2015 (4) TMI 1117 - HC - Customs

Import of food additive - YO-MIX 305 LYO 50 DCU which is a blend of defined strains of lactic acid bacteria that is used for direct vat inoculation into milk for preparing yogurt and fermented milk products. - Non- compliance with the Packaging and Labelling Regulations - Ingredients list was not mentioned on the label - NOC refused that the safety of the product could not be assessed without knowing the mandatory labelling requirements as per the Packaging and Labelling Regulations - Whether a food additive is also a food. Held that - as per the definition of food and food additive in Sections 3(1)(j) & (k) of the Act, food additive, is distinct from, and is not a food. While food, essentially is something intended for human consumption, food additive, essentially is something not normally consumed as a food itself. Though both definitions, after so providing, proceed to be inclusive but in our understanding of the principles of Interpretation of Statutes, the various items in the inclusive portion‟ of the definitions will have to satisfy the essential test. It would thus follow that non-mentioning of food additive in the definition of food, has to be interpreted as food additive not falling within the definition of food. A substance which is not normally consumed as a food by itself or used as a typical ingredient of a food and which may be a food additive, cannot be a food as only those substances which are intended for human consumption can be food. Merely because a food additive may fall within the expression and includes any substance used into the food during its manufacture, preparation or treatment within the inclusive part of the definition of food will not make a food additive food because a food additive fails to satisfy the crucial part of the definition of food i.e. intended for human consumption . Similarly, because a food additive is added for technological purpose in the manufacture, processing, packaging etc. of food and becomes a component of or affects the characteristics of such food would also not make it a food because a food additive by itself is normally not consumed as a food. The appellant authority is thus clearly wrong in its assertion that without holding food additives to be also food, it would not have authority to regulate and monitor manufacture and processing, distribution, sale and import of food additives. The Act, takes within its ambit, food as well as food additives and the two being different, makes separate provisions with respect to two. However, the context in which food is used in some of the provisions of the Act, take within their ambit food additives also. What the appellant authority is however wanting to do is to make the provisions of the Act made in context of foods, applicable to food additives also and which cannot be permitted. Since the Act contains provisions with respect to food additives, the enforcement mechanism under Chapter VII of the Act, the provision relating to offences and penalties under Chapter IX of the Act and the adjudicatory mechanism provided under Chapter X of the Act would be applicable to food additives also. Applicability of the Packaging and Labelling Regulations to the food additives - Held that - the said Regulations have been made in exercise of powers under Section 23 of the FSS Act read with Section 92(2)(k) of the FSS Act. Section 92(2)(k) empowers the appellant authority to make Regulations under Section 23. We have hereinabove held that the context in which the word food is used in Section 23, does not allow inclusion of food additives therein. It thus follows that the Packaging and Labelling Regulations do not apply to food additives. A reading of the Packaging and Labelling Regulations also shows that the same can possibly have no application to food additives. Therefore, without intending to return any conclusive finding on the said aspect we may only observe that the whole purpose of labelling is to make the persons dealing with the product aware of the nature and character thereof. The prohibition in Section 23(1) against the manufacturer of food products not marked and labelled in the manner prescribed cannot possibly apply to a manufacturers of a food product situated outside India. However, the same would apply to distribution, sale / exposure for sale and delivery of such products in India and before which is done, the said products would definitely be required to be labelled in the manner prescribed. However, the responsibility for such labelling cannot be of the foreign manufacturer of such food products and we see no bar to the requirement of such labelling being fulfilled by the person who distributes, sells, dispatches or delivers the said imported goods in India. Therefore, insistence on reshipping of the said goods to the foreign manufacturer thereof does not serve any purpose. It would also mean, reliance being placed on the declaration on the label by a foreigner, rather than an Indian and which is unacceptable. Non- compliance with the Packaging and Labelling Regulations - NOC refused by the appellant authority - curability of the defect - Held that - this has already been decided by us in the other appeal, though ultimately finding that the question did not arise for adjudication therein, nevertheless expressed our view that the FSS Act and the Regulations made thereunder cannot be binding on a foreign manufacturer or supplier of food and considering the purpose of labelling, the defect/deficiency in labelling in imported goods is curable. However, we fail to see the harm if any in allowing any defect/deficiency in labelling being permitted to be made up, in respect of imported goods, in India. Also no prohibition thereagainst in the Act or any Regulations is found. Therefore, in case of imported foods, the obligation to comply with the provisions of the Act and the Regulations thereunder with respect to labelling is of the food business operator in India who imports the goods or otherwise deals with them first after their arrival in India and thus the said obligation can be permitted to be performed in India. Vegetable oil/vegetable fat - Held that - as per Regulation 2.7.4 of the Safety and Standards Regulations, under Chapter 2 thereof titled Food Product Standards , with respect to the chocolate, there is a prohibition against chocolates containing any vegetable fat other than cocoa butter. Section 18(2) also requires the appellant authority to take into account prevalent practices, international standards and practices. Our research shows that the Guidance on Cocoa and Chocolate Products Regulations, 2003 published by the Food Standards Agency of the United Kingdom, in clause 7 thereof states that the Regulations allow the use of specified vegetable fats other than cocoa butter upto a maximum on five percent in the preparation of chocolate products including in filled chocolates. It thus appears that internationally, vegetable fat other than cocoa butter, though are permitted in chocolates including as filling in filled chocolates but only of certain type and subject to maximum limits of 5%of the total content. The appellate authority while taking the decision aforesaid, may consider the said aspect also. Accordingly, the appellant authority is directed to in accordance with Section 18 and after considering all the relevant factors including those highlighted by us hereinabove decide whether a filling of vegetable fat other than cocoa butter and to what extent is permitted in filled chocolates. We deem time of six months to be appropriate therefor. The said decision be accordingly taken within six months of today. - Decided partly in favour of revenue

