MUMBAI/NEW DELHI: The Bombay High Court has rejected an Adani Group joint venture’s plea that duty-free shops at Mumbai airport lie beyond the reach of Indian law, upholding a ban on the sale of unapproved nicotine pouches at the country’s busiest international gateway.
A Division Bench of Justice Suman Shyam and Justice Advait M. Sethna, in an order issued late on 22 September, held that goods stocked and sold in duty-free shops remain subject to India’s domestic regulatory regime. Fiscal concessions such as exemption from customs duty and local taxes, the court said, do not create a legal island. “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, beyond the customs barrier,” the bench observed. “The domestic regulatory regime will apply in full force to such goods brought into the DFS within the Indian territorial jurisdiction.”
The petitioner, Mumbai Travel Retail Ltd — a joint venture of the Adani Group and Dubai-based Flemingo Dutyfree — had challenged an April ban imposed after a March inspection by drugs-control officials at Chhatrapati Shivaji Maharaj International Airport. The inspection, prompted by a complaint from the group Mothers Against Vaping, found imported nicotine pouches on sale in the international departure zone without the registration certificate and import licence required under the Drugs and Cosmetics Act, 1940. The Central Drugs Standard Control Organisation treated the pouches as drugs.
Adani’s retailer argued that shops in the airside departure area sit outside India’s territorial jurisdiction, that nicotine pouches are a “recent innovation” and not a drug, and that they are sold only to outbound passengers in sealed bags intended for use after leaving the country. The Centre and Customs rejected that reading. They told the court the products enter Indian territory on landing, that bonded storage does not take them outside India, and that passengers who take possession of duty-free goods can consume them at once. Officials called the sales a “substantive violation” of drug laws and a “serious public health risk.”
The High Court declined to rule on whether the pouches themselves are “drugs.” It directed Mumbai Travel Retail to place its material before the CDSCO and left the classification to the regulator. It refused to lift the ban.
The outcome is a setback for Adani’s airport retail strategy. The group operates eight Indian airports and has outlined an $11-billion expansion in which duty-free and travel retail form a significant pillar. Nicotine pouches — among the fastest-growing nicotine products worldwide — remain unapproved for sale in India’s domestic market. Earlier reporting had noted imports of brands such as Zyn and White Fox by the Adani-linked retailer.
Adani Group did not immediately comment on Tuesday’s order. In earlier statements the company had described talk of a “breach of law” as premature and said it was testing the regulatory interpretation through judicial review.
The ruling leaves the Mumbai ban intact while the drugs regulator examines the product status. For Adani and other airport concessionaires it settles a larger point: “duty-free” is a tax description, not an exemption from public-health and drug-control law.