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2025 Supreme(Online)(Mad) 46949
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Mr.Justice Senthilkumar Ramamoorthy, J
M/s.Axeon Marketing India – Appellant
Versus
The Assistant Commissioner of Customs (Group 2) – Respondent
W.P.Nos.8920, 8924 & 8928 of 2025 | W.M.P.No.10028 of 2025
For the Appellants/Petitioners: Mr.Hari Radhakrishnan
For the Respondents: Ms.Revathi Manivannan, Mr.ARL.Sundaresan, Assisted by Mr.V.Chandrasekaran, Ms.M.Sneha
Ayurvedic drugs, while classified as 'drugs' under the Drugs and Cosmetics Act, require compliance with import licensing norms due to regulatory gaps, demanding testing to meet Indian standards for clearance.
Headnote:(A) Drugs and Cosmetics Act, 1940 - Section 33EEA - Rules 154 and 23 of the Drugs and Cosmetics Rules, 1945 - Writ petitions filed under Article 226 of the Constitution of India seeking directions for clearance of goods imported as ayurvedic drugs - The petitioner contended that the products are exempt from import licensing requirements, citing previous tribunal rulings and government guidelines - The court emphasized that while the Drugs and Cosmetics Act applies to ayurvedic drugs, existing import rules were impractical for such drugs - It mandated testing of imported ayurvedic products to ensure compliance with Indian standards prior to clearance. (Paras 1-10)
(B) Legal standing of ayurvedic drugs - The court affirmed the classification of imported ayurvedic products as 'drugs' under the statute, underscoring the need for regulatory compliance regarding importation to safeguard public health. (Paras 2-10)
(C) Licensing requirements - Despite existing regulations, the court noted the necessity for the rule-making authority to modify import licensing norms to accommodate ayurvedic products. (Paras 6-10)
Facts of the case:
The petitioner sought permission to clear imported ayurvedic goods after receiving notices regarding regulatory violations. The products in question had historical approval from customs as ayurvedic drugs, which complicates the licensing issue under current rules.
Findings of Court:
The court directed the testing of the imported goods for compliance with local manufacturing standards, with results needed before allowing clearance.
Issues: The primary issues included the classification of ayurvedic drugs under the existing statute and the applicability of licensing regulations.
Ratio Decidendi: The court concluded that ayurvedic drugs fall within the statute's definition of 'drugs', necessitating compliance with the import regulations, while suggesting the need for clearer rules for such products.
Result: Writ petitions disposed of with orders for testing prior to goods clearance.
| Table of Content |
|---|
| 1. petitioner's authorization as importer and prior notifications (Para 1 , 2) |
| 2. arguments supporting classification of ayurvedic drugs (Para 3) |
| 3. legal stance on licensing requirements for ayurvedic imports (Para 4) |
| 4. role of 5th respondent and judicial interpretation of the law (Para 5 , 6) |
| 5. existence of public interest in drug regulation (Para 7 , 8) |
| 6. need for laboratory testing and compliance for ayurvedic drugs import (Para 9 , 10) |
| 7. final disposition of writ petitions (Para 11) |
COMMON ORDER
By these writ petitions, the petitioner seeks a direction to the first and second respondents to permit the petitioner to clear all goods covered by bill of entry No.8438669 dated 19.02.2025 and for other remedies ancillary or incidental thereto.
2. The petitioner states that it is an authorized importer and distributor of Axe Brand Medicated Oil products in India and that it has been importing the same from the parent company, Leung Kai Fook Medical Company Private Limited, Singapore, since 2007. The petitioner received notices from the 5th respondent alleging violation of Section 33EEA of the Drugs and Cosmetics Act, 1940 (Drugs & Cosmetics Act) and Rule 154 of the Drugs and Cosmetics Rules, 1945 (Drugs & Cosmetics Rules) and replied thereto on 06.12.2024 and 18.01.2025. Thereafter, the petitioner requested the Additional Commissioner of Customs (Group-2) to release the goods, but was informed on 07.03.2025 that the file had been transferred to the office of the 4th respondent. The present writ petitions were filed in the said facts and circumstances.
3. The contentions of learned counsel for the petitioner may be summarized as under:
(i) The products imported by the petitioner have been held to be classifiable as ayurvedic drugs under chapter 30 of the CTH by the Customs Excise and Service Tax Appellate Tribunal (CESTAC), Chennai, in Commissioner of Customs, Chennai v. M/s. SMA Trading Company , 2022(8) TMI 558 ('SMA Trading Company').
(ii) Although the definition of “drug” read with the definition of ayurvedic, siddha or unani drug in the Drugs and Cosmetics Act indicates that the statute applies to ayurvedic drugs, the provisions in relation to import of drugs is inapplicable to ayurvedic drugs.
(iii) Rule 23 prescribes that an import licence should be issued in Form-10 or Form 10A and Rule 24 prescribes that the application for import licence should be made in Form-8 or Form-8A with an undertaking in Form- 9. None of these forms are appropriate or applicable to ayurvedic drugs. Therefore, the petitioner should be permitted to import goods under the above mentioned bill of entry without a licence.
(iv) Without prejudice, the Central Drugs Standard Control Organization (CDSCO) has framed guidelines permitting the import of ayurvedic drugs subject to the manufacturer's test report, samples, etc. being examined and a no objection certificate being issued. This process may be followed on an expedited basis to grant clearance.
(v) The Health Sciences Authority, Singapore, has certified on 15.03.2022 that the manufacturer has maintained an acceptable level of compliance with the Pharmaceutical Inspection Convention/Cooperation Scheme Guide to Good Manufacturing Practices for Medicinal Products.
(vi) The import policy provides that import of ayurvedic drugs may be undertaken “free”, i.e without a licence.
(vii) In response to a question in Parliament, the Minister of AYUSH provided the import value of ayurvedic drugs for multiple financial years commencing from financial year 2021-22 to financial year 2023-24.
4. Learned Additional Solicitor General made submissions in reply on behalf of respondents 3 to 4 and 6. His contentions may be summarized as under:
(i) Drug is defined inclusively in Section 3(b) of the Drugs and Cosmetics Act and therefore encompasses ayurvedic drugs.
(ii) While the Drugs and Cosmetics Act and the rules framed thereunder deal with the manufacture of ayurvedic drugs in India and prescribe licensing requir
