Petitioner denied relief from demurrage charges on seized imported goods under Section 49 Customs Act 1962

The Delhi HC dismissed a petition seeking release of imported goods seized by the Principal Commissioner of Customs without payment of demurrage charges. The petitioner failed to follow up with customs for moving goods to warehouse despite their own communication and did not avail liberty granted by the court. The petitioner also failed to participate in show cause notice proceedings and take necessary actions under Section 49 of the Customs Act, 1962. The court held that the petitioner was not entitled to relief under Article 226, ruling that customs department's procedural delays did not absolve liability for demurrage charges.

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ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the Petitioner is entitled to the release of the imported goods without payment of demurrage charges under Regulation 6(1)(L) of the Handling of Cargo in Customs Areas Regulations, 2009.
• Whether the Customs Department's failure to issue a show cause notice within the stipulated period under Section 110(2) of the Customs Act, 1962, mandates the unconditional release of the imported goods.
• Whether the Petitioner is liable for demurrage charges incurred due to the non-transfer of goods to a warehouse as per Section 49 of the Customs Act, 1962.
• Whether the Petitioner had taken the necessary steps to follow up on the initial communication requesting the transfer of goods to a warehouse.

ISSUE-WISE DETAILED ANALYSIS

Release of Imported Goods Without Demurrage Charges

The relevant legal framework includes Regulation 6(1)(L) of the Handling of Cargo in Customs Areas Regulations, 2009, which addresses the conditions under which goods can be released without demurrage charges. The Court noted that despite the Petitioner's communication dated 7th November 2021, requesting the transfer of goods to a warehouse, the Petitioner did not follow up with any further steps or applications under Section 49 of the Customs Act, 1962. The Court emphasized that the Petitioner had not availed the opportunity to file an application under Section 49, even when given liberty to do so on 4th September 2023.

Failure to Issue Show Cause Notice and Unconditional Release

Section 110(2) of the Customs Act, 1962, mandates the issuance of a show cause notice within six months of the seizure of goods, with a possible extension. In this case, the extension period had also expired, leading to the Court's previous order on 31st January 2023, directing the unconditional release of the goods. However, the Court noted that the Petitioner did not seek release without demurrage charges in the earlier petition.

Liability for Demurrage Charges

The Court examined whether the Petitioner was liable for demurrage charges owed to CELEBI, the cargo terminal management company. The Petitioner's argument was that the Department's failure to transfer the goods to a warehouse as requested absolved them of liability for demurrage charges. However, the Court found that the Petitioner did not take necessary follow-up actions on their initial request and did not utilize the opportunity to file an application under Section 49 when granted.

Petitioner's Actions and Follow-Up

The Court analyzed the Petitioner's actions, noting that despite the initial communication and the liberty granted by the Court to file an application under Section 49, the Petitioner did not pursue these avenues. The Court also highlighted that the Petitioner did not participate in proceedings related to the show cause notice, which was issued on 30th January 2023, indicating a lack of engagement with the process.

Treatment of Competing Arguments

The Customs Department argued that the goods were prohibited and could not be shifted to a warehouse, and that the Petitioner had not approached under Section 49 despite being given the liberty to do so. CELEBI maintained that it was entitled to recover demurrage charges for storage. The Court found that the Petitioner had not demonstrated any special circumstances or peculiar facts that would warrant relief from demurrage charges, distinguishing the case from precedents cited by the Petitioner.

Conclusions

The Court concluded that the Petitioner was not entitled to the reliefs sought under Article 226 of the Constitution of India due to their failure to take necessary steps and follow up on their initial request. The Court disposed of the petition, allowing the Petitioner to approach the Department and CELEBI for the release of goods in accordance with the law.

SIGNIFICANT HOLDINGS

The Court held that:

• The Petitioner is not entitled to the release of goods without demurrage charges due to their failure to take necessary actions under Section 49 of the Customs Act, 1962.
• The Customs Department's failure to issue a show cause notice within the stipulated period does not automatically absolve the Petitioner of liability for demurrage charges.
• The Petitioner did not demonstrate any special circumstances justifying relief from demurrage charges, and the precedents cited were not applicable to the facts of this case.

The Court's final determination was that the Petitioner could pursue the release of goods through appropriate legal channels, but the petition for relief from demurrage charges