Gujarat High Court Rules in Favor of Chemical Importers: No Import Permit Needed for Acrylonitrile in Non-Insecticidal Use

Court Upholds Exemption Under Insecticides Act

In a significant ruling for the chemical manufacturing industry, the Gujarat High Court has quashed a public notice mandating import permits for Acrylonitrile (ACN) when used for non-insecticidal purposes. The decision, delivered on November 19, 2025, by a bench comprising Honourable Mr. Justice A.S. Supehia and Honourable Mr. Justice Pranav Trivedi, emphasizes the exemptions provided under Section 38 of the Insecticides Act, 1968. This judgment resolves multiple consolidated writ petitions, with Special Civil Application No. 9705 of 2023 serving as the lead case.

The court declared the Public Notice F. No. 04-01/2022-CIR-I dated February 17, 2022, issued by the Central Insecticides Board, invalid to the extent it applies to Acrylonitrile imports for industrial uses like synthetic rubber production. No costs were imposed on any party.

Background of the Case

Apcotex Industries Ltd., a company engaged in manufacturing synthetic rubbers such as Nitrile Butadiene Rubber (NBR) since 1986, imports Acrylonitrile as a key raw material. Classified under Tariff Item 29261000 of the Customs Tariff Act, 1975, Acrylonitrile has historically been freely importable under the Foreign Trade Policy without restrictions.

However, complications arose due to Acrylonitrile's listing in the Schedule to the Insecticides Act, 1968, which regulates insecticides. Notifications and circulars, including Notification No. 106/2013 dated January 1, 2015, by the Directorate General of Foreign Trade (DGFT), imposed registration and import permit requirements under Chapter 38 for scheduled substances intended as insecticides. The petitioners argued that their use—manufacturing rubber products—qualified as non-insecticidal, exempting them from these mandates.

The petitioners faced demands for permits from customs authorities at Hazira Port, despite prior clarifications allowing clearance on end-use bonds. A letter dated October 24, 2019, from the Central Insecticides Board initially tightened rules, but subsequent orders, like the Order-in-Original dated September 21, 2021, from the Joint Commissioner of Customs, affirmed that non-insecticidal imports fall outside the Act. Unresolved issues led to the 2022 Public Notice, prompting the filing of writ petitions in 2023.

Arguments from Both Sides

Represented by advocate Mr. Anand Nainawati, the petitioners contended that Section 38(b) of the Insecticides Act explicitly exempts scheduled substances used for purposes other than pest control, such as industrial manufacturing. They highlighted that requiring registration under Section 9 and import permits contradicts this exemption. Citing a 2018 Kerala High Court decision in Deputy Commissioner of Customs (Gr.VII), Cochin v. M. Chandrasekhar (2018 (10) TMI 1160), they argued for parity, as that case exempted Ethylene Di-Chloride (EDC) imports for PVC production without permits. The petitioners noted their compliance with end-use bonds and lack of any barring notification under the Foreign Trade (Development and Regulation) Act, 1992.

Respondents, including the Union of India (represented by Mr. Ankit Shah) and customs authorities (Mr. C.B. Gupta), defended the Public Notice, asserting that registration under Section 9 read with Section 38 remains mandatory for scheduled substances like Acrylonitrile, regardless of end-use. They distinguished the Kerala precedent, claiming it did not directly address the 2022 notice and that safeguards were needed due to the substance's potential risks.

Legal Precedents and Key Principles Applied

The court relied heavily on the Kerala High Court ruling, which interpreted Section 38 as a non-obstante clause exempting non-insecticidal uses from the entire Act, including registration requirements. The bench distinguished this from cases involving substances like Boric Acid, where Foreign Trade Act notifications explicitly mandated permits.

Pivotal excerpts from the judgment underscore the reasoning:

> "The provisions of Section 38 of the Act of 1968 exempts the application filed under the said provisions of law... if such substance or preparation is intended for purposes other than preventing, destroying, repelling or mitigating any insects... Thus, the Acrylonitrile imported by the petitioner is used by them in manufacturing of goods like rubber items which would not fall in any of the purposes mentioned in Section 38 of the Act of 1968."

The court further noted:

> "Having not denied by the respondents that Acrylonitrile imported by the petitioner is for non-insecticidal use as per clause (b) of Section 38... none of the provisions of the Act of 1968 would apply and... the requirement of any import permit from respondent no.7 does not arise."

Recent notifications, such as Notification No. 44/2025-26 dated October 15, 2025, from the Ministry of Commerce, were cited to confirm no ongoing restrictions on Acrylonitrile imports.

Court's Final Decision and Implications

All petitions were allowed, with the Public Notice quashed specifically for Acrylonitrile imports. The rule was made absolute, affirming that end-use bonds suffice for clearance, without needing permits or registration.

This ruling provides clarity for importers of scheduled chemicals used industrially, reducing bureaucratic hurdles and aligning with the Insecticides Act's intent. It may influence similar cases nationwide, particularly for substances dual-listed as insecticides but used in manufacturing, potentially easing trade under the Foreign Trade Policy. Industry stakeholders, including chemical manufacturers, can now import without fear of permit demands, fostering smoother operations in sectors like rubber and plastics.