The Bombay High Court on September 22, 2026, ruled that duty-free shops at airports cannot claim exemption from Indian regulatory laws simply because they operate beyond the customs barrier. A Division Bench of Justice Suman Shyam and Justice Advait M. Sethna delivered the judgment on petitions concerning nicotine pouches sold at the international departure terminal of Chhatrapati Shivaji Maharaj International Airport, Mumbai. The ruling came on a plea filed in April by Mumbai Travel Retail Ltd, an Adani Group-backed retailer, and Flemingo Dutyfree Shop Pvt. Ltd over the sale of tobacco-free nicotine pouches at duty-free shops in the international departure area. The companies had argued that Indian drug authorities could not take action against them because the shops are located in the international departure area and domestic regulatory laws should not apply beyond the customs barrier.
The court rejected the companies' claims, stating that 'such goods would be subject to the law of the land and would be governed by the regulatory regime in force even if the transaction takes place in the DFS (duty-free shops), beyond the customs barrier,' as reported by Mint. The court clarified that the exemption available to duty-free shops is limited to matters such as customs duty and taxes and does not create a separate legal zone where other Indian laws cease to operate. The order noted that products may receive fiscal treatment different from domestic market goods, but that doesn't automatically exempt them from laws governing drugs, safety, public health, or other regulated products. The bench relied substantially on its earlier decision in Glamstone Cosmetics Pvt. Ltd. v. Union of India & Ors. and held that 'Import of goods into India, even if it is for the limited purpose of warehousing or re-export, would not enjoy any immunity from the application of the domestic laws.'
The court did not decide whether tobacco-free nicotine pouches are 'drugs' under the Drugs and Cosmetics Act, 1940, according to Mint reports. While authorities stated that nicotine pouches required regulatory approval and import licenses under the Act, the companies argued that the products were not drugs and were a relatively new category of nicotine product. The bench noted that the companies had not furnished the relevant product specifications to the authorities, resulting in insufficient material to determine whether the particular products fell within the statutory definition of a drug or qualified for exemptions under the Drugs and Cosmetics Rules. The court further noted that the authorities had not clearly explained under which of the four categories in Section 3(b) the products were being treated as drugs, making it incumbent upon the authority to clearly indicate the applicable category before concluding that 'Nicotine Pouch' is a 'drug' under the Act of 1940.
The bench consisting of Justice Suman Shyam and Justice Advait Sethna granted the companies four weeks to submit supporting material, including product specifications, to the Central Drugs Standard Control Organisation (CDSCO). As reported by Mint, the court clarified that it would require a detailed factual inquiry over the product and stated it did not have the expertise to undertake that exercise in a writ petition. The court noted that 'whether import licence and/or registration certificate would be required or not will depend on whether the composition of the product legally constitutes a 'drug' under Section 3(b)'. The court kept open the question of whether the nicotine pouches require an import licence or registration under the Drugs and Cosmetics Act and gave both petitioners liberty to submit representations with supporting material explaining why the products were not drugs or were covered by applicable Schedule D or Schedule K exemptions. The representations, if filed within four weeks, must be considered by the authorities through a reasoned order, with a personal hearing if necessary, and the exercise must be completed within 30 days of receiving the representation.
