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Unlimited Nutrition Pvt Ltd Versus The Commissioner Of Customs & Ors

2016 (5) TMI 1107 - DELHI HIGH COURT

Import of 'energy gel' and 'energy chews' - There are two broad issues that arise in this petition. The first concerns the question whether proprietary foods are outside the purview of the FSS Act, the FSS Regulations 2011 and the FSS Packaging Regulations 2011. The second issue is whether on the facts of the present case, the Petitioner can be said to have complied with the FSS Packaging Regulations 2011. - Held that:- The main object of the FSS Act is to lay down “science based standards for a .....

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is required to mandatorily comply with the labelling requirements in terms of the FSS Regulations and FSS Packaging Regulations. - Although the Petitioner admitted to having affixed labels on the master boxes after they arrived in India, it is evident from the affidavit of the Customs authorities and the letter of the CWC that neither of them gave any permission to the Petitioner to do so. Further, it is evident that the FSSAI also permitted the affixation of the labels on imported food art .....

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s well as officers/employees of the Customs and/or CWC. The enquiry will be completed within a period of three months from today. Appropriate action in terms thereof will be taken against all those found responsible for the lapse. - Decided against the petitioners. - W.P.(C) 10666/2015 - Dated:- 23-5-2016 - S.MURALIDHAR & VIBHU BAKHRU JJ. For the Appellant: Mrs. Anjali J. Manish with Mr. Priyadarshi Manish, Advocates. For the Respondent: Mr. Kamal Nijhawan, Senior standing counsel with Mr .....

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d Products Standards and Food Additives) Regulations 2011 ('FSS Regulations 2011 ) and the Food Safety and Standards (Packaging and Labelling) Regulations 2011 ( FSS Packaging Regulations 2011 ). The two issues 2. There are two broad issues that arise in this petition. The first concerns the question whether proprietary foods are outside the purview of the FSS Act, the FSS Regulations 2011 and the FSS Packaging Regulations 2011. The second issue is whether on the facts of the present case, t .....

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of thereof together with the FSS Regulations 2011. 4. As regards the second issue concerning the compliance with the labelling requirements, the matter was further examined after the said date and the present order proposes to deal with the said issue. Background facts 5. The Petitioner, M/s. Unlimited Nutrition Private Limited ('UNPL ) is registered under the Companies Act, 1956 and has its registered office in Mumbai. It is engaged in the import of food items, including energy gel and ener .....

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r, the said goods were shipped on 13th June 2015. The place of delivery was the Inland Container Depot (ICD), Patparganj. It terms of the FSS Act for the import of any food articles, the FSSAI issues a 'No Objection Certificate' ('NOC') in order that the Customs Department may issue an 'Out of Charge' ('OOC') order. The FSSAI grants such NOC on the basis of the report of a Food Analyst at a lab notified by the FSSAI. For the purpose of a 'one window' clear .....

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turn contained boxes and each box contained 24 packets/sachets. There were 17 different types of energy gel and energy chews that formed part of the imported consignment. One sample of each was drawn by the Customs officer and sent for testing to M/s. Ozone Pharmaceuticals Limited ('OPL') which was notified as accredited laboratory by the National Accreditation Board for Testing and Calibration Laboratories in terms of the Notification dated 1st April 2015 of the Ministry of Health and .....

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nufacturer's name and address', the report mentioned 'GU Energy Labs Berkeley CA 94710'. Enclosed with the submitted report was Form 'B' in terms of the Regulation (ii) of 2.3.1 of the FSS Regulation 2011. 9. This was followed by the Petitioner's letter dated 19th October 2015 to the Customs Department stating that the imported goods would be sold in India in full boxes only and that the individual sachets would not be sold in the market. In the office noting of the D .....

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s were not cleared. In those circumstances, the present writ petition was filed. Proceedings in this Court 10. At the hearing on 20th November 2015 the Court passed the following order: "It appears that there is a software glitch at the end of the Customs Department as a result of which the Indian Customs Single Window Project is not functioning properly. Because of this, the Customs Department has not been able to transmit the 'BE message' to FSSAI, even though the assessment has b .....

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ansmitted to the FSSAI the B/E message. The Court then passed the following order: "The 'B/E' shall be manually supplied by the Customs Authorities to the FSSAI within one day. The FSSAI shall also draw the samples, if necessary, within one day. The report of the FSSAI shall be made available to this Court by the next date of hearing. Renotify on 03.12.2015." 12. Pursuant to the order dated 26th November 2015 an officer of the FSSAI visited the ICD, Patparganj, Delhi but declin .....

