1995 (2) TMI 70 - SC - Customs

No demurrage payable for period covered by Customs detention certificates; IAAI rates cannot override Public Notice protections

SC dismissed the appeal and upheld the HC direction that no demurrage is payable for the period covered by Customs detention certificates. The Court held ... Challenged the direction issued by the High Court of Delhi for release of imported goods without payment of any demurrage charges for the period for which detention certificate had been issued by the Customs Authorities - Nature of these certificates - binding on the IAAI - Whether any demurrage could have been charged for the period detention certificate was issued by the Assistant Collector of Customs? Held that:- If the appellants' claim that IAAI being a statutory body it was entitled to frame its regulations and rate schedule is accepted then it results in conflict between sub-paragraph (vii) of Public Notice and paragraph (3) of the Policy framed by the IAAI. The legislative intention in enacting Act being to check and control economic offences such as smuggling, illegal import etc., the provisions have to be construed to advance the purpose sought to be achieved without sacrificing the consignee's interest. t recognises the legal consequences which must follow the adjudication by directing that no demurrage should be charged for that period as in law the decision by the Tribunal dates back to the date of detention. And by fiction of law it is assumed that the Customs Department clears the goods as it should have done when the goods had landed. Even otherwise if the policy decision of capacity to pay is read along with rate prescribed, then levy of demurrage may defeat the very purpose and objective of the policy. Payment of three times or four times of demurrage of value of goods because the goods were detained at the instance of Customs Authorities does not accord with the policy decision. It is not in common interest. One of the settled principles of construction is to read a provision in such manner that it may not be self-defeating. The levy of demurrage at the prescribed rate by ignoring the Public Notice issued by the Customs Department in 1986 is apt to lead to such disastrous consequences. Appeal dismissed. Issues Involved:1. Binding nature of detention certificates issued by Customs Authorities on IAAI and CWC.2. Conflict between Public Notices issued by Customs Authorities and Regulations framed by IAAI.3. Liability for demurrage charges during the period of detention by Customs Authorities.4. Validity and enforceability of Customs Public Notice No. 30/86.5. Powers of the Collector of Customs under Section 45 of the Customs Act, 1962.6. Applicability of previous judicial decisions on demurrage charges.Issue-wise Detailed Analysis:1. Binding Nature of Detention Certificates Issued by Customs Authorities on IAAI and CWC:The High Court ruled that IAAI and CWC, as custodians of the Customs Department, could not ignore the Detention Certificates issued by the Customs Authorities. Therefore, no demurrage could be charged for the period the proceedings were pending. This view was based on the interpretation of Section 45(2) of the Customs Act, 1962, and the issuance of detention certificates by Customs Authorities.2. Conflict Between Public Notices Issued by Customs Authorities and Regulations Framed by IAAI:The appellants argued that the power to levy demurrage by IAAI is derived from the International Airports Authority Act, 1971, and could not be regulated or controlled by any other statute, including the Customs Act. The High Court's reliance on Public Notices and previous decisions (Trishul Impex and Trans Asia Carpets cases) was challenged on the grounds that these notices were not binding on IAAI or CWC.3. Liability for Demurrage Charges During the Period of Detention by Customs Authorities:The Supreme Court examined whether the period during which adjudication proceedings were pending could be considered as free days. It was held that even if the delay in clearing the goods was not due to the negligence of the importer, the importer could not avoid the payment of demurrage as the rates imposed are under the authority of law.4. Validity and Enforceability of Customs Public Notice No. 30/86:The Public Notice issued by the Collector of Customs in 1986 directed that warehousing/storage charges should not be charged for the period of detention at the instance of Customs. The Supreme Court held that this notice was issued in valid exercise of power under Sections 8, 33, 34, and 45 of the Customs Act, and was binding on the custodians (IAAI and CWC).5. Powers of the Collector of Customs Under Section 45 of the Customs Act, 1962:Section 45 of the Customs Act permits removal of imported goods from the customs area only with the permission of the proper officer. The Supreme Court held that the Collector of Customs had the authority to issue directions regarding the custody and removal of goods, including the issuance of detention certificates.6. Applicability of Previous Judicial Decisions on Demurrage Charges:The Supreme Court referred to previous decisions (Trustees of the Port of Madras v. Aminchand Pyarelal, Board of Trustees of the Port of Bombay v. Indian Goods Supplying Co., and Board of Trustees of the Port of Bombay v. Jai Hind Oil Mills Co.) which held that Port Trusts were entitled to charge demurrage even if the delay in clearing the goods was due to the fault of Customs Authorities. The Court distinguished these cases on the basis that they did not involve Public Notices issued under Section 45 of the Customs Act.Conclusion:The Supreme Court concluded that the Public Notice issued by the Collector of Customs in 1986 was valid and binding on IAAI and CWC. Therefore, the custodians could not charge demurrage for the period mentioned in the detention certificates. The appeals were allowed, and the orders of the High Court were set aside. The writ petitions filed by the respondents were dismissed.