Govt Is Promoting Start-Up Culture, Customs Should Be Sensitive In Proceedings Against Them: Delhi High Court

The Delhi High Court has asked the Central Board of Indirect Taxes and Customs to consider whether some “preferential treatment” ought to be given to Start-ups and MSMEs in terms of timelines, warehousing and provisional release in cases of misdeclaration of goods, especially in case of low value consignments.A division bench of Justices Prathiba M. Singh and Shail Jain observed that considering the prevailing policy in India to encourage start-ups and MSMEs, the Customs Department also needs to be sensitized to ensure that such parties are given some consideration, especially, when the goods are not prohibited goods.“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,” the Court said.However, it added, “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.”The Court was dealing with a petition moved by a MSME, engaged in the business of baby care products.Petitioner had imported certain packaging materials (bottle caps) for baby care products, which were inspected by the Customs officials and two extra cartons, which were not declared by the Petitioner, were found.As per Customs, 20,860 excess pieces were found and as such, it proceeded against violation of Section 46(4) of the Customs Act— directing the Petitioner to pay ₹24,249/- differential duty, redemption fine of ₹10,000/- as also penalty of ₹5,000/.Petitioner submitted that for goods worth approximately Rs. 4,00,000/-, it was made to incur demurrage charges of Rs.3,88,000/-. This, as though Customs Department had on 24th July, 2025 itself decided to impose basic customs duty at 20%, despite this, the Order-in-Original was not passed till 26th August, 2025.During this time, the containers were in the warehouse and the Petitioner continued to incur warehousing and container handling charges.The High Court at the outset observed that the difficulty expressed by the Petitioner seems genuine. “While there can be no doubt that there has to be truthful declaration in the bills of entry, however, all misdeclarations cannot be treated similarly. The nature of the goods and the extent of the under declaration or misdeclaration cannot be lost sight of. The goods in this case were caps for cosmetic products as also the bottles for filling cosmetics. These are not goods which are damaging or prohibited in any manner. The Order-in-Original itself recognises the fact that the Petitioner had agreed for the classification which was given by the Customs Department on 30th July, 2025. Despite that, after being aware of the amount of demurrage that is paid by small importers, there was no reason for the Customs Department to delay in passing of the Order-in-Original by almost a month…The delay is completely inexplicable,” it observed.Under these circumstances, the Court directed that the goods of the Petitioner be released upon payment of differential duty but it waived redemption fine as also the penalty.Appearance: Ms. Riya Soni and Mr. Sunil Kumar Tripathi, Advs for Petitioner; Ms. Anushree Narain, SSC with Mr. Naman Choula, Adv. for RespondentCase title: Mitraj Business Private Limited Through Its Director Mr Manoj Kankane v. Union Of India Represented By The Secretary Ministry Of Finance & Ors.Citation: 2025 LiveLaw (Del) 1058Case no.: W.P.(C) 12907/2025 Click here to read order

Govt Is Promoting Start-Up Culture, Customs Should Be Sensitive In Proceedings Against Them: Delhi High Court

Kapil Dhyani

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