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colate and strawberry kiwi flavours) and energy chews (orange champs, strawberry, orange and black cherry flavours) which are not defined in FSSR 2011. Hence all the 17 products mentioned in the BE were found proprietary in nature which cannot be cleared as per Section 22 of FSS Act, 2006. (2) Date of manufacture was not mentioned on the label of all the products as per BE which contravene the regulation No. 2.2.2 (9) of FSS (Packaging and Labelling) Regulation, 2011. (3) Lot No. & manufactu .....

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of the central issues that arise is whether proprietary foods are completely outside the purview of the FSS Act, particularly in terms of Section 22 thereof, which reads as under: 22. Genetically modified foods, organic foods, functional foods, proprietary foods, etc. - Save as otherwise provided under this Act and regulations made thereunder, no person shall manufacture, distribute, sell or import any novel food, genetically modified articles of food, irradiated food, organic foods, foods for .....

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ion or specific diseases and disorders and which are presented as such, wherein the composition of these foodstuffs must differ significantly from the composition of ordinary foods of comparable nature, if such ordinary foods exist, and may contain one or more of the following ingredients, namely:- (i) plants or botanicals or their parts in the form of powder, concentrate or extract in water, ethyl alcohol or hydro alcoholic extract, single or in combination; (ii) minerals or vitamins or protein .....

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ventional food and whereby such products may be formulated in the form of powders, granules, tablets, capsules, liquids, jelly and other dosage forms but not parenterals, and are meant for oral administration; (ii) such product does not include a drug as defined in clause (b) and ayurvedic, sidha and unani drugs as defined in clauses (a) and (h) of section 3 of the Drugs and Cosmetics Act, 1940 (23 of 1940) and rules made thereunder; (iii) does not claim to cure or mitigate any specific disease, .....

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osed of or containing genetically modified or engineered organisms obtained through modern biotechnology, or food and food ingredients produced from but not containing genetically modified or engineered organisms obtained through modern biotechnology; (3) organic food means food products that have been produced in accordance with specified organic production standards; (4) proprietary and novel food means an article of food for which standards have not been specified but is not unsafe: Provided .....

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prietary food was not as such outside the ambit of the FSS Act. She buttressed the above submission with a reference to the decisions of the Supreme Court in State of Rajasthan v. Shri Noor Mohammad (1972) 2 SCC 454 and Lalu Prasad Yadav v. State of Bihar (2010) 5 SCC 1 and to the fact that FSS Regulation 2011 makes a specific reference to 'Proprietary Food' under Regulation 2.12.1 read with Appendices A and B thereof. It is further submitted that once the consignment satisfied the requi .....

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consignment cannot be permitted to be imported under Section 22 of the FSS Act. 19. Having considered the above submissions in light of the relevant provisions of the FSS Act and FSS Regulation 2011, the Court is of the view that the submission of the FSSAI that proprietory foods fall entirely outside the ambit of the FSS Act is not borne out on a correct and holistic reading of Section 22 thereof together with the FSS Regulation 2011 and other Regulations. As rightly pointed out by the Petitio .....

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gredients prohibited under this Act and the regulations made thereunder are meant to be kept out of the preview of Section 22 of the Act. If the intention was to not permit any proprietary food of any kind whatsoever, there would be no need to describe 'proprietary foods' under Regulation 2.12.1 of FSS Regulation 2011 as under: 2.12.1 (1) Proprietary food means a food that has not been standardized under these regulations. (2) In addition, to the provisions including labelling requiremen .....

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e not mentioned in Appendices A and B would not ipso facto mean that they are prohibited from being imported. The FSSAI will have to examine if energy gel and ''energy chew which are proprietary foods are unsafe or contain any ingredient which is prohibited under the FSS Act. 21. Consequently, the Court is of the view that the first reason given by the FSSAI in its letter dated 2nd December 2015 addressed to the Customs for not drawing samples of the consignments in question is not justi .....

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ds (Packaging and Labelling) Regulations 2011 ('FSS Packaging Regulation 2011'). Although the report of the OPL does appear to indicate that the samples sent to it did contain some of the above details, the FSSAI is right in its contention that it was not kept in the loop when samples were drawn by the Customs and sent to OPL and this was not in accordance with the procedure under Circular 9 of 2015. 24. Ms. Manish, learned counsel for the Petitioner, pointed out that as far as the Petit .....

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e asked to issue the OOC without samples of the products, which are admittedly food items, being tested to the satisfaction of FSSAI, which is a requirement under Circular 9 of 2015. 26. Accordingly, it is directed that without any further wastage of time, the authorised officer of FSSAI will visit ICD, Patparganj not later than 11 am on Wednesday, i.e., 20th January 2016. In the presence of the authorized representative of the Petitioner, the officer of the FSSAI will visually inspect each of t .....

