Chennai Customs Commissioner To Release MSME Importer’s Sanitary Napkins, Panty Liners Subject To Deposit Of Rs. 15 Lakhs: Madras HC

The Madras High Court has directed the Commissioner of Customs, Chennai-II (Import), to release consignments of sanitary napkins and panty liners imported by an MSME importer, subject to a monetary deposit of Rs. 15 lakhs, to enable sale before the statutory deadline of December 31, 2025. The bench of Justice V. Lakshminarayanan passed the order while allowing a writ petition filed by an importer of feminine hygiene products, which had been held up by Customs on the ground of non-compliance with Bureau of Indian Standards (BIS) requirements under the Quality Control Order (QCO) issued by the Ministry of Textiles. The petitioner, an importer of sanitary napkins and panty liners sourced from China and marketed under a proprietary brand, had imported two consignments in March 2025. The goods were detained by Customs following an alert notice issued in February 2025, based on a clarification from the Department for Promotion of Industry and Internal Trade (DPIIT) stating that relaxations under the QCO did not apply to imports. Subsequently, Customs initiated adjudication proceedings and, by an order dated August 22, 2025, ordered confiscation of the goods under Section 111(d) of the Customs Act, read with the Foreign Trade (Development and Regulation) Act and the BIS Act, 2016. The importer was given the option to re-export the goods on payment of a fine of ₹10 lakh and was also subjected to a penalty of ₹5 lakh. The importer initially approached the High Court, but the writ petition was dismissed on the ground of availability of an alternate remedy. Thereafter, the importer moved the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, which stayed the operation of the confiscation order on December 22, 2025, and fixed the appeal for final hearing in January 2026. Despite the CESTAT stay, Customs did not release the goods, prompting the importer to again approach the High Court, citing the imminent statutory deadline of December 31, 2025, after which sale of non-BIS-marked stock would be prohibited. The core issue before the Court was whether an importer registered as a micro or small enterprise was entitled to the benefit of the extended timeline introduced by the second amendment to the Medical Textiles (Quality Control) Order dated July 30, 2025, which permitted manufacturers and importers to sell declared non-BIS-marked stock up to December 31, 2025. The Court undertook a detailed examination of the original QCO and its subsequent amendments. It noted that while the initial amendment issued on January 1, 2025, extended benefits only to manufacturers, the second amendment explicitly included “importers” within its scope. Rejecting the Customs department’s contention that traders registered as MSMEs were excluded from the benefit, the Court held that an Office Memorandum relied upon by the department could not override a statutory notification issued by the Ministry of Textiles. The Court observed that the amended QCO did not restrict its applicability only to manufacturing MSMEs and that the petitioner, being a registered small enterprise, was entitled to the benefit of the extended timeline. The Court also disagreed with the argument that CESTAT had not ordered provisional release, pointing out that the Tribunal had stayed the operation of the confiscation order, which necessarily required Customs to give effect to that stay. The Court emphasized that judicial and quasi-judicial orders are entitled to “full faith and credit” under Article 261 of the Constitution, and Customs authorities were bound to comply with the CESTAT’s interim directions. While declining to order unconditional release, the Court balanced regulatory concerns with commercial realities. It directed Customs to release the goods covered under the two Bills of Entry, subject to the importer depositing Rs. 15 lakh with the department within 24 hours. The deposit was made without prejudice to the rights of either party and subject to the outcome of the pending appeal before CESTAT. The Court clarified that its observations were confined to the issue of release of goods and would not influence the Tribunal while deciding the appeal on merits. Case Details Case Title: Urban Essentials India Pvt. Ltd. Versus The Commissioner of Customs, Chennai – II (Import) Case No.: W.P.No.50475 of 2025 Date: 26/12/2025 Counsel For Petitioner: Raghavan Ramabadran Counsel For Respondent: K.Guruprasad Click Here To Read Order Read More: E-Filing Mandatory for Companies; Madras High Court Allows Dept’s Appeal on Section 80-IC Deduction

Chennai Customs Commissioner To Release MSME Importer’s Sanitary Napkins, Panty Liners Subject To Deposit Of Rs. 15 Lakhs: Madras HC

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