2018 (1) TMI 32 - HC - Customs

Company liable for demurrage charges for uncleared consignments detained at ICD due to customs issues.

The Court upheld the liability of the petitioner company to pay demurrage charges for uncleared consignments detained at the ICD due to customs clearance ... Demurrage charges - Is the Petitioner Company liable to pay the demurrage charges to ICD for the consignments not cleared by custom authorities? - Held that: - the issue is no longer res integra and is decided in the case of Trustees of the Port of Madras v. K.P.V. Sheikh Mohd. Rowther & Co. Pvt. Ltd. and another [1995 (3) TMI 105 - SUPREME COURT OF INDIA], wherein it has been held by the Supreme Court that once consignment is handed over to the Port Trust by the steamer agents, duly endorsing the bill of lading or issuing the delivery order but the goods detained at Port Trust for want of clearance from Customs authorities, the demurrage has to be collected by the Port Trust only from the consignee and not from the steamer agents. The respondents were justified in claiming the demurrage charges from the petitioner Company and the petitioner Company is liable to pay the said demurrage charges till the goods were released from the ICD - petition dismissed. Issues:1. Liability of the Petitioner Company to pay demurrage charges to ICD for uncleared consignments.Analysis:The petitioner, a company engaged in import and export, imported handmade carpets from the United States. The consignments were not cleared by Custom Authorities due to suspicions of misdeclaration of origin and undervaluation. The respondents argued that since the consignments were not cleared, the petitioner is liable to pay demurrage charges. The petitioner challenged this, leading to a series of legal proceedings and orders for provisional release of the consignments.The Court noted that before the duty could be assessed and paid for clearance, the goods were detained and the petitioner was asked to furnish a bond and bank guarantee. The petitioner challenged these orders through writ petitions, which led to directions for depositing a percentage of the duty amount and furnishing bonds and guarantees. The consignments were eventually released after compliance with the court orders.In compliance with the court's directions, the petitioner deposited the required amount and executed a bank guarantee. However, a show cause notice was issued regarding the consignments, and the petitioner rushed to challenge the demurrage charges without responding to the notice. The Court refrained from commenting on the show cause notice, stating it was pending adjudication before the customs authorities.The Court referred to past judgments, including one by the Supreme Court, which established that the consignee is liable to pay demurrage charges when goods are detained at a port due to customs clearance issues. Citing these precedents, the Court held that the petitioner company is indeed liable to pay the demurrage charges until the goods were released from the ICD. Consequently, the Court found no merit in the writ petition and dismissed it accordingly.In conclusion, the Court upheld the liability of the petitioner company to pay demurrage charges for the consignments that were not cleared by the customs authorities. The decision was based on established legal principles and precedents, leading to the dismissal of the writ petition.