Tata Starbucks Limited vs Union of India and Others

V.M. Kanade, J.—Heard the learned Senior Counsel appearing on behalf of the Petitioner and the learned Counsel appearing on behalf of Respondent Nos. 2 and 3. Though time was taken on behalf of Respondent Nos. 2 and 3 to file affidavit-in-reply on two occasions viz on 23.4.2014 and 29.4.2014, no reply has been filed. Petitioner is a Joint Venture Company between Tata Global Beverages Limited and Emerald City C.V. which is an affiliate of Starbucks Corporation, USA. Petitioner is carrying on business of operation of Starbucks Cafes, in which specialty coffees, coffee beverages and other items are sold through Starbucks Cafes in India. Petitioner operates about 43 such Cafes all over India. Petitioner has obtained license for the purpose of carrying on the said business in India under the Food Safety & Standards Act, 2006 [For Short "FSSA, 2006"] which is valid till 19th September, 2017.

Petitioner is aggrieved by the action of Deputy Commissioner of Customs, J.N.P.T., Nhava Sheva who has rejected the consignment of the Petitioner at the Port on account of NOC not being granted by Respondent Nos. 2 and 3 for clearing the goods from the Customs at J.N.P.T.

It is the case of the Petitioner that under the Food Safety and Standards (Food Product Standards and Food Additives) Regulations, 2011 [For short "the said Regulations, 2011"] syrups are generally categorized under category 2.3.34. It is the case of the Petitioner that if the syrups falling under the said category do not contain minimum of 65% of soluble solids then, in such cases, the said food is treated as proprietary food under category 2.12.1. According to the Petitioner, in the products viz. syrups which have been imported by the Petitioner, percentage of soluble solids is less than 65% and, therefore, such syrups are in the nature of proprietary food. According to the Petitioner, an order to that effect has been passed by the Assistant Director (Imports) dated 22nd/23rd August, 2013 in which it is mentioned that the product of the Petitioner does not fall either under category 2.3.1(2) or 2.3.23 of the said Regulations, 2011. Petitioner was informed to apply for product approval of the said product.

The grievance of the Petitioner is that though on the one hand by the said letter, Respondent Nos. 2 and 3 have treated the product imported by them as a proprietary product, in spite of the application being made by the Petitioner for product approval, the said application has not been processed and, on the other hand, Respondent Nos. 2 and 3 have, thereafter, proceeded to categorize the said product as syrup and have held that it falls under category 2.3.24 and have further held that since percentage of soluble solids in the syrup imported by the Petitioner is less than 65%, they have not cleared the goods and they are lying at J.N.P.T. Nhava Sheva Port.

Mr. Chagla, the learned Senior Counsel appearing on behalf of the Petitioner submitted that though the application for product approval was filed by the Petitioner, the said application has not been processed on the ground that this Court has granted stay to the said Advisories which have been issued by the Food Authority. It is submitted that in the event of the said Advisories being stayed, natural consequence would be that unless the standard is fixed by Regulations, such proprietary products cannot be detained, unless it is found that the said product is unsafe for human consumption. It is submitted that no affidavit-in-reply has been filed and it is not the case of Respondents that the said product is unsafe for human consumption. Secondly, it is submitted that though the Petitioner has been importing these products since July, 2012 and they have been cleared for almost two years, after February, 2014 all the consignments have been detained at J.N.P.T. Nhava Sheva Port and the Petitioner is not permitted to clear the said products. He submitted that, therefore, Respondents do not have any authority in law to detain these products which on their own account are of a proprietary nature. The learned Senior Counsel invited our attention to the reports of various laboratories which have, after analysing the said product, in terms stated that the product passes/conforms to other food items of FSS Act, 2006 and Rules and Regulations made thereunder with respect to tested parameter and values. This fact can be seen from the following Reports viz. (i) Report of Geo Chem Laboratories Pvt. Ltd. dated 7th September, 2013 containing an analysis of "coffee flavored syrup", (ii) Report of Envirocare Labs Pvt. Ltd. dated 15th May, 2013 containing an analysis of "caramel syrup" and (iii) Report of Export Inspection Agency Mumbai dated 18th September, 2013 containing an analysis of "hazelnut syrup".

Mr. Chagla, the learned Senior Counsel appearing on behalf of the Petitioner also invited our attention to the fact that on 24.3.2014 and 26.3.2014 Food Safety & Standards Authority of India have given their no objection for release of the products from Nhava Sheva Port as the result of the inspection showed that the samples conformed to the specifications under FSSA, 2006 and Rules and Regulations framed thereunder. Similar such no objection letters were issued thereafter on 5.4.2014. He submitted that, however, surprisingly, on the basis of letter dated 24.3.2014 and the report of Food Analyst dated 22.3.2014 the authorized Officer of Food Safety & Standards Authority of India has given a rejection Report of the food imported on the ground that the sample does not conform to the specifications under FSSA, 2006. It is, therefore, submitted that after having specifically mentioned in their letter dated 22nd/23rd August, 2013 that the said product is a proprietary product, Respondent Nos. 2 and 3 could not have taken a contradictory stand that the said product is syrup and has to conform to the food product prescribed under category 2.3.24. It is also submitted that, in the past, all these goods which were imported by the Petitioner have been cleared and only after the stay was granted by this Court to the advisories issued by the Respondent No. 2, Respondents have not cleared the goods of the Petitioner. Our attention is invited to the Chart which shows the products which were imported by the Petitioner since July 2012 and which were cleared up to 10.2.2014. He, therefore, submitted that action of the Respondents is arbitrary and there is no reason whatsoever for detaining and not clearing the goods from J.N.P.T. Nhava Sheva Port.

On the other hand, the learned Counsel appearing on behalf of Respondent Nos. 2 and 3 has submitted that since Advisories which were issued by the Food Authority have been stayed by this Court, Respondent Nos. 2 and 3 are unable to process the application for product approval. It is submitted that the Petitioner itself has mentioned that the product is syrup and, therefore, Regulation No. 2.3.24 was applicable. He further submitted that the Report of Analyst shows that percentage of soluble solids in syrup imported by the Petitioner is less than 65% and, therefore, it does not conform to the standards prescribed under category 2.3.34. Our attention is also invited to Section 22 and other provisions of FSSA, 2006.

After having heard both the learned Counsels at length, we are of the view that the stand taken by the Respondents is self contradictory. On the one hand, Respondents have in terms stated that the product which is imported by the Petitioner does not fall under category 2.3.24 and, on the other hand, they have not cleared the goods on the ground that it does not conform to the said category under 2.3.34.

It is not in dispute that Petitioner has been importing these products since July, 2012 and these goods have been cleared by Respondents. No affidavit-in-reply has been filed by the Respondents, stating therein that these products are unsafe for human consumption. It is also an admitted position that in respect of number of proprietary foods, no standard has yet been fixed by the Respondents. Perusal of the FSSA, 2006 and the Rules and Regulations which are framed thereunder clearly discloses that there is no approved Regulations which authorize the Food Authority to introduce a scheme of obtaining product approval. Under the Scheme, powers have been vested in the Food Authority to issue prohibitory order for import and manufacture, distribution and sale of certain goods. No such prohibitory order has been issued in respect of these goods. Secondly, Food Authority has the power to seize the goods if they are of the view that goods are unsafe for human consumption and they can, after following the procedure prescribed under the Act, file a criminal complaint or initiate such other proceedings either for confiscation of goods or for suspension of license of the food manufacturers.

In our view, Food Authority does have a power to frame the Regulations. However, these Regulations would have a force of law only if the procedure which is mentioned in Sections 91 and 93 of FSSA, 2006 is complied with viz. that these Regulations have to be placed before both the Houses of Parliament and only thereafter the said Regulations will have the force of law. Respondents, therefore, in our view, instead of complying with the provisions of the Act and Rules and Regulations framed thereunder have acted in an arbitrary and capricious manner and detained the goods of the Petitioner. Respondents also have not filed any affidavit-in-reply clarifying the contradictory stand taken by them. In this view of the matter, we are of the view that action of Respondents of detaining these goods of the Petitioner needs to be stayed. Secondly, it has to be borne in mind that these goods have a limited shelf life and the Petitioner has stated in its Petition that the shelf life of these products would expire in the month of August/November, 2014.

We are of the view therefore that the prima facie case is made out for grant of ad-interim relief. Ad-interim relief is granted in terms of prayer clause (c) with a rider that the said NOC would be only in respect of goods which have now been imported and are lying with the Customs Department at J.N.P.T., Nhava Sheva Port.

Respondents are directed to file their detailed affidavit-in-reply within four weeks. Stand over to 25th June, 2014.

At this stage the learned Counsel appearing on behalf of Respondent No. 2 and 3 seeks stay of the operation of this order. Taking into consideration the peculiar facts and circumstances of the case, application for stay is declined. Parties to act on the copy of this order duly authenticated by the Registry of this Court.