Dhariwal Industries contended a government notification banning sale of the tobacco product in the state did not restrict its export.
Advocate general Darius Khambata countered the notification not mentioning an export ban did not matter as under Food Safety Regulations, export or import of any product found unfit for consumption could be stopped.
Dhariwal Industries said the food safety commissioner issued a letter to the commissioner of customs in November last year to not allow export or import of gutkha and paan masala.
The letter was issued pursuant to a ban imposed by the state government on sale, manufacture and storage of the tobacco products through a notification of July 19, 2012.
Soon after, a Dhariwal Industries cargo worth Rs 2.5 crore reached Nhava Sheva Port from its manufacturing plant in Vadodara for export and was confiscated by customs authorities. The stock has been lying in a warehouse at the port in Navi Mumbai for the past 45 days.