2022 (11) TMI 1558 - HC - Customs

Goods erroneously shipped to India cannot be immediately re-exported without proper bill of entry filing

M/s. MEADOWS INTERNATIONAL CO Versus COMMISSIONER OF CUSTOMS & ORS

Delhi HC declined to allow immediate re-export of goods (ammonia sulphate, poppy seeds, areca nuts) that were erroneously shipped to India without bill of ... Direction to allow the Petitioner to take back/re-export the goods against bill of lading - direction not to charge any demurrage / ground rent from the Petitioner - HELD THAT:- Admittedly, no Bill of Entry has been filed in respect of the said goods; according to the petitioner, the goods have not crossed the barrier for being considered as imported into India. It is in the aforesaid context that the petitioner seeks re-export of the said goods It is also the petitioner’s grievance that the goods are currently lying in the port and incurring demurrage. It also stated that part of the goods (poppy seeds) are of perishable nature and any delay in processing the re-export / return of the goods would result in the deterioration of the goods and loss of its value. The respondents state that the goods have been examined and although the Bill of Lading indicates that the goods are ammonia sulphate, the consignment also includes poppy seeds and areca nuts. The respondents state that they are now conducting certain investigations and therefore, re-export at this stage is not permissible. The first prayer made by the petitioner, that is, to allow the immediate re-export cannot be allowed at this stage. However, it is expected that the respondents would examine the petitioner’s request for re-exporting the goods on its own merit. The respondents shall also take into account the explanation of the petitioner, as briefly noted above, that the goods were erroneously shipped to India and that the petitioner had sought its recall even while the said goods were on high seas - Admittedly, some of the goods are perishable in nature, the respondents are directed to complete the investigation as expeditiously as possible and, in any event, not later than two months from today. Insofar as the petitioner’s second prayer is concerned, the same too cannot be allowed. This Court finds no reason to direct that demurrages or ground rent be not recovered from the petitioner. The petitioner has already requested for permission to warehouse the same. The learned counsel appearing for the respondents, states that the ‘No Objection Certificate’ in this regard has already been issued but same has not been acted upon. Petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court are:(a) Whether the petitioner, being the owner of goods erroneously shipped to India and still in possession of the Bill of Lading, is entitled to re-export or take back the goods without payment of demurrage or ground rent, despite no Bill of Entry having been filed and the goods not having crossed the customs barrier to be considered imported.(b) Whether the respondents are obligated to allow immediate re-export of the goods, including perishable items, in light of the petitioner's claim of error and prior request for recall while the goods were still at sea.(c) Whether the petitioner can be exempted from payment of demurrage or ground rent accruing on the goods lying at the port.(d) The procedural and substantive rights of the parties pending investigation by the customs authorities concerning the nature and contents of the consignment.2. ISSUE-WISE DETAILED ANALYSISIssue (a) and (b): Entitlement to re-export of goods erroneously shipped and still under possession of Bill of LadingThe legal framework governing import and export of goods, customs clearance, and demurrage charges is central to these issues. The Bill of Lading evidences ownership and shipment, but customs law requires filing of Bill of Entry for import clearance. The petitioner argued that since no Bill of Entry was filed and the goods had not crossed the customs barrier, the goods cannot be deemed imported and thus should be allowed to be re-exported without impediment.The respondents countered that the goods had been examined and investigations were ongoing, particularly because the consignment included items (poppy seeds and areca nuts) not declared in the Bill of Lading, which indicated ammonia sulphate. This raised suspicion and necessitated investigation before any re-export could be permitted.The Court recognized the petitioner's position that the shipment was erroneous and that the request for recall was made even while the goods were on high seas, indicating bona fide intent to rectify the error. However, the Court held that immediate re-export could not be allowed at this stage, given the ongoing investigation and the need to ensure compliance with customs and other regulatory requirements.The Court directed the respondents to consider the petitioner's request on its merits, taking into account the explanation of error and the timing of the recall request. The Court also mandated expeditious completion of the investigation, particularly emphasizing the perishable nature of some goods (poppy seeds), to avoid loss of value.The application of law to facts involved balancing the petitioner's rights as owner and the procedural safeguards and regulatory oversight by customs authorities. The Court's reasoning reflects the principle that ownership and possession under Bill of Lading do not automatically confer the right to re-export without customs clearance and investigation, especially where discrepancies in declared goods exist.Issue (c): Liability for demurrage and ground rent chargesThe petitioner sought relief from payment of demurrage and ground rent charges accruing due to the goods lying at the port. The legal principle here is that demurrage and ground rent are charges imposed for delay in clearance or removal of goods from port premises, recoverable under applicable port and customs regulations.The Court found no justification to exempt the petitioner from these charges, emphasizing that the petitioner had already sought permission to warehouse the goods, and that a No Objection Certificate (NOC) had been issued by the respondents. The petitioner's failure to act on the NOC did not warrant waiver of demurrage or ground rent.The respondents were directed to facilitate shifting the goods to the warehouse within two weeks, which would presumably reduce or contain further demurrage charges. The Court's approach reflects adherence to established principles that demurrage charges are compensatory and not punitive, and that owners must bear such costs arising from delay.Issue (d): Procedural rights pending investigationThe respondents' investigation was triggered by the discrepancy between the declared goods in the Bill of Lading and the actual contents, raising concerns under customs and possibly other regulatory statutes. The Court acknowledged the necessity of such investigation to uphold regulatory compliance and prevent unlawful import or trafficking of restricted goods.While denying immediate re-export, the Court required the respondents to complete the investigation expeditiously within two months, balancing regulatory oversight with the petitioner's interest in timely resolution, especially given the perishable nature of part of the consignment.This reflects the principle that regulatory investigations must be conducted within reasonable timeframes to avoid undue prejudice to the parties involved.3. SIGNIFICANT HOLDINGSThe Court held:'The first prayer made by the petitioner, that is, to allow the immediate re-export cannot be allowed at this stage. However, it is expected that the respondents would examine the petitioner's request for re-exporting the goods on its own merit.''The respondents shall also take into account the explanation of the petitioner, as briefly noted above, that the goods were erroneously shipped to India and that the petitioner had sought its recall even while the said goods were on high seas.''Admittedly, some of the goods are perishable in nature, the respondents are directed to complete the investigation as expeditiously as possible and, in any event, not later than two months from today.''This Court finds no reason to direct that demurrages or ground rent be not recovered from the petitioner.''The respondents shall ensure that the necessary arrangements are made to shift the goods to the warehouse as soon as possible and in any event within the period of two weeks from today.'The core principles established include:- Ownership under Bill of Lading and absence of Bill of Entry filing does not confer an absolute right to re-export goods without customs clearance and investigation.- Regulatory authorities are entitled to conduct investigations where discrepancies in declared shipments arise, and such investigations must be completed within a reasonable timeframe.- Demurrage and ground rent charges are legitimate costs recoverable from the owner for delay in clearance or removal of goods, and exemption therefrom requires compelling justification, which was not found.- Courts must balance the rights of the owner with regulatory compliance and public interest, ensuring procedural fairness and expeditious resolution.