Delhi HC to CBIC: Consider preferential treatment for start-ups, MSMEs in customs delays

The Delhi High Court has asked the Central Board of Indirect Taxes and Customs (CBIC) and the Commissioner of Customs to consider if some preferential treatment should be given to start-ups and micro, small and medium enterprises ( MSMEs) in terms of timelines, warehousing and provisional release of confiscated goods, especially in the case of low-value consignments.

A division bench comprising Justices Pratibha M Singh and sShail Jain stated that a perusal of Section 110 of the Customs Act, 1962 would show that the timelines prescribed in the said provision are six months plus an additional six months.

“The said timeline would be too long in cases involving small businesses, especially, when there are no prohibited goods which are involved,” Justice Sigh said, adding that “CBIC as also Commissioner of Customs shall take a look at this matter and consider whether some preferential treatment ought to be given to Start-ups and MSMEs in terms of timelines, warehousing and provisional release in such cases, especially in case of low value consignments.

The CBIC and the Commissioner of Customs should file affidavits in this regard by October 28, the next date of hearing, it said.

The order stated that it is a matter of public knowledge that in the case of start-ups and MSMEs in various areas of executive administration, they are given some preferential treatment so that their businesses are encouraged.

Considering the prevailing policy in India to encourage start-ups and MSMEs, the customs department also needs to be sensitised to ensure that such parties are given some consideration, especially when the goods are not prohibited, the court said.

International Cooperation Scheme provides opportunities to MSMEs to continuously update themselves to meet the challengesemerging out of changes in technology, changes in demand, emergence of new markets, etc, according to the court.

The issue arose on a petition by Mitraj Business, a recognised start-up under the MSMEs sector which is in the business of baby care products under the name 'Fabie Baby'.

The company had imported certain packaging materials for baby care products, which were loaded in Dubai, arrived at Mundra Port in Gujarat and were further delivered to ICD Tughlakabad in Delhi. Thereafter, an alert was issued against the goods and the same were inspected by the customs officials. A 'panchnama' was also prepared, according to which, there were two extra cartons which were not declared.

The company said that it had agreed to amend the bill of entry immediately, but despite repeated visits to the customs department its goods were not been. This prompted the firm to move the court seeking release of containers along with a refund of the demurrage and warehousing charges.