Madras HC Flags Licensing Gap, Says Ayurvedic Imports Must Meet Indian Drug Standards

Background: Customs Detention Over Labeling and Licensing

The ruling came in response to three writ petitions filed by Axeon Marketing India, an authorized importer of Axe Brand Medicated Oil from Singapore, whose consignment—Bill of Entry No. 8438669 dated 19.02.2025—was detained by Chennai Customs.

The State Licensing Authority (SLA) issued notices dated 21.05.2024 and 29.11.2024, alleging that the firm violated Section 33EEA of the Drugs and Cosmetics Act, 1940, and Rule 154 of the Drugs and Cosmetics Rules, 1945, by failing to remove the label “Ayurvedic Proprietary Medicine” from the product.

The Customs Department also flagged the company in its electronic system with an alert stating: “Importing proprietary items under the guise of Ayurvedic medicines.”

In view of this, the petitioner sought court directions to release the consignment, prohibit SLA inquiries, and remove the alert from the customs database.

Petitioner’s Claims: No Licence Required for Ayurvedic Products

The petitioner argued that Axe Brand Medicated Oil had previously been classified as an ayurvedic drug by the CESTAT in Commissioner of Customs, Chennai v. SMA Trading Company, and thus should not be subjected to conventional drug import requirements. The court quoted, “The products imported by the petitioner have been held to be classifiable as ayurvedic drugs under chapter 30 of the CTH.”

They also contended that the CDSCO’s import licensing provisions are designed for allopathic drugs, not ayurvedic ones, “None of these forms [Form 8, 8A, 10, 10A] are appropriate or applicable to ayurvedic drugs. Therefore, the petitioner should be permitted to import goods... without a licence.”

As an alternative, the petitioner requested clearance via the CDSCO port office process, where an NOC could be granted based on manufacturer’s test reports and sample examination.

Respondents' Arguments: CDSCO Oversight Applies

The Additional Solicitor General, representing CDSCO, DCGI, and Ministry of AYUSH, argued that ayurvedic drugs are very much within the scope of the Drugs and Cosmetics Act: “Drug is defined inclusively in Section 3(b)... and therefore encompasses ayurvedic drugs.”

While acknowledging that current licensing forms were tailored for allopathy, the respondents stated, “In the absence of provision in the rules, in exercise of judicial review, the Court should not prescribe licensing norms or rules.”

However, they agreed that if the court permitted clearance, it should be conditional upon compliance with Indian manufacturing norms for ayurvedic products. The SLA also clarified its role was limited to domestic manufacture licensing, not import approvals.

Court’s Observations: Reform Needed, But Law Still Applies

The Madras High Court rejected the petitioner’s claim of exemption. Citing Rule 23 and Rule 24, it held;

“Ayurvedic drugs clearly fall within the ambit of the statute. Indeed, Parliament's intention to regulate this category is expressed beyond doubt in Part XVI of the Drugs and Cosmetics Rules, which expressly regulate ayurvedic drugs.”

However, it acknowledged the regulatory gap:

“Forms [under Rules 23 and 24] appear to be inappropriate for ayurvedic drugs and appropriate only for drugs used in allopathy.”

The court then issued a key recommendation to CDSCO;

“Therefore, it is necessary for the rule making authority to modify existing rules, prescribe standards and prepare appropriate forms in which applications may be made and import licenses granted to persons importing ayurvedic drugs. In the alternative, as a policy measure, it is always open to Parliament to amend the law and prohibit the import of ayurvedic or other classes of drugs, if deemed fit.”

Final Ruling: Conditional Clearance, Mandatory Testing

While allowing conditional release of the consignment, the court imposed safeguards to protect public health:

“It is necessary that this consignment be tested by one of the laboratories accredited to the CDSCO. This process shall be overseen by the 5th respondent, which is the licensing authority for the manufacture of ayurvedic drugs. All expenses relating to such testing shall be borne by the petitioner. If a satisfactory report is received from such laboratory, the 5th respondent shall certify that the manufacturing process is in conformity with the process prescribed for the manufacture of ayurvedic drugs in India. A copy of such certificate shall be provided to the first and second respondents, who, on receipt thereof, shall permit the release of goods covered under bill of entry No.8438669.”

Only upon receiving a satisfactory lab report, Customs may release the goods, noting that;

“This entire process shall be completed within a maximum period of eight weeks, preferably within six weeks from the date a copy of this order is uploaded on the website.”

The petitions were disposed of “on these terms without any order as to costs.”

To view the original order, click on the link below: