Laws & Legal Compliances for Selling Therapeutic Oils in India: Lawyers Advice

In recent times, it can be observed that the market for essential oils has been booming world over. The reasons for this are primarily due to the fact that lifestyles are improving across the world and an increasing number of people are getting involved in aroma therapies and other activities pertaining to physical wellness. The barriers to entry in these markets are low and as a result there is increased competition in this market. In order to streamline business activities to gain a competitive edge, it will prove useful for a business person to be aware of and comply with the compliance requirements pertaining to the sale of therapeutic oils in India.

Therapeutic oils come under the purview of cosmetic in India and the Drugs & Cosmetics Act, 1940.. The Section 3(aaa) of the Act defines a cosmetic as “any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of a cosmetic.”

The Drugs and Cosmetic Rules, 1945 (the “Rules”) lays down the procedure that ought to be followed for the manufacturing of cosmetics. In order to carry out the manufacturing of a cosmetic, a licence for the same has to be obtained from a licensing authority who is appointed by the concerned State Government.

Chapter IV A of the Act contains provisions related to ayurvedic products. In order to manufacture ayurvedic/ therapeutic oils in India, a manufacture license has to be obtained under clause (c) of section 333EEC of the Act.
It prohibits the misbranding of products (Section 33E). In order for this ensure that liability under this section is not incurred, the entrepreneur should ensure that the product is not coloured, coated, powdered in such a way to conceal damage or make the product seem like it is of a higher therapeutic value than it really is, and that it does not contain any information on it that is false or misleading. Care should be also taken to ensure that the product manufactured is not adulterated or spurious so as to avoid penalties under Sections 33EE and 33EEA of the Act

The Supreme Court held in the case of Sharma Chemical ((154) ELT 328 (SC)) that the product in question should be manufactured in accordance with the various ingredients specified in the authoritative ayurvedic books and under a licence from the Drug Control authority.

Penalties under the Act
The manufacture of products without a license/ product which are deemed to be adulterated under the Act will attract a penalty of imprisonment for a period which may extend to a period of one year and a fine which is above two thousand rupees.
If the product is spurious, the manufacture will incur a penalty of imprisonment for a term will shall not be less than one year and may extend to three years and a fine which shall not be less than five thousand rupees.

In the case of Chimanlal Jagjivandas Sheth v. State of Maharashtra (1963 AIR 665, 1963 SCR Supl. (1) 344), The Supreme Court convicted and sentenced the appellant to undergo rigorous imprisonment for a period of three months and imposed a fine of Rs. 100 for the manufacture of ayurvedic products that were of sub – standard quality.

Regulations on Import for Sale in India
There exists a prohibition on the import of cosmetics that are spurious, misbranded, unsafe or prohibited by any law in force by virtue of section 10 of the Act. A spurious cosmetic is defined in section 9D as a cosmetic that is imported under a name which belongs to another cosmetic, imitates another cosmetic or if it bears the name of a fictitious company as the manufacturer.

If a spurious cosmetic is imported, the importer will be liable to imprisonment for a period which may extend to 3 years and fine which may extend to five thousand rupees. In addition to this, there will be additional liability that is incurred for the breach of the provision of any law pertaining to sea customs. Therefore, it is essential that the importer ensures that the product is not spurious before importing for sale in India.

Registration Process
It is mandatory for all cosmetic products that are imported into India for sale to be registered with the licensing authority as provided for under Rule 21 of the Act. The application for registration has to be made in Form – 42 to the Drugs Controller General. In order to obtain a registration certificate, the following documents need to be provided –
• A cover letter from the applicant;
• Form 42;
• Treasury Challan;
• Power of Attorney;
• Schedule D III;
• Original or a copy of the Label;
• Free Sale Certificate (FSC) or a Marketing Authorisation Letter and the Manufacturing License if any;
• Product specification and testing protocol;
• A list of all the countries where Market Authorisation/ import permission/ registration was granted;
• Samples; and
• Information pertaining to the brand, manufacturer and product.
The Customs, Excise and Gold Tribunal – Delhi, in the case of Richardson Hindustan Limited v. Collector of Central Excise (1988 (16) ECC 145), held that the used of the equivalent Hindi name of raw materials used for manufacture like paraffin, camphor, turpentine oil, menthol etc. does not make the products an ayurvedic product.

Advertising Compliances
The Advertising Standards Council of India (ASCI) is a non – statutory tribunal, established to promote ethical advertising practices. The ASCI came out with a code that mandates that
• Truthful and honest representations are made in advertising;
• No offensive material is broadcast;
• Harmful products to individuals, minors and/or society are not promoted; and
• Fair competition and consumer interests are given paramount importance.

The Government of India made it mandatory that the ASCI code be followed in August 2006. If an entrepreneur who wishes to sell cosmetics in India is aware of and follows the abovementioned compliance requirements, they can be rest assured that business will run smoothly and that they will not run into any sort of roadblocks with the regulatory authorities
Authored By: Adv. Anant Sharma & Vismay G.R.N.