By TIOL News Service

NEW DELHI, MAY 14, 2016: A common question that arises for consideration in both the writ petitions is about the liability of an importer to pay demurrage/godown rent and container charges under circumstances in which the importer is ultimately able to show that the import of the goods detained was validly made.

The matter involved in the first petition is that by an order dated 23rd July 2001, the Tribunal allowed the appeal filed by the Petitioner holding that there was nothing on record to suggest that the Petitioner had not entered into contract with German firm for supplying the scrap and further that M/s YKK Japan had also confirmed that the goods were sold as scrap. Accordingly the CEGAT set aside the adjudication order dated 2/4th June 2001 and directed that the goods be mutilated in the presence of the customs officers.

Pursuant thereto, the goods were mutilated & a letter was written by the Additional Commissioner of Customs to the Central Warehousing Corporation/APL communicating the recommendations of the Commissioner of Customs (ICD) for consideration of the request of the Petitioner for waiving of the godown rent charges in respect of the period of investigation and adjudication i.e. from 15th February to 22nd August 2001.

Since no reply was received,the present petition was filed for a direction to the customs authorities to pay/remit godown charges and the demurrage that had become payable by the Petitioner for the period from 9th February 2001 till the date of release. The second prayer was for a direction to refund the penalty of Rs. 25,000 with interest in view of the order of the CEGAT. The Petitioner also prayed for compensation and costs.

In the counter affidavit filed, the Customs department submitted that no appeal was filed against the order of CEGAT as the duty involved was not high and that the penalty of Rs.25,000 had been refunded on 11th October 2001. As regards the prayer for payment of the demurrage charges, the Customs Department referred to Section 155 of the Act, which states that no suit or other legal proceedings would be maintainable in respect of anything done in good faith in pursuance of the Act or the rules and regulations.

It was also submitted that as a prudent businessman the Petitioner could have sought release of the goods at any stage while still filing the petition and claiming the demurrage charges. In fact, on 19th September 2001, the Customs gave an option to the Petitioner to have the goods released after mutilation of the zip sliders but this option was not availed by the Petitioner.

CWC informed that they had already communicated that the request for waiving of godown rent charges could not be acceded to. APL stated that there was no provision in the Act or any other law to compel them to waive the container/retention charges.

The High Court summarized the legal position by adverting to the decisions in International Airport Authority of India v. Grand Slam International - 2002-TIOL-534-SC-CUS-LB as well as Shipping Corporation of India Limited v. C.L. Jain Woollen Mills - 2002-TIOL-536-SC-CUS-LB thus -

i. There is no provision in the Act that enables the customs authorities to direct a carrier of goods to waive demurrage charges or container charges even in terms of Section 45(2)(b) of the Act. That would be governed entirely by the contract between the importer and the carrier and the terms and conditions of the bill of lading, if any.

ii. Where the carrier is a corporation incorporated by a statute like for instance, the CWC, or the CCI or SCI then it would be bound by the provisions of the Act as far as its right to recover demurrage or container charges is concerned.

iii. Section 45(2)(b) of the Act, which enables the customs authorities to issue a detention certificate, cannot extend to directing the carrier or the owner of the container to waive the charges even where an order of confiscation or levy of penalty is ultimately held to be illegal by the courts.

iv. The only option is for the Central Government to make a request to the owner of the container or the space where the goods were stored to waive demurrage charges and if it is so conceded then to that extent the importer would be able to get some relief.

The High Court also culled the later case laws on the subject matter which followed the decision in Grand Slam International and observed that the orders passed in Om Petro Chemicals v. Union of India, Yang Ming Marine Transport Corporation v. Commissioner of Customs Inland Container Depot, Tughlakabad and even the interim order in Modern Oversea s cannot be said to be good law.

The petitioner, thereafter, pointed out to the Court the unfair conduct of the Customs authorities in continuing to retain the goods despite knowing that such detention was unjustified. It was further alleged that the proper investigation was never made into the complaints given by the Petitioner;that the offer of the Petitioner to furnish a bond for release of the goods in its favour was also unfairly not entertained.

To this submission, the High Court observed -

++ In the present writ petitions under Article 226 of the Constitution of India, given the inadequacy of the pleadings and the scope of the jurisdiction, it is not possible to examine the mala fides of the individual Customs officers in delaying the release of the goods in favour of the Petitioner.

++ In the absence of any clear determination of such allegations it would not be possible to even direct the waiver of the demurrage charges.

++ In a given case, however, where it is able to be established that the officers acted malafide and entirely without the authority of law, directions could be issued to the central government to direct the warehousing and/or shipping companies to waive the demurrage/detention and container charges as the case may be.

Concluding that the Court is unable to issue any direction to the customs authorities to direct the CWC or M/s APL (India) Pvt. Ltd. to waive the demurrage charges, detention and/or container charges, the Writ Petitions were dismissed.

(See 2016-TIOL-935-HC-DEL-CUS)