2016 (5) TMI 301 - HC - Customs

Importer Liable for Demurrage Charges Despite Valid Release

The court held that the importer is liable to pay demurrage/godown rent and container charges even if goods were validly released after detention. It ... Release of goods - Waiver of demurrage/godown rent and container charges - Import and selling of scrap - Confiscation of consignment under Section 111 of the Customs Act 1962 - Held that:- 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 mala fide 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. Therefore, the Court is unable to issue any direction to the customs authorities to direct the CWC or Respondent No.4 to waive the demurrage charges, detention and/or container charges. As far as appellant M/s. S.K. Metal is concerned, as already noticed, pursuant to the interim orders passed by the Court, the goods have already been de-stuffed from the containers and auctioned and some amount realised. Similarly, in the case of M/s. Modern Overseas as already noticed, the goods had been directed to be released on fulfilling specified conditions. - Decided against the appellant Issues Involved:1. Liability of the importer to pay demurrage/godown rent and container charges.2. Validity and consequences of detention certificates issued by customs authorities.3. The role of contractual obligations between importers and carriers.4. The impact of judicial precedents on the liability for demurrage charges.Detailed Analysis:1. Liability of the Importer to Pay Demurrage/Godown Rent and Container Charges:The primary issue in both writ petitions revolves around the liability of the importer to pay demurrage/godown rent and container charges even when the import of goods detained was ultimately found to be valid. The court examined the facts of each case, where the goods were detained and later released after adjudication. In the case of M/s. S.K. Metal & Co., the goods were detained due to a mis-declaration but later released after mutilation as ordered by CEGAT. Similarly, M/s. Modern Overseas faced detention due to alleged undervaluation, which was later overturned by the Commissioner of Customs (Appeals).2. Validity and Consequences of Detention Certificates Issued by Customs Authorities:The court referred to several precedents, notably the Supreme Court's decision in International Airport Authority of India v. Grand Slam International, which held that there was no power in the Collector of Customs to issue a Detention Certificate directing custodians not to collect custody charges. This principle was reaffirmed in Shipping Corporation of India Limited v. C.L. Jain Woollen Mills, where the court emphasized that the customs authorities could not compel carriers or warehouse owners to waive demurrage charges through detention certificates.3. The Role of Contractual Obligations Between Importers and Carriers:The court highlighted that the relationship between importers and carriers is governed by the terms and conditions of their contracts, including bills of lading. The carriers, such as CWC and SCI, have a statutory right to claim demurrage charges based on their regulations and the Indian Contract Act, 1872, which provides for a bailee's lien. The court noted that there is no provision in the Customs Act that allows customs authorities to interfere with these contractual obligations.4. The Impact of Judicial Precedents on the Liability for Demurrage Charges:The court analyzed various judicial precedents to outline the legal position regarding demurrage charges. It reiterated the principles from International Airport Authority of India v. Grand Slam International and Shipping Corporation of India Limited v. C.L. Jain Woollen Mills, which establish that customs authorities cannot direct the waiver of demurrage charges. The court also discussed cases like Union of India v. Sanjeev Woollen Mills, which was decided on exceptional facts and does not constitute a general precedent for waiving demurrage charges.Conclusion:The court concluded that it could not issue directions to customs authorities to waive demurrage charges or container charges. It emphasized that such charges are governed by contractual obligations and statutory rights of the carriers. The writ petitions were dismissed, and the court did not grant the main prayers, including the waiver of demurrage charges, due to the established legal principles and the absence of any provision in the Customs Act to support such a waiver.