2025 (11) TMI 23 - HC - Customs

Petition dismissed: sanitary napkin imports not eligible for Medical Textiles exemption; appeal allowed under Section 129A(1)

M/s. Urban Essentials India Private Limited, rep. by its Director Shri Ketan Munoth Versus The Commissioner of Customs (Imports), The Additional Commissioner of Customs, Import Commissionerate, Chennai

Petition dismissed by HC: goods cleared as sanitary napkins could not benefit from the Medical Textiles (Quality Control) Order (01.1.2025) exemption ... Direction to the respondents to release the goods declared as sanitary napkins on assessment - Medical Textiles (Quality Control) Order, 2024, which was amended with effect from 01.1.2025 and which extended the time line for compliance of the BIS certification upto 01.4.2025 for the micro and small enterprises, will enure to the benefit of the petitioner, which was not, admittedly, a manufacturer, but was an importer of the goods in question - HELD THAT:- A careful reading of the amended Medical Textiles (Quality Control) Order dated 01.1.2025 would show that it applies only to a manufacturer certified by the Bureau or any manufacturer, which has applied for certification to the Bureau for the subject goods and if such manufacturer is also a small and micro enterprise, exemption was granted upto 01.4.2025 - The subsequent clarification dated 19.3.2025 issued by the DPIIT only confirmed the plain language used in the amended Medical Textiles (Quality Control) Order dated 01.1.2025 and reiterated that this exemption will only apply to domestic manufacturer and not for an importer. The above clarification does not, in any way, contradict the amended Medical Textiles (Quality Control) Order dated 01.1.2025 and it is merely a reiteration of the original amended Notification. Admittedly, in the case in hand, the petitioner is not a manufacturer, but only an importer. The exemption that was granted for the small and micro enterprises was not based on the goods, but was only based on the important factor that the concerned enterprise must be a manufacturer. If the enterprise, which is seeking for exemption, is not a manufacturer, but only an importer, such an enterprise cannot seek for exemption. There is absolutely no doubt in the mind of this Court that the exemption applied only to the manufacturer and not to the importer. In fact, even the petitioner had properly understood the scope of the Notification and sought for a no objection certificate vide their representation dated 17.3.2025. The said order dated 25.9.2025 passed by me has not gone into this crucial issue and therefore, it will not apply to the facts of the present case - The amended Medical Textiles (Quality Control) Order dated 01.1.2025 was not goods centric and it was only manufacturer centric and therefore, the exemption granted can be availed only by a manufacturer, which is a small and medium enterprise. The order passed by the first respondent can be challenged by way of filing an appeal before the CESTAT under Section 129A(1) of the Customs Act, 1962. When such an alternative remedy is available, this Court generally will not exercise its discretion under Article 226 of The Constitution of India unless the Authority, who passed the order, lacks jurisdiction or the order has been passed in violation of the principles of natural justice or the order suffers from an error apparent on the face of it. None of the above ingredients is satisfied in the present case - the impugned order was passed by the first respondent only after affording an opportunity to the petitioner. This is yet another reason as to why this Court is not inclined to exercise its discretion under Article 226. It is left open to the petitioner to avail the alternative remedy of appeal before the CESTAT. If any such appeal is filed before the CESTAT, the time taken by the petitioner in prosecuting the present writ petition shall be given due credit and the appeal shall be dealt with on its own merits and in accordance with law - Petition dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the extended timeline for BIS certification in the amended Medical Textiles (Quality Control) Order (extended to 1.4.2025 for small and micro enterprises) applies to an importer or is confined to manufacturers. 2. Whether a subsequent communication/clarification from the Department for Promotion of Industry and Internal Trade (DPIIT) (dated 19.3.2025) restricting the extended timeline to domestic manufacturers is inconsistent with, or contrary to, the statutory scheme under the Bureau of Indian Standards Act, 2016. 3. Whether the earlier order of this Court relied upon by the petitioner (granting relief to an importer in a different goods-context) governs the present facts, or is distinguishable. 4. Whether the impugned adjudication order (confiscation/re-export/penalty/redemption fine) suffers from jurisdictional error, breach of natural justice, or an error apparent on the face of the record so as to warrant exercise of extraordinary writ jurisdiction despite the availability of an alternative statutory appeal (under Section 129A(1) of the Customs Act, 1962). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Application of the extended timeline for BIS certification to importers Legal framework: The Bureau of Indian Standards Act, 2016 prescribes mandatory use of standard marks and regulates certification; Sections 16 and 17 (and definition of 'person') extend statutory obligations to manufacturers, importers and other categories. The Medical Textiles (Quality Control) Amendment Order (01.1.2025) expressly modifies timelines in Schedule A, providing different implementation dates for Large/Medium (1.1.2025) and Small/Micro (1.4.2025) enterprises and inserts a proviso permitting certain declared old stock to be sold until 30.6.2025 for certified/applicant manufacturers. Precedent treatment: The Court considered an earlier order in which, in a different goods-context, relief was granted to an importer; that order had reasoned that a circular from Government (19.3.2025) was ultravires and that enactment did not distinguish importers from manufacturers. In the present matter the Court re-examined the scope of the Amendment Order itself. Interpretation and reasoning: The Amendment Order is manufacturer-centric