TaxTMI 
TaxTMI 
2016 (5) TMI 1107
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.... 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. 3. The first issue has been comprehensively dealt with by this Court on 18th January 2016. The Court in that order, which will be referred to hereafter, held that in the facts and circumstances of the case the stand taken by the FSSAI that the proprietary foods imported by the Petitioner fall outside the ambit of the FSS Act, Rules and Regulations was not borne out on a correct and holistic reading of Section 22 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 o....
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....falling under Regulation No. 2.12.1 of FSS Regulation 2011. Inter alia the test report mentioned that each of the samples contained the manufacturing date, best before date and country of origin. Against the column 'manufacturer'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 Department it was stated that the B/E was finally assessed by the Deputy Commissioner (Group) on the basis of the report received from OPL. However, the online system had failed to accept the final assessment. The Petitioner was given the understanding that overriding permission would be sought for issuance of the OOC order. The Petitioner's case is that it deposited the requisite customs duty of Rs. 4,78,355 for the purpose of clearance. However, the OOC order was....
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....the products as per BE which contravene the regulation No. 2.2.2 (9) of FSS (Packaging and Labelling) Regulation, 2011. (3) Lot No. & manufacture name and address were not specified on the label of all the products mentioned in the BE which contravene the regulation No. 2.2.2. (8) and 2.2.2 (6) of the FSS (Packaging and Labelling) Regulation, 2011 respectively." The order dated 18th January 2016 13. In its order dated 18th January 2016 the Court comprehensively dealt with the issue whether the proprietary foods were outside the purview of the FSS Act. The relevant portion of the said order discussing the said issue, is as under: "16. One 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 special dietary uses, functional foods,....
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.... and Cosmetics Rules, 1945; (2) "genetically engineered or modified food" means food and food ingredients composed 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 that such food does not contain any of the foods and ingredients prohibited under this Act and regulations made thereunder. 17. It has been urged by Ms. Manish, learned counsel for the Petitioner, that in terms of the opening words of Section 22 of FSS Act, "save as otherwise under this Act", read with Explanation (4) thereof, unless the proprietary food is unsafe or contains any of "the foods and ingredients prohibited under this Act and the regulations made thereunder", proprietary food was not as such outside the ambit of the FSS Act. She buttressed the abov....
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....s including labelling requirements specified under these regulations, the proprietary foods shall also conform to the following requirements, namely:- (i) the name describing as clearly as possibly, the nature or composition of food and/or category of the food under which it falls in these regulations shall be mentioned on the label; (ii) the proprietary food product shall comply with all other regulatory provisions specified in these regulations and in Appendices A and B." 2 20. The mere fact that „energy gel' and „energy chew' are 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 justified in terms of Section 22 of FSS Act." 14. The Court in its order dated 18th January 2016 dealt with the two objections raise....
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....d 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 requirements of FSS Packaging Regulations 2011. Therefore, no sample was drawn by the FSSAI. An affidavit to the above effect was filed on 4th February 2016 by Mr. Anil Mehta, Deputy Director and an authorized officer of FSSAI. The affidavit pointed out that the name and complete address of the manufacturer has not been shown on the labels. Only the name of the distributor was indicated. The other objection was that "the batch number/code number/lot number required to be mentioned on the label for ascertaining 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 furthe....
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....e the Petitioner to answer the following questions regarding the sticker labels (i) on what basis were the details set out in the label prepared and by whom? (ii) where were the sticker labels printed and how was the information depicted in the sticker label made available to the person who printed it (iii Were the labels affixed by GU Energy Labs USA at the place of export or thereafter at the place of import and 3. Ms. Anjali J. Manish, learned counsel for the Petitioner 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 more questions than it answers. 2. The Court had in its order clearly set out in para 2 of the abovementioned order, the specific questions that were required to be answered by the Petitioner. One partic....
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....abels 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 order, an affidavit dated 5th May 2016 has been filed by Mr. Manish Kumar Jha, Deputy Commissioner (Legal), ICD, Patparganj, Delhi. The affidavit refers to the DGFT's Notification No. 44 (RE-2000)/1997-2002 dated 24th November 2000 which requires the Customs to examine the compliance with the labelling requirements before clearance of the goods by the proper officer. It is pointed out that by Circular No. 19/2011 dated 15th April 2011 issued by the Central Board of Excise & Customs ('CBEC') and 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....
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....lling of food products is important for traceability and for giving an opportunity to the consumer for making an informed choice." No permission given for affixing labels 24. As far as the present case is concerned, the categorical statement of the Customs in the above affidavit is that "no request for affixing of the labels in the Customs area was ever received by the Respondent, i.e., Customs Department. Hence, there is no question of granting any permission 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 under: "This is with reference to your letter No. VIII(6)/ICD/PPG/ WP/Unltd Nut/Import/Shed/1396/15/7120 dated 2nd April 2016 on the above cited subject. In this regard, it is to inform that no permission from Customs was ....
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.... 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 Court of Bombay in Writ Petition No. 2746 of 2013 (Vital Nutraceuticals Private Limited v. Union of India). By an order dated 1st August 2014 the High Court by majority of 2:1 held that the product approval advisory dated 11th May 2013 of FSSAI does not have force of law and it is not within the ambit and scope of the power conferred on the FSSAI under the FSS Act, and the Rules and Regulations framed thereunder. It further held that FSSAI has no power and authority to issue any advisory under 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 wa....
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....ecessary under the FSS Packaging and Labelling Regulations. The Customs authorities were directed to ensure sufficient access to the goods to enable the Petitioner to affix the necessary labels. 35. The above said decision was affirmed by the Division Bench of this Court in Food Safety & Standards Authority of India v. United 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." 36. The above decisions underscore the need for an importer to mandatorily comply with the labelling requirements in terms of the FSS Regulations and FSS Packaging Regulations. They also point to the concerns that may arise if such affixation of labels in India is not carefully monitored and regulated. 37. In the present case although the Petitioner admitted to....