Safiya Malik

The High Court of Kerala Single Bench of Justice Ziyad Rahman A.A. declined the plea of an importing entity that sought exemption from compliance with a Quality Control Order (QCO) on the basis of its classification as a Micro Enterprise. The court concluded that the benefit of the QCO's extended compliance date could not be availed by wholesale or retail traders who were granted MSME recognition solely for the purpose of priority sector lending. Consequently, the writ petition filed seeking clearance of plywood consignments without BIS certification was dismissed.

Also Read: Unregistered Sale Deeds Based On Revoked Power Of Attorney Cannot Confer Title | Supreme Court Restores Suit Over Disputed Land Transfer

The court held that while retail and wholesale traders may have been re-included under the MSME framework, such inclusion is limited in scope. Relying on clarificatory government memorandums, the judgment asserted that these categories cannot claim broader exemptions under the MSME Development Act, 2006. As such, the plea for relief by the petitioner, who had imported plywood post the general enforcement date of the QCO, was found to be untenable.

The court refused to interfere with the customs authority's decision to deny clearance of goods lacking BIS certification and dismissed the writ petition while leaving open other remedies that may be available to the petitioner.

The petitioner, an importer engaged in the trade of plywood, approached the High Court seeking relief against the enforcement of the Plywood and Wooden Flush Door Shutters (Quality Control) Order, 2024 (QCO). The petitioner held a Udyam registration issued by the Ministry of Micro, Small and Medium Enterprises, which categorized the establishment as a Micro Enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act).

As per the QCO dated 15.03.2024 issued by the Ministry of Commerce and Industry, compliance with the prescribed standards was mandated from 28.02.2025. However, under the second proviso to Order 1(2) of the QCO, micro enterprises were allowed an extended compliance deadline of 28.08.2025.

The petitioner imported "Indonesian Keruing Matt Plywood" from Indonesia through Invoice No. 017/URS-LPD/EXP/III/2025 dated 14.03.2025. A corresponding Bill of Entry No. 9388479 was filed on 09.04.2025. The customs authority, however, objected to the clearance of the consignment, citing the absence of Bureau of Indian Standards (BIS) certification required under the QCO. Additional Bills of Entry and Invoices were also submitted, including Entry Nos. 9613944, 9243341, and 9885175.

The petitioner filed the writ petition seeking a declaration that the QCO would apply to Micro Enterprises only from 28.08.2025, and hence, their importations made prior to that date should not be subjected to BIS requirements. The reliefs sought included directives to the customs authorities to clear the consignments for home consumption and instruct the Container Freight Station (CFS) not to levy demurrage charges.

In opposition, the respondents (Customs Authorities) filed a counter affidavit asserting that the petitioner's claim to MSME benefits was unsustainable. They argued that despite holding Udyam registration, the petitioner, being engaged in wholesale and retail trade, was excluded from the substantive benefits of the MSMED Act. Reference was made to various official memorandums:

• Ext.R1(b) excluded retail traders from the ambit of the MSMED Act.

• Ext.R1(c), dated 02.07.2021, conditionally re-included retail and wholesale traders for the limited purpose of availing priority sector lending.

• Ext.R1(d), dated 01.09.2021, clarified that such traders were not entitled to benefits under provisions such as delayed payment.

The petitioner, in reply, submitted Ext.P10 – a 2009 Policy Circular which recognized retail trade under the MSMED Act. However, the respondents maintained that the later notifications (Ext.R1 series) restricted this recognition for limited financial benefits only.

Justice Ziyad Rahman A.A. noted the specific contention of the petitioner, which relied on the second proviso to Order 1(2) of the QCO. The petitioner argued that being classified as a Micro Enterprise entitled them to the extended implementation deadline of 28.08.2025.

The court recorded: "Admittedly, the petitioner is an entity engaged in wholesale and retail trade and therefore, by virtue of Ext.R1(b), the category to which the petitioner belongs, was excluded from the benefits of MSMED Act, 2006."

While acknowledging that Ext.R1(c) brought retail and wholesale traders back under the MSMED Act, the court observed: "Such inclusion was for a limited purpose of availing priority sector lending only."

The court rejected the petitioner's reliance on Ext.P10, noting that more recent memorandums clarified the limited scope of inclusion. It stated: "The crucial aspect to be noted... is that earlier, as per Ext.R2(b), the entire category of wholesale and retail trades were excluded completely from the purview of MSMED Act and later, they were re-included... for a limited purpose."

On the argument that exemption under the QCO did not constitute a "benefit" within the scope of MSMED benefits, the court observed: "Since the aforesaid provisos are meant for exemptions, the same have to be strictly construed and in the light of Exts.R2(b) and (c), the status of the petitioner as a micro enterprise... is only for the purpose of availing priority sector lending alone and nothing beyond that."

Also Read: Kerala HC Orders Arrest Of MSC AKITETA II | Rs 9531 Crore Claim For Oil Spill And Pollution Damage | Court Finds Prima Facie Maritime Claim Against Sister Vessel Of MSC ELSA III

The court concluded: "Therefore, I am of the view that, the contentions raised by the learned counsel for the petitioner in this regard, claiming benefits of exemption, as far as Micro enterprises are concerned, cannot be extended to them."

Justice Ziyad Rahman A.A. issued the following directions:

"In such circumstances, I find that, there are no justifiable grounds to grant the reliefs sought in this writ petition. Accordingly, this writ petition is dismissed without prejudice to the other rights of the petitioner, if any, to approach the appropriate forum to get their grievances redressed."

The court thus declined all reliefs prayed for in the writ petition, including:

• Declaration of exemption from the QCO until 28.08.2025.

• Directions to the customs authorities to process and clear the goods.

• Directives to the CFS to refrain from levying demurrage/storage charges.

The judgment upheld the regulatory authority of customs officers to enforce QCO standards uniformly, without carving out exceptions for traders classified under MSME solely for lending benefits.

Advocates Representing the Parties:

For the Petitioners: Sri. M. Balagopal, Smt. R. Devika, Smt. Anjali Menon, Shri. Arjun Varghese Kuriappan

For the Respondents: Shri. Vivek A.V., Shri. V. Girishkumar, Senior Panel Counsel

Case Title: M/s. Luxe Panel Distributors v. The Additional Commissioner of Customs & Anr.

Neutral Citation: 2025: KER:40799

Case Number: WP(C) No. 18501 of 2025

Bench: Justice Ziyad Rahman A.A.