garden Silk Mills Ltd. v. Union of India to argue that import is complete only upon clearance for home consumption, not upon entry into territorial waters. He further challenged the valuation report by the Chartered Engineer, asserting lack of expertise in valuing cosmetics.
For the Respondent
Mr. Jitendra Mishra, for the DRI, contended that Section 2(33) defines prohibited goods as those whose import is barred under any law in force - including the Drugs and Cosmetics Act, 1940 and Cosmetics Rules, 2020. Rule 12 of the Cosmetics Rules 2020 mandates CDSCO registration for all imports, making unlicensed cosmetics 'prohibited goods' ipso facto. The DRI argued that the Warehousing Bills of Entry were filed as an afterthought to evade regulatory scrutiny, citing the petitioner’s failure to produce proof of license application at the time of import, inconsistent statements under Section 108, and deliberate non-cooperation with the investigation. The DRI also emphasized that Section 46(4A)(c) requires compliance with all applicable laws at the time of import, regardless of the type of Bill of Entry filed.
The Court's Analysis
The Court undertook a detailed statutory interpretation of the Customs Act, 1962, read conjointly with the Drugs and Cosmetics Act, 1940 and the Cosmetics Rules, 2020. It held that Section 2(23) defines 'import' as 'bringing into India from a place outside India', and Section 2(27) includes territorial waters within the meaning of 'India'. Thus, import is complete upon entry into Indian territorial waters, not upon clearance for home consumption.
"The goods are prohibited goods within the meaning of Section 2(33), the import of which is subject to any prohibition under the Customs Act or any other law for the time being in force."
The Court emphasized that Section 10 of the Drugs and Cosmetics Act prohibits import of any cosmetic without a CDSCO license, and Rule 12 of the Cosmetics Rules 2020 reinforces this as a mandatory condition. Consequently, unlicensed cosmetics are 'prohibited goods' under Section 2(33), triggering Section 111(d) for confiscation.
The Court rejected the petitioner’s reliance on Garden Silk Mills, noting that the Supreme Court’s observations pertained to valuation and duty assessment under Section 12, not to the legality of import under regulatory prohibitions. The Court also dismissed the argument that Section 69(1) permits re-export of prohibited goods, stating that the provision applies only to legally imported goods. Warehousing does not immunize goods from regulatory compliance.
"Merely for the purpose of warehousing, such goods could be imported... is an untenable contention, which has no legs to stand."
The Court further noted the petitioner’s failure to demonstrate prior intent to re-export, the absence of purchase orders, and the deliberate avoidance of investigation as indicators of mala fide intent. The valuation challenge was left open for adjudication during the confiscation proceedings.
The Verdict
The petition was dismissed. The Court held that importing cosmetics without a CDSCO license renders them 'prohibited goods' under Section 2(33) of the Customs Act, irrespective of the importer’s stated intent to re-export. The seizure under Section 110 and potential confiscation under Section 111(d) were upheld as legally valid. The petitioner must participate in the ongoing investigation and adjudication process.
What This Means For Similar Cases
Import Compliance Is Non-Negotiable at Entry
- Practitioners must ensure all regulatory licenses (CDSCO, FSSAI, etc.) are obtained before goods enter Indian territorial waters.
- Filing a Warehousing Bill of Entry does not exempt importers from compliance with sector-specific laws.
- Any attempt to use warehousing as a loophole for unlicensed imports will be treated as illegal import under Section 111(d).
Re-Export Is Not a Cure for Illegal Import
- Section 69(1) applies only to legally imported goods; prohibited goods cannot be 'regularized' by re-export.
- Customs authorities may seize and initiate confiscation proceedings even if the importer offers to re-export at its own cost.
- Petitioners must demonstrate bona fide intent to re-export at the time of import - not as a post-seizure defense.
Regulatory Violations Trigger Customs Enforcement
- Violations of laws like the Drugs and Cosmetics Act, 2020, or Foreign Trade Policy are now directly enforceable under the Customs Act via Section 2(33).
- DRI and Customs officers may seize goods based on non-compliance with non-customs laws without waiting for adjudication under those laws.
- Importers must maintain documentary proof of regulatory compliance at the time of filing any Bill of Entry.
