2000 (9) TMI 82 - HC - Customs

Customs ordered to pay demurrage charges, shifting liability from CWC.

The court allowed the writ petition, directing Customs authorities to pay demurrage and other dues to the Central Warehousing Corporation (CWC) within 15 ... Obligation of custodian to release goods without payment of demurrage - statutory custodian's right to recover demurrage and storage charges - shift of liability to Customs authorities for storage/demurrage where detention is their fault - effect of detention certificate and appellate order on liability for demurrage - inapplicability of guidelines in Circular No. 128/95 para (15) to public sector custodiansObligation of custodian to release goods without payment of demurrage - statutory custodian's right to recover demurrage and storage charges - inapplicability of guidelines in Circular No. 128/95 para (15) to public sector custodians - Whether the Central Warehousing Corporation was obliged to release the goods without payment of storage and demurrage charges in view of the CEGAT order and the detention certificate. - HELD THAT: - The Court held that a statutory custodian such as the Central Warehousing Corporation is entitled to recover demurrage and storage charges for goods in its custody notwithstanding that the detention was due to the fault of Customs authorities, following the principle in the majority judgment in International Airports Authority's case. The Court found that the guidelines in Circular No. 128/95 (para (15)) are directed to private-sector establishments and are not applicable to the public-sector Central Warehousing Corporation, and that the Public Notice under which the CWC operates contemplates delivery only after completion of formalities, which include realisation of storage charges. Consequently, no writ of mandamus could be issued compelling the CWC to release the goods without payment of the charges payable to it. [Paras 9, 11, 12, 14]The Central Warehousing Corporation was not legally obliged to release the goods without payment of storage and demurrage charges; the importer remained prima facie liable to pay those dues before delivery.Shift of liability to Customs authorities for storage/demurrage where detention is their fault - effect of detention certificate and appellate order on liability for demurrage - Whether, having found that the detention by Customs was unjust, the liability to bear storage and demurrage charges should be shifted to the Customs authorities. - HELD THAT: - Although the importer remained liable to pay the custodian, the Court held that equity and reasonableness required the burden of such dues to be shifted to the Customs authorities where detention was found to be unjust or wrongful. The Court relied on precedent (including Padam Kumar Agarwalla) and constitutional norms of reasonableness under Article 14 to conclude that it would be unfair to require the importer to pay the charges and then seek reimbursement from the authorities; accordingly the Customs authorities, having accepted the CEGAT order and issued the clearance certificate, must bear the detention-related charges. [Paras 13, 15, 16]Respondents 1 to 3 (Customs authorities) were directed to pay the demurrage and other dues to the Central Warehousing Corporation in respect of the goods within 15 days, after which the petitioner would be permitted to lift the goods subject to other formalities.Final Conclusion: Writ petition allowed: while the Central Warehousing Corporation need not release the goods without realisation of its dues, the Court directed the Customs authorities to reimburse/pay the demurrage and storage charges (found attributable to their wrongful detention) to the custodian within 15 days and permitted the petitioner to lift the goods upon completion of formalities. Issues Involved:1. Obligation of Central Warehousing Corporation to release goods without payment of storage and demurrage charges.2. Liability of Customs authorities for payment of storage and demurrage charges due to wrongful detention of goods.Summary:1. Obligation of Central Warehousing Corporation to Release Goods Without Payment of Storage and Demurrage Charges:The primary issue in this writ petition is whether the Central Warehousing Corporation (CWC) is legally obligated to release the goods stored in the Inland Container Depot (I.C.D.), Hyderabad, to the petitioner company without the payment of storage and demurrage charges, based on the Final Order No. 1568/99 dated 29-6-1999 by the Customs, Excise, and Gold (Control) Appellate Tribunal (CEGAT). The CEGAT had held that the petitioner company was not responsible for the detention of goods and was entitled to a Certificate for Clearance without demurrage charges. The petitioner company argued that the CWC must release the goods without these charges, while the CWC contended that it was not a party to the CEGAT proceedings and thus not bound by its order. The CWC also emphasized that it is a statutory authority under the Warehousing Corporation Act, 1962, and there is no provision in the Act or Rules for waiving storage charges.2. Liability of Customs Authorities for Payment of Storage and Demurrage Charges Due to Wrongful Detention of Goods:The Customs authorities, represented by respondents 2 and 3, supported the petitioner's claim and contended that the CWC is bound to waive demurrage charges as per paragraph (15) of Circular No. 128/95-Cus., dated 14-12-1995. However, the CWC argued that this guideline applies only to private sector establishments, not public sector undertakings like itself.The court referred to the Supreme Court's judgment in the case of International Airports Authority of India v. M/s. Gulab Impex Enterprises Ltd. [1995 (77) E.L.T. 753 (S.C.)], which established that statutory authorities like the CWC are entitled to charge demurrage even if the goods were detained due to the fault of Customs authorities. The court concluded that while the petitioner company is liable to pay storage and demurrage charges, the burden should be shifted to the Customs authorities, who were responsible for the wrongful detention of goods.Conclusion:The writ petition was allowed, directing the Customs authorities to pay the demurrage and other dues to the CWC within 15 days, allowing the petitioner company to lift the goods upon completion of other formalities. The CWC was instructed to release the goods immediately upon receipt of payment from the Customs authorities.