Customs notice and port demurrage demand fail where no statutory basis supports the alleged diversion or recovery.

A customs show cause notice for confiscation and penalty was treated as premature where the imported goods were covered by a governmental exemption for distribution to the poor and needy, and the record did not support an inference of diversion for the 47 bales in the petitioner's custody. Allegations that five bales were recovered from a third-party shop required separate enquiry and could not be ined on the writ record. A later demurrage demand was also held unsustainable because the port tariff provisions did not permit recovery merely on the basis of subsequent customs allegations, and no express statutory basis existed for the claim. The remaining goods were directed to be distributed under supervision, with return of the guarantee amount after compliance.

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Issues: (i) Whether the customs show cause notice and proposed confiscation and penalty proceedings were justified in respect of the imported goods; (ii) Whether the demand for additional demurrage by the port authorities was sustainable in law; (iii) Whether directions were required regarding supervision of distribution of the remaining goods and return of the guarantee amount.

Issue (i): Whether the customs show cause notice and proposed confiscation and penalty proceedings were justified in respect of the imported goods.

Analysis: The goods had been imported under a governmental exemption for distribution to the poor and needy, with six months available for such distribution. The only tangible basis for alleging diversion was the alleged recovery of five bales from a third party shop. As to the 47 bales found with the petitioner, there was no basis to infer diversion from the permitted purpose. The alleged sale of the five bales was a matter for enquiry and could not be concluded in the writ proceedings. On the materials, the notice under the confiscation provisions was premature in relation to the goods in the petitioner's custody and in relation to the quantity already distributed, while the penalty proposed under Section 112 was also unsupported on the present record.

Conclusion: The customs notice was quashed except to the extent of the five bales allegedly recovered from the third party shop, and the penalty notice under Section 112 was quashed.

Issue (ii): Whether the demand for additional demurrage by the port authorities was sustainable in law.

Analysis: The port authorities relied on provisions of the Major Port Trusts Act, 1963, but those provisions did not authorize a later claim for demurrage merely because the customs authorities later alleged misuse of the import. The amount already collected was the charge properly leviable, and the remission granted could not be treated as a short levy or erroneous refund. No enabling provision supported the demand.

Conclusion: The demurrage demand was quashed.

Issue (iii): Whether directions were required regarding supervision of distribution of the remaining goods and return of the guarantee amount.

Analysis: Since the petitioner still claimed the goods were meant for distribution to the poor and needy, a further direction was necessary to ensure lawful distribution of the 47 bales. The customs authorities were required to revoke the detention order to that extent, and the distribution had to be supervised by the third respondent. The guarantee amount could be returned after the distribution report was received.

Conclusion: Directions were issued for supervised distribution of the 47 bales and for return of the guarantee amount after compliance.

Final Conclusion: The petition obtained substantial relief: the port demand was struck down, the customs proceedings were set aside except for the limited enquiry regarding five bales, and administrative directions were issued to secure distribution of the remaining goods.

Ratio Decidendi: A show cause notice or fiscal demand is unsustainable where the record discloses no legal basis for the alleged contravention or demand, and a remission or provisional arrangement cannot be converted into a recoverable liability absent an express statutory provision.

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