Arbitrary demurrage remission refusal can be quashed, but relief remains confined to the governing policy limits.

A port trust's remission of demurrage must operate within its statutory policy under Section 53 of the Major Port Trusts Act, 1963, and the importer could claim only the policy limit of 80 per cent for 150 days, not full refund. Although no reasons were recorded and no personal hearing was given, the refusal was open to judicial review because it was arbitrary, irrational, and unsupported by material grounds. The customs authorities could not be made liable to reimburse the balance demurrage, as no statutory basis existed for fastening such liability on them.

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Issues: (i) whether the Port Trust's refusal to grant remission of demurrage was valid under Section 53 of the Major Port Trusts Act, 1963 and its remission policy; (ii) whether the refusal was vitiated for want of reasons or personal hearing; (iii) whether the Customs Authorities could be made liable to reimburse the balance demurrage.

Issue (i): whether the Port Trust's refusal to grant remission of demurrage was valid under Section 53 of the Major Port Trusts Act, 1963 and its remission policy.

Analysis: Section 53 empowers the Board, in special cases and for recorded reasons, to exempt wholly or partially any charge leviable under the Act. The Port Trust's policy limited remission to 80 per cent for a maximum period of 150 days, retaining 20 per cent as service and handling charges. The detention certificate established that the goods were held up for bona fide import control formalities, but that circumstance did not displace the governing policy.

Conclusion: The importer was entitled only to remission at 80 per cent for 150 days, and not to full refund of demurrage.

Issue (ii): whether the refusal was vitiated for want of reasons or personal hearing.

Analysis: Although no reasons were stated in the impugned refusal and no personal hearing was granted, Section 53 did not impose an obligation to record reasons for rejecting remission. A personal hearing was never sought, and the refusal was tested on the material placed before the Court. On that material, the reasons advanced for rejection were found to be unsustainable and irrational, rendering the order arbitrary and perverse and therefore open to judicial review under Article 14 of the Constitution of India.

Conclusion: The refusal was invalid and liable to be set aside.

Issue (iii): whether the Customs Authorities could be made liable to reimburse the balance demurrage.

Analysis: The Customs Authorities had acted bona fide in adjudicating the import clearance dispute. No statutory basis was shown for fastening liability on them to pay the balance remission amount, and such a direction would amount to imposing a penalty without authority of law.

Conclusion: No liability could be imposed on the Customs Authorities for the balance demurrage.

Final Conclusion: The impugned refusal of remission was quashed, the Port Trust was directed to grant remission/refund to the extent of 80 per cent for 150 days, and no relief was granted against the Customs Authorities.

Ratio Decidendi: A port trust's refusal to remit demurrage under a statutory remission policy is liable to be struck down if it is arbitrary, unreasonable, and unsupported by rational grounds, but the importer's relief remains confined to the limits of the governing remission policy and cannot be extended to impose liability on another public authority without statutory sanction.

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