Summary

Issues Involved:
1. Nature of the subject goods: whether they are food or a food additive.
2. Whether a food additive is also considered food.
3. Applicability of the Packaging and Labelling Regulations to food additives.
4. Compliance of the subject goods with the Packaging and Labelling Regulations.
5. Curability of deficiencies in imported goods' compliance with Packaging and Labelling Regulations in India.

Detailed Analysis:

Nature of the Subject Goods:
The court determined that the subject goods, specifically "YO-MIX 305 LYO 50 DCU," are a food additive. This was established based on their specific mention in the Safety and Standards Regulations as a food additive.

Whether a Food Additive is Also Food:
The court analyzed the definitions of "food" and "food additive" under Sections 3(1)(j) and (k) of the FSS Act. It concluded that a food additive is distinct from food. The definition of food emphasizes substances intended for human consumption, whereas food additives are substances not normally consumed as food by themselves but are added for technological purposes during food manufacturing.

Applicability of the Packaging and Labelling Regulations to Food Additives:
The court held that the Packaging and Labelling Regulations, made under Section 23 of the FSS Act, apply only to food and not to food additives. The term "packaged food products" in Section 23 does not extend to food additives. The court emphasized that the appellant authority cannot apply these regulations to food additives without specific provisions.

Compliance of the Subject Goods with the Packaging and Labelling Regulations:
Given the court's determination that the Packaging and Labelling Regulations do not apply to food additives, the compliance question was rendered moot. However, the court noted that the appellant authority could make specific regulations for food additives under Sections 16 and 19 of the FSS Act if deemed necessary.

Curability of Deficiencies in Imported Goods' Compliance with Packaging and Labelling Regulations in India:
The court opined that deficiencies in labeling of imported goods could be cured in India before their release by customs authorities. It emphasized that the responsibility for such labeling should lie with the food business operator in India, not the foreign manufacturer. The court found no legal prohibition against curing labeling deficiencies in India.

Additional Judgment Analysis:

LPA No.711/2014:
This appeal concerned the import of chocolates found non-compliant with the Packaging and Labelling Regulations and the Safety and Standards Regulations. The court addressed two main issues:

1. Curability of Labeling Defects:
- The court reaffirmed that labeling defects in imported goods could be rectified in India. It rejected the appellant authority's insistence on re-shipping goods to the foreign manufacturer for relabeling.

2. Use of Vegetable Fat in Filled Chocolates:
- The court examined Regulation 2.7.4 of the Safety and Standards Regulations, which prohibits chocolates from containing vegetable fat other than cocoa butter. The court found that this prohibition applies to the chocolate shell but not necessarily to the filling inside the chocolate. The court directed the appellant authority to decide on this matter within six months, considering international standards and practices.

Summary:
1. Food Additive Distinction: A food additive is distinct from food as defined in the FSS Act.
2. Regulatory Authority: The FSS Act empowers the appellant authority to regulate food additives separately from food.
3. Packaging and Labelling Regulations: These regulations apply only to food, not to food additives.
4. Curable Labeling Defects: Labeling defects in imported goods can be cured in India before customs release.
5. Vegetable Fat in Chocolates: The court referred the issue of vegetable fat in filled chocolates back to the appellant authority for a decision within six months, allowing the current interpretation to prevail in the interim.

Costs and Orders:
- LPA No.659/2014: Dismissed with costs of Rs. 20,000 to the respondent No.1 / writ petitioner.
- LPA No.711/2014: Partly allowed with directions for the appellant authority to decide on the vegetable fat issue within six months.