2015 (10) TMI 2131 - HC - Customs

Customs service provider barred from imposing demurrage charges during detention. Petitioner responsible after clearance.

M/s Continental Carbon India Ltd. Versus Union of India And Others

The court held that the customs cargo service provider was not allowed to impose demurrage charges for the period of detention by customs authorities. The ... Goods not cleared on the basis of being hazardous – Custom cargo Service Provider demanded demurrage charges for releasing goods - Petitioner contends that he is not liable to pay demurrage charges; should be paid by customs authorities - Regulation 6(1) of the Regulations of 2009 bars Respondent no.4 from demanding demurrage charges on goods that were detained by customs authorities - Respondent No. 4 states that demurrage charges are paid on goods within a period of 7 days; further contended that neither delivery order nor endorsed invoices have been placed before Respondent till date; goods as such cannot be delivered to petitioner. Held that:- Provision of Section 45 read with the Regulation 2(b), 5 and 6 of Regulations of 2009 states customs cargo service provider is responsible for providing storage facilities; is entitled to charge demurrage charges but not in case where goods are detained, seized or confiscated by customs department - Consequently, permitting the cargo to remain in the customs area for months on the pretext of seeking a clarification from the MOEF with regard to the nature of the goods being hazardous or not appears to unjustified and arbitrary, especially when the petitioner made a specific application for shifting the goods to a warehouse in terms of Section 49 of the Act. - By not passing any orders on the petitioners application for provisional assessment or by not passing any orders on the application of the petitioner under Section 49 of the Act for storage of the imported goods in a warehouse pending clearance would amount to detention of the goods. – Petitioner granted relief; - allowed to clear goods without payment of demurrage charges upto the period 15th January, 2015; handling or demurrage charges leviable subsequent to 15th January, 2015 till the actual clearance – Decided in favour of Petitioner. Issues Involved:1. Detention and clearance of imported goods.2. Levy of demurrage charges by the customs cargo service provider.3. Authority of customs authorities and custodian under the Customs Act and related regulations.4. Provisional assessment and storage of goods under Section 49 of the Customs Act.5. Responsibility for demurrage charges during the period of detention.Issue-Wise Detailed Analysis:1. Detention and Clearance of Imported Goods:The petitioner company imported Carbon Black Feed Stock (CBFC) and the goods were detained by the Deputy Commissioner of Customs, Noida, pending a test to determine if they were hazardous. Despite requests for provisional clearance, the goods were not released until the Ministry of Environment and Forest (MOEF) clarified that the goods were not hazardous. The customs authorities finally cleared the goods on 15th January 2015.2. Levy of Demurrage Charges by the Customs Cargo Service Provider:The petitioner was charged demurrage by the customs cargo service provider, respondent no.4, despite the goods being detained by customs authorities. The petitioner argued that demurrage charges were not payable as the goods were detained for customs examination. The court found that respondent no.4 was not entitled to charge demurrage for the period during which the goods were detained by customs authorities.3. Authority of Customs Authorities and Custodian Under the Customs Act and Related Regulations:The judgment elaborated on the powers of customs authorities under various sections of the Customs Act, including Sections 2(11), 8, 33, 34, 45, and 49. It was emphasized that the customs authorities have full control over imported goods until they are cleared. Section 45(2) of the Act and Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009, were particularly relevant, as they restrict the custodian from charging demurrage on goods detained by customs.4. Provisional Assessment and Storage of Goods Under Section 49 of the Customs Act:The petitioner's requests for provisional assessment and storage under Section 49 were not acted upon by the customs authorities. The court noted that the failure to pass orders on these applications amounted to detention of the goods. The customs authorities' inaction was deemed unjustified and arbitrary, especially given the petitioner's specific application for shifting the goods to a warehouse.5. Responsibility for Demurrage Charges During the Period of Detention:The court concluded that the custodian, respondent no.4, could not charge demurrage for the period during which the goods were detained by customs authorities. The petitioner was entitled to clear the goods without paying demurrage charges up to 15th January 2015, the date when the goods were finally cleared by customs. Any demurrage charges post this date were to be borne by the petitioner.Conclusion:The court ruled that the customs cargo service provider was not entitled to levy demurrage charges for the period during which the goods were detained by customs authorities. The petitioner could clear the goods without paying demurrage charges up to 15th January 2015, subject to payment of other charges applicable after this date. The writ petition was disposed of with each party bearing its own costs.