Compounding of Offences under the Drugs and Cosmetics Act, 1940

Compounding of Offences under the Drugs and Cosmetics Act, 1940

CDSCO Rules, Procedure, Immunity & FAQs (2025)

The Drugs and Cosmetics Act, 1940 is the backbone of pharmaceutical, cosmetic, and medical device regulation in India. Traditionally, any non-compliance under the Act could result in prosecution, even for minor or technical contraventions. To address this challenge and promote a compliance-focused regulatory approach, the Government of India notified the Drugs and Cosmetics (Compounding of Offences) Rules, 2025.

These rules introduce a structured legal framework that allows eligible offences to be compounded without prolonged prosecution, subject to conditions and approval by the designated Compounding Authority.

What is Compounding of Offences under the Drugs and Cosmetics Act?

Compounding of offences refers to the settlement of certain offences by payment of a prescribed amount, enabling the offender to avoid prosecution, provided the offence is eligible and the authority is satisfied.

This mechanism is introduced under Section 32B of the Drugs and Cosmetics Act, 1940 and aims to:

• Resolve minor and technical regulatory violations
• Reduce unnecessary litigation
• Encourage voluntary compliance
• Improve ease of doing business in the pharmaceutical sector

It reflects a shift from punitive enforcement to regulatory self-correction.

Legal Framework: Drugs and Cosmetics (Compounding of Offences) Rules, 2025

The Ministry of Health and Family Welfare (MoHFW) notified these rules on 24 April 2025, following amendments introduced under the Jan Vishwas (Amendment of Provisions) Act, 2023.

The Rules clearly define:

• Eligible offences for compounding
• Authorities involved
• Application process and timelines
• They provide uniformity, transparency, and procedural clarity across CDSCO offices.
• Grant and withdrawal of immunity from prosecution

Applicability of the Compounding of Offences Rules

The Rules are applicable to:

• CDSCO Head Office
• Zonal, Sub-Zonal, and Port Offices

They apply to companies and individuals involved in:

• Manufacturing
• Import
• Sale and distribution
• Any activity regulated under the Drugs and Cosmetics Act

CDSCO Compounding Authority and Reporting Authority

Compounding Authority

The Additional Director General of Health Services (DGHS) has been appointed as the Central Compounding Authority. The authority is empowered to:

• Examine compounding applications
• Call reports from the reporting authority
• Decide the compounding amount
• Grant or reject immunity from prosecution

Reporting Authority

The Reporting Authority is the relevant licensing authority having jurisdiction over the place where the offence occurred. It submits a factual report to assist the Compounding Authority in decision-making.

Who Can Apply for Compounding of Offences?

The following entities may apply:

• Pharmaceutical manufacturers
• Importers and distributors
• Marketers
• Any person or company regulated under the Act

It is important to note that compounding of offences is not a legal right. Approval is entirely at the discretion of the Compounding Authority.

Form and Manner of Application

An application for compounding:

• May be submitted before or after prosecution
• Must be filed in the prescribed form under Rule 4
• Should be supported by relevant documents and factual details

Typical application details include:

• Applicant and licence information
• Product details
• Nature of offence and sample data
• Test reports and seizure details
• History of previous offences, if any

Procedure for Compounding of Offences in India

The procedure for compounding of offences under the Drugs and Cosmetics Act involves the following steps:

1. Submission of application in the prescribed form
2. Generation of e-file by the Compounding AuthorityCalling of report from the Reporting Authority
3. Verification through zonal or sub-zonal offices
4. Evaluation of facts and compliance history
5. Approval or rejection of the application
6. Determination of the compounding amount
7. Payment within 30 days of approval

The compounding amount, once paid, is generally non-refundable.

Immunity from Prosecution under the Drugs and Cosmetics Act

The Compounding Authority may grant immunity from prosecution if it is satisfied that the applicant has:

• Cooperated fully during proceedings
• Made a complete and truthful disclosure of facts

Immunity is case-specific and may be granted subject to conditions deemed appropriate by the authority.

Withdrawal of Immunity: Key Conditions

Immunity granted under the Rules can be withdrawn if:

• The compounding amount is not paid within the prescribed time
• Conditions attached to immunity are violated
• Material facts are concealed
• False evidence is submitted

Upon withdrawal, the person may be prosecuted as if no immunity had ever been granted.

Importance of Compounding of Offences for the Pharma Industry

The compounding mechanism plays a crucial role in:

• Minimising regulatory risk
• Reducing compliance-related litigation
• Enabling faster resolution of minor violations
• Strengthening trust between regulators and industry

It aligns Indian pharmaceutical regulation with global best practices.

Frequently Asked Questions (FAQs)

Conclusion

The Drugs and Cosmetics (Compounding of Offences) Rules, 2025 mark a significant regulatory reform by introducing a structured, transparent, and compliance-driven mechanism for resolving minor offences. For pharmaceutical companies and regulatory professionals, understanding and correctly applying these rules is essential to avoid unnecessary prosecution and ensure long-term regulatory compliance.

Click here to Access the official guidance document

Note:
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