2017 (8) TMI 1462 - SC - Customs

Supreme Court Rules No Demurrage Charges on Seized Goods

CONTINENTAL CARBON INDIA LTD. Versus UNION OF INDIA

The Supreme Court held that no demurrage charges were payable on the seized goods as per Customs regulations. It directed that the goods, now stale and ... Liability to pay demurrage charges - whether relief of non-payment of charges should have been restricted till 15-1-2015? - Held that:- The proceedings were pending before the High Court from 15-1-2015 till 14-10-2015. It is during the pendency of these proceedings and in the absence of any interim order passed by the High Court allowing the appellant to clear the goods, it was not possible for the appellant to clear those goods. In these circumstances, we are of the opinion that the High Court should have held that no charges towards any rent or demurrage are payable till the date of the judgment of the High Court instead of 15-1-2015. The ends of justice would be subserved by directing that no demurrage charges or rent is payable on the aforesaid goods by the appellant to respondent No. 4. At the same time, respondent No. 4 would be entitled to auction those goods and whatever money is received as a result of that auction, can be appropriated by respondent No. 4. Appeal disposed off. Issues:1. Seizure of goods by Customs Authorities and demand for demurrage charges by Customs Cargo Service Provider.2. High Court's order restricting relief of non-payment of charges till a specific date.3. Excessive demurrage charges claimed by Customs Cargo Service Provider.4. Delay in High Court judgment affecting clearance of goods.5. Stale and rotten condition of goods leading to no utility for the appellant.Analysis:1. The appellant imported Carbon Black Feed Stock (CBFS) which was detained by Customs authorities due to appearing hazardous. The appellant sought provisional clearance, but Customs demanded a clearance certificate. After obtaining clearance from Ministry of Environment and Forest, Customs allowed clearance on 12-1-2015. The Customs Cargo Service Provider demanded demurrage charges, leading to a writ petition challenging the action. High Court found the seizure improper and ruled no demurrage charges were payable on seized goods as per Customs regulations.2. The High Court granted relief to the appellant till 15-1-2015, based on the date of assessment and clearance of goods by Customs Authorities. The appellant challenged this part of the order, arguing against the restriction on non-payment of charges. The respondents accepted the judgment, acknowledging the wrongful detention of goods by Customs Authorities.3. Respondent No. 4 claimed excessive demurrage charges of Rs. 7.67 crores on goods valued at Rs. 7 crores. The appellant contested the charges, stating they were unreasonable and not payable. The High Court vindicated the appellant's stand but delivered the judgment on 14-10-2015, after a prolonged period from 15-1-2015.4. The delay in the High Court judgment from 15-1-2015 to 14-10-2015 impacted the appellant's ability to clear the goods. In the absence of an interim order allowing clearance, the appellant couldn't proceed, leading to a need for a revised decision on the payment of charges till the date of the High Court judgment.5. Subsequent developments revealed the goods were now stale and rotten, rendering them useless to the appellant. In light of this, the Supreme Court directed that no demurrage charges or rent were payable on the goods to respondent No. 4. Instead, respondent No. 4 was permitted to auction the goods and retain the proceeds. The appeal was thus disposed of, considering the changed circumstances and the lack of utility of the goods to the appellant.