2023 (1) TMI 310 - HC - Customs

Court grants Singapore company release of consignment abandoned by importer under Bill of Lading.

The Court granted the Petitioner, a Singapore-based company, the release of a consignment under Bill of Lading abandoned by the importer. The Petitioner ... Abandonment of imported goods - ownership/title of imported goods - definition of importer under Section 2(26) - right to present bill of entry by owner - liability for detention/demurrage charges - payment of customs duty and interestOwnership/title of imported goods - definition of importer under Section 2(26) - right to present bill of entry by owner - Whether the petitioner, having received the original documents and on facts amounting to abandonment by the original importer, could be recognized as owner and permitted to get the goods released and file a bill of entry. - HELD THAT: - The Court held that where the importer effectively abandoned the goods by not paying for or clearing them and the exporter/supplier (the petitioner) has received the original title documents, title can be recognised in favour of the petitioner. The definition of 'importer' in Section 2(26) includes an owner or beneficial owner between importation and clearance, and the fiction that the initial importer is owner cannot be stretched to deprive the exporter/supplier of title where the importer abandons the goods. Applying the principle in Agrim Sampada and Sampat Raj Dugar, the petitioner, having obtained the original documents back from the bank, is within the definition and entitled to seek clearance on payment of appropriate customs duty and interest. [Paras 11, 12, 15]Petitioner entitled to be recognised as owner for purposes of presentation of bill of entry and release of goods upon payment of assessed customs duty and interest.Liability for detention/demurrage charges - abandonment of imported goods - Whether the petitioner is liable to pay detention/demurrage charges or whether such charges must be borne by the customs authorities. - HELD THAT: - The Court reviewed precedent establishing that demurrage may be recoverable even if customs are at fault, but that in exceptional circumstances courts have directed revenue or custodian to bear demurrage where the authority was at fault or gave undertakings. Here, the out-of-charge process had been undertaken by the importer in September 2022 and customs had no notice of any transfer of ownership until the petitioner received documents in December 2022. There was an unexplained lull between September and December during which goods remained uncleared. Given these facts and that customs proceeded in accordance with law, the petitioner cannot shift the entire burden of detention/demurrage to the customs authorities. Accordingly, equitable allocation was directed: petitioner to bear a portion of demurrage for the period up to the first representation and full demurrage thereafter. [Paras 21, 22, 24, 25, 26]Petitioner liable to pay 50% of detention/demurrage charges up to 3rd December, 2022 and full demurrage for the period from 3rd December, 2022 until date; customs authority not directed to bear demurrage.Payment of customs duty and interest - right to present bill of entry by owner - Reliefs and procedural directions for release: payment obligations, verification, and procedural steps permitted to quantify and preserve remedies. - HELD THAT: - The Court directed that the petitioner must pay the assessed customs duty and interest and be permitted to appear before the customs authority to quantify amounts. The petitioner was directed to appear on the specified date for quantification. The Court left open the remedies of the petitioner and customs authority against the original importer. The petitioner was also permitted to clear the goods by paying the demurrage charges under protest if it wished to preserve challenges to the order. [Paras 23, 27]Petitioner to pay assessed customs duty and interest; permitted to appear before customs on the appointed date for quantification; remedies against importer left open; petitioner may clear goods under protest by paying directed demurrage.Final Conclusion: Writ petition disposed. Petitioner recognised as entitled to seek release on payment of assessed customs duty and interest; petitioner ordered to pay 50% of detention/demurrage up to 3rd December, 2022 and full demurrage thereafter; petitioner to appear before customs for quantification and may clear goods under protest; remedies against the original importer remain open. Issues Involved:1. Release of consignment under Bill of Lading.2. Cancellation of previous bill of entry and permission to file a new bill of entry.3. Waiver of charges, interest, and penalties levied upon the consignment.4. Liability for demurrage charges.Issue-wise Detailed Analysis:1. Release of consignment under Bill of Lading:The Petitioner, a Singapore-based company, sought the release of a consignment under Bill of Lading No. HLCUTOR220708684 from the Respondent - Commissioner of Customs. The consignment was initially intended for M/s Earth Wire Private Limited, which failed to clear the goods by not paying the customs duty. The Petitioner argued that the importer abandoned the goods, and as the owner, the Petitioner should be allowed to clear the goods. The Court recognized that the importer had effectively abandoned the goods by not paying the customs duty and not clearing the goods. The ownership of the goods was deemed to have passed to the Petitioner, who had received all original documents from the bank. The Court referred to the judgment in Agrim Sampada v. Union of India, which supported the release of goods to the owner when the importer abandons them.2. Cancellation of previous bill of entry and permission to file a new bill of entry:The Petitioner sought the cancellation of the previous bill of entry filed in favor of M/s Earth Wire Private Limited and requested permission to file a new bill of entry as per the new consignee. The Court acknowledged that under Section 2(26) of the Customs Act, 1962, the definition of 'importer' includes the owner or beneficial owner of the goods. Given that the title of the goods had passed to the Petitioner, the Court permitted the Petitioner to file a new bill of entry.3. Waiver of charges, interest, and penalties levied upon the consignment:The Petitioner requested the waiver of various charges, interest, and penalties levied upon the consignment. The Court held that the Petitioner was willing to pay the customs duty and interest but contested the imposition of demurrage charges. The Court directed the Petitioner to pay the customs duty and interest as assessed.4. Liability for demurrage charges:The Court examined the issue of demurrage charges in detail. The Petitioner argued that as per the judgment in Agrim Sampada, they should not be liable for demurrage charges. The Court reviewed several Supreme Court and High Court decisions on demurrage charges, including International Airports Authority of India v. M/s. Grand Slam International and Om Petro Chemicals v. Union of India. The Court concluded that if the importer is at fault, demurrage charges would be liable. In this case, the importer had processed the documents but failed to clear the goods. The Court held that the Petitioner would be liable to pay 50% of the demurrage charges up to 3rd December 2022, and full demurrage charges from 3rd December 2022 onwards. The Petitioner was directed to appear before the customs authority to quantify the exact amounts payable.Conclusion:The Court disposed of the petition with the following directions:a) The Petitioner shall pay the customs duty and interest.b) The Petitioner shall pay 50% of the demurrage charges till 3rd December 2022 and full charges thereafter.c) The Petitioner's representative shall appear before the customs authority to quantify the payable amounts.d) Remedies against the importer and customs authority are left open.e) The Petitioner can clear the goods by paying demurrage charges under protest if they wish to challenge the order.The petition was disposed of in these terms, with a copy of the order provided under the signature of the Court Master.