Importers not liable for demurrage charges when Customs detains goods for verification without fault

The Madras HC held that importers are not liable for demurrage/detention charges when goods are detained by Customs for verification and subsequently cleared without fault. Waiver certificates issued by Customs authorities are statutorily binding on Container Freight Stations and shipping lines. The court ruled that statutory regulations override contractual agreements between parties, and CCSPs must honor waiver certificates. The HC found writ petitions maintainable as they seek enforcement of statutory rights. When goods are detained for verification and cleared favorably, no charges can be levied during the detention period, with liability shifting to authorities for delays beyond prescribed timelines.

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Issues Involved:

1. Whether the importers are liable to pay detention/demurrage charges to the CFS and the shipping lines/steamer agents when the goods have been detained by the Customs Department for verification.
2. Whether the waiver certificate for the detention/demurrage charges granted by the Customs Department is statutorily binding on the CFS and shipping lines/steamer agents.
3. Maintainability of the writ petitions.
4. Applicability and enforceability of the Handling of Cargo in Customs Areas Regulations, 2009 (HCCA Regulations) and the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMT Regulations).
5. Whether the statutory regulations would have an overruling effect on the contract between the parties.
6. Whether the CCSPs (Customs Cargo Service Providers) and shipping lines are bound by the statutory regulations and waiver certificates issued by the Customs authorities.
7. Whether the CCSPs and shipping lines are entitled to be heard before the issuance of waiver certificates.
8. Determining the period of waiver and the liability for charges beyond the stipulated period.
9. Refund of charges paid by the importers when adjudication ends in their favor.
10. Non-compliance of waiver certificates by the CCSPs and the authorized carriers.

Detailed Analysis:

1. Liability of Importers to Pay Detention/Demurrage Charges:
The court held that importers are not liable to pay detention/demurrage charges if the goods are detained by the Customs Department for verification and the final adjudication finds the imported goods to be in order. The waiver certificate issued by the Customs authorities is binding on the CFS and shipping lines/steamer agents.

2. Statutory Binding Nature of Waiver Certificates:
The waiver certificates issued by the Customs Department are statutorily binding on the CFS and shipping lines/steamer agents. The Handling of Cargo in Customs Areas Regulations, 2009 (HCCA Regulations) and the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMT Regulations) have statutory force and override the contractual agreements between the parties.

3. Maintainability of Writ Petitions:
The writ petitions under Article 226 of the Constitution are maintainable against the CCSPs as they are bound by the statutory regulations. The court held that the writ petitions filed for the enforcement of a statutory right are maintainable.

4. Applicability and Enforceability of HCCA and SCMT Regulations:
The HCCA Regulations, 2009, and SCMT Regulations, 2018, are applicable to all entities handling imported and exported goods in customs areas. The regulations have statutory force and are binding on all Customs Cargo Service Providers (CCSPs), including CFS, shipping lines, and steamer agents.

5. Overruling Effect of Statutory Regulations on Contracts:
The statutory regulations prevail over the contractual agreements between the parties. The court held that the terms of the contract are subject to the law of the land, which includes the Customs Act, 1962, and the regulations framed thereunder.

6. Binding Nature of Statutory Regulations on CCSPs and Shipping Lines:
The CCSPs and shipping lines are bound by the statutory regulations and the waiver certificates issued by the Customs authorities. The regulations are binding on all entities operating in customs areas and handling imported and exported goods.

7. Right to be Heard Before Issuance of Waiver Certificates:
The court held that the CCSPs and shipping lines do not have a right to be heard before the issuance of waiver certificates. The waiver certificates are issued based on the outcome of the adjudication proceedings, and the CCSPs and shipping lines are bound to comply with the statutory regulations.

8. Determining the Period of Waiver and Liability for Charges Beyond the Stipulated Period:
The period of waiver is determined based on the timelines prescribed under the HCCA Regulations and SCMT Regulations. The court held that the waiver period is applicable as long as the adjudication proceedings are pending. If the adjudication is not completed within the stipulated period, the liability for charges beyond the period falls on the Customs authorities.

9. Refund of Charges Paid by Importers:
The importers are entitled to a refund of the charges paid if the adjudication proceedings end in their favor. The court held that the importers are entitled to a refund of the charges paid during the detention period if the final adjudication finds the imported goods to be in order.

10. Non-Compliance of Waiver Certificates by CCSPs and Authorized Carriers:
The court directed the Customs authorities to take appropriate action against the CCSPs and authorized carriers for non-compliance with the waiver certificates. The statutory regulations mandate compliance with the waiver certificates, and failure to comply can lead to suspension, revocation, or imposition of penalties on the CCSPs and authorized carriers.

Conclusion & Directives Issued:

1. The writ petitions under Article 226 of the Constitution are maintainable against the CCSPs.
2. The 2009 HCCA Regulations and 2018 SCMT Regulations will prevail over the contract between the parties.
3. Waiver certificates can be issued by the Customs authorities if the adjudication ends in favor of the importer/exporter.
4. Provisional release is subject to the outcome of the adjudication proceedings.
5. Importers/exporters found guilty of misdeclaration or violation must pay demurrage charges.
6. Customs authorities must follow timelines under the Act and Regulations.
7. Applications for waiver must be decided within four weeks.
8. Adjudication proceedings must be completed within four weeks.
9. Clearance for re-export must be completed within four weeks.
10. Non-compliance with waiver certificates can lead to proceedings against CCSPs.
11. Importers/exporters are entitled to a refund if adjudication ends in their favor.
12. Claims for interest must be decided by the concerned authority.
13. The Central Government may bring uniform timelines and accountability.
14. The Board must issue instructions and take action against officers responsible for delays.

The court disposed of the writ petitions and appeals in terms of the above conclusions and directives.

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