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bmitted to the Court on the next date of hearing. The FSSAI will proceed with the drawing of the samples and their testing without insisting, at this stage, upon the Petitioner making any payment for testing or any other charge. This will be subject to further orders that may be passed by this Court. Packages do not comply with labelling requirements 15. Pursuant to the above order, the FSSAI when inspected the consignment found that none of the packages contains label which confirms the require .....

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taining the traceability of the manufacture and distribution chain of the product in terms of Regulation 2.2.2 (8) of the FSS Packaging Regulations 2011, had not been mentioned. It is further pointed out that in terms of notification issued by the Director General of Foreign Trade ( DGFT ) only food products with a remaining shelf life of 60% can be allowed to be imported. In the absence of the date of manufacture, it was not possible to very if the shelf-life of the products was 60% or not. Acc .....

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. Since this is a contentious issue and since the Court does not have before it any photograph or specimen of the packets which have been imported, the Court is constrained to direct that both the representative of the FSSAI and the AR of the Petitioner to remain present at the Customs Warehouse Officer on 19th February 2016 at 11 am. On the strength of the present order, the Superintendent-in-Charge of the Customs Warehouse where the imported consignment is stored at present will be permit the .....

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er labels are of the Petitioner and a sample reads as under: Imported By UNLIMITED NUTRITION PVT. LTD. 43-45 & 52, Nawab Building 4th Floor, D.N. Road, Fort Mumbai - 400 001 INDIA Supplier : GU Energy Labs USA Qty: (1 Serving x 24) Net Weight: 768 gm Desc of goods: GU Roctame Energy Gel MRP ₹ 4,000/- (Inclusive of all taxes) Mfg. Date: 06/2015 Exp Date: See the Box Date of Import: 09/2015 2. In light of the submissions made by Mr. Mehmood Pracha, learned counsel for Respondent No. 2/FS .....

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r states that an affidavit answering the above questions will be filed by the Petitioner within one week from today with an advance copy to learned counsel for the Respondents. 4. List on 10th March 2016. 19. The Petitioner filed an affidavit in response to the above order on 17th March 2016. After perusing the said affidavit on 22nd March 2016, the Court passed the following order: 1. The affidavit filed by the Petitioner in response to the order passed by this Court on 1st March 2016 raises mo .....

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oday, learned counsel for the Petitioner volunteered that these labels were affixed by the Petitioner in the Customs area itself and that there were circulars that permitted the Petitioner to do so. It is also stated that the permissions were obtained from the concerned Custom officials for that purpose. However, these details do not find place in the affidavit. 3. It appears to the Court that the Petitioner has not been forthcoming with the entire facts of the matter. The Court gives the Petiti .....

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g. 5. The Court makes it clear that it would like the entire matter to be fully enquired into and taken to its logical conclusion. 6. The further affidavit of the Petitioner be filed not later than 29th March 2016. The response thereto of the Customs department be filed before the next date. 7. List on 25th April 2016. 20. The Petitioner filed a further affidavit on 21st April 2016 stating that G-Card holder who was handling the file had left the employment of the CHA of the Petitioner and there .....

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ere exists any practice of permitting affixing of labels on goods that are imported after their arrival at the port of entry and if so the relevant rules/instructions be enclosed; (ii) whether in the present case any such permission/order was issued to the Petitioner for affixing labels on the imported consignment (iii) can the Petitioner be permitted to re-export the goods and if so under what circumstances and subject to what conditions? Labelling of imported goods 22. Pursuant to the above or .....

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d pursuant to the notice No. 16/2013 dated 15th October 2013 issued by the Commissioner of Customs (Imports & General), New Delhi, the facility of labelling of imported goods has been extended to importers, subject to certain procedural conditions. The importer or CHA has to submit a letter to the Assistant Commissioner ( AC )/Deputy Commissioner (DC) (Import Shed) seeking permission for labelling the imported goods. However, this labelling has to happen prior to the registration of the good .....

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tion dated 24th November 2000. 23. It is pointed out that the FSSAI has issued the following instructions on 21st December 2015 regarding rectifiable and non-rectifiable labelling requirements in the Customs bonded warehouses by importers: Subject: Rectifiable and Non-Rectifiable Labelling requirements - reg. Sir, With regard to the subject cited above, this is to inform that the labelling requirements and the manner in which these are to be depicted on the label of the food products are mention .....