by its express terms (applies to 'manufacturer certified by the Bureau or any manufacturer who has applied for certification'); the extension to 1.4.2025 is linked to the status of the enterprise as a manufacturer (and declared old stock) rather than to the goods irrespective of the actor. The statutory scheme (BIS Act) does impose obligations on importers, but the specific express language of the Amendment confines the particular relaxation to manufacturers. The importer in the present case admitted the foreign supplier's FMCS application was pending and the imported goods did not bear the BIS mark or conform to IS 5405:2019. Ratio vs. Obiter: Ratio - where a quality control amendment expressly ties a postponement/exemption to manufacturer status (including declared old stock), importers cannot claim that manufacturer-specific relief merely by virtue of MSME registration; importers importing non-BIS-marked goods after the effective dates must comply. Obiter - general observations about the statutory reach of the BIS Act to include importers as 'persons' are explanatory. Conclusions: The extended timeline in the Amendment Order (01.1.2025) is available only to manufacturers (including those who declared pre-commencement old stock), and does not extend to importers. The impugned importation without BIS conformity therefore did not qualify for the micro/small enterprise relaxation. Issue 2 - Validity and effect of the DPIIT clarification dated 19.3.2025 Legal framework: Executive communications and clarificatory circulars are subordinate to, and must conform with, statutory provisions and the textual scope of delegated instruments. Precedent treatment: The Court noted an earlier order had treated a similar circular as violative when it attempted to introduce a distinction not present in the statute; in the present case the Court analysed whether the DPIIT clarification conflicted with the Amendment Order's plain terms. Interpretation and reasoning: The Amendment Order's plain language confines the benefit to manufacturers. The DPIIT clarification reiterated that the additional time for MSMEs does not apply to imports and confirmed that the date of implementation in the QCO must be considered for imports. The clarification thus aligns with, and confirms, the Amendment Order's manufacturer-focused relief rather than introducing an impermissible distinction beyond the statute. Where a circular only reiterates the clear tenor of the statutory or sub-statutory instrument, it is not ultra vires. Ratio vs. Obiter: Ratio - a clarificatory communication that merely reiterates the plain scope of an amendment does not contravene the statutory scheme; it may be relied upon to interpret the operative instrument. Obiter - comments on the general limits of executive circulars when they purport to trespass statutory bounds. Conclusions: The DPIIT clarification is consistent with the Amendment Order and does not invalidate petitioner's non-compliance claim; it confirms that importers cannot invoke the MSME timeline extension available to manufacturers. Issue 3 - Applicability of the Court's earlier order relied upon by the petitioner Legal framework: Binding effect and precedential value of earlier orders of the same Court; requirement to distinguish prior decisions on their facts and reasoning. Precedent treatment: The Court reviewed its prior decision where relief was granted to an importer in a plywood/wooden flush door context. In that earlier order the Court had found the DPIIT communication to be violative and allowed clearance without BIS registration certificate. In the present matter, the Court re-examined factual and textual differences. Interpretation and reasoning: The earlier order did not address whether the Amendment Order was manufacturer-centric in the manner this case requires; here the Amendment expressly ties relief to manufacturers (and declared stock). The Court concluded the earlier order did not explore that crucial issue and therefore cannot be applied as governing precedent for the present facts. Distinguishing is warranted because the legal and instrument-specific context differs. Ratio vs. Obiter: Ratio - a prior judgment may be distinguished where it did not consider or decide a determinative textual point which is central to the present dispute. Obiter - prior observations about circulars and statutory scope insofar as they were not central to the present decision. Conclusions: The earlier order relied upon by the petitioner is distinguishable and does not entitle the importer to relief in the present case. Issue 4 - Availability of alternative remedy and suitability of writ jurisdiction Legal framework: Principles governing exercise of judicial review under Article 226 when an alternative statutory remedy (here, appeal under Section 129A(1) of the Customs Act) is available; grounds for exceptional exercise include lack of jurisdiction, breach of natural justice, or error apparent on the face of the record. Precedent treatment: The Court applied settled principles that where adequate alternative remedies exist and the impugned order is not vitiated by jurisdictional infirmity, breach of natural justice or prima facie error apparent on face of record, writ relief will normally be withheld. Interpretation and reasoning: The impugned adjudication was preceded by an opportunity of hearing; no jurisdictional excess or breach of natural justice, nor any error apparent on face of record, was shown. Consequently, the Court declined to exercise extraordinary writ jurisdiction and dismissed the petition while leaving open the statutory appeal. The Court directed that time taken in prosecuting the writ be given due credit and permitted one week to file the appeal before CESTAT. Ratio vs. Obiter: Ratio - where an alternative efficacious remedy exists and the challenged order does not exhibit jurisdictional defect, breach of natural justice, or an apparent error on face, courts will ordinarily refuse to exercise writ jurisdiction. Obiter - procedural note on time-credit and directions to appellate forum. Conclusions: Writ relief is declined; petitioner must pursue the statutory appeal to CESTAT within the prescribed period (subject to the Court's limited time-credit direction), failing which the adjudication becomes final.