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ives (v) Name and complete address of the manufacturer (vi) Net quantity (vii) Lot/Code/Batch identification (viii) Date of manufacture or packing (ix) Best before and use by date (x) Country of origin of imported food (xi) Instructions for use (i) Declaration regarding Veg or Non Veg (ii) Name and Address of the Importer (iii) FSSAI Logo and license number The labelling requirements of food products is directly related to the safety of food. It has been reiterated in several judgments of variou .....

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ion for the same. 25. In response to the Petitioner's assertion that the labels were affixed on the master boxes on 6th October 2015, before the goods were examined by the Customs, when they were lying in the CWC, the above affidavit of Mr Jha states: CWC has denied any permission having been given to the Petitioner for affixing of labels as has been contended by it. 26. The letter dated 5th April 2016 written by CWC to the Customs in this regard has been enclosed. The said letter reads as u .....

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ner has not been forthcoming as to who, if any one at all, gave permission for affixation of labels on the master boxes while they were lying in the CWC warehouse. This aspect will have to be enquired in to by the Commissioner of Customs to unearth the truth. It is a matter of some concern that an importer has been able to affix labels on imported food articles after their arrival in India and while being kept at the notified warehouse. 28. The Customs however states that as regards the Petition .....

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on payment of redemption fine under Section 125 and may impose penalty under Section 112 of the CA. Further, the adjudicating authority would like to verify that the remittance towards the goods has been recalled by the importer from the exporter. It is further stated that after the goods have been redeemed they will be allowed to be re-exported by the appropriate authority. Overriding nature of the FSS Act as regards imported food items 29. Mr. Mehmood Pracha, learned counsel appearing for FSS .....

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ion made thereunder. Mr. Pracha submitted that since the imported consignment was in the nature of the food articles, it was mandatory that FSS Act, Rules or Regulations should be strictly complied with as regards the fulfilment of the labelling requirements. 30. Mr. Pracha pointed out that the question whether the advisories issued by FSSAI had the force of law and were within the ambit and scope of its powers under the FSS Act, and the Rules and Regulations thereunder, was examined by the High .....

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Section 16 (1) read with Section 16 (5) read with Sections 18 and 22 of the FSS Act without following the procedure laid down under Sections 92 and 93 of the FSS Act of placing the Advisories/Regulations before both the Houses of Parliament. 31. The above judgment of the Bombay High Court was affirmed by the Supreme Court by its order dated 19th August 2015 in Special Leave Petition (Civil) No. 23872-23874 of 2014 (Food Safety and Standards Authority of India v. Vital Nutraceuticals Pvt. Ltd.). .....

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oms which meets once in a month to sort out the issue concerning import of food items that have to comply with the requirements of FSS Act and the Rules and Regulations framed thereunder. 33. The main object of the FSS Act is to lay down science based standards for articles of food and to regulate their manufacture, storage, distribution, sale and import, to ensure availability of safe and wholesome food for human consumption. The word food has been defined under Section 2 (1) (j) of the FSS Act .....

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gulations. The FSSAI had refused to grant NOC to 16 of the 20 types chocolates that were imported. According to FSSAI, 8 types of chocolates were found to be non-compliant with the FSS Packaging Regulations 2011 and the balance 8 were found to be non-compliant with the FSS Regulations 2011. In that context the learned Single Judge held that the sticker labels affixed on the packages provided all the information would meet the object of the FSS Packaging and Labelling Regulations 2011. It was acc .....

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d Distributors Incorporation (2015) 219 DLT 752 (DB). The Division Bench was of the view that FSSAI should have no objection to the Indian importer affixing labels in order to make up the deficiency in the labelling requirements after the goods arrived in India. The Division Bench failed to see any harm, if any, in allowing any defect/deficiency in labelling being permitted to be made up, in respect of imported goods, in India. We find no prohibition there against in the Act or any Regulations. .....

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he letter of the CWC that neither of them gave any permission to the Petitioner to do so. Further, it is evident that the FSSAI also permitted the affixation of the labels on imported food articles only to a limited extent. viz., in order to (i) declare whether the product is Veg or Non Veg (ii) disclose the name and address of the importer and (iii) indicate the FSSAI Logo and license number. It does not extend to affixing labels on the imported food articles after they have landed in India to .....

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arrived and what cannot be so rectified is based on a rational criteria that conforms to the objects of the FSS Act. Much of the non-rectifiable information, which would be within the exclusive knowledge of the manufacturer, cannot possibly be permitted to be affixed on to the imported food packages after they have arrived. The said information helps to trace the origin of the food product and provide other vital details that would enable the consumer to make an informed choice. Indeed there can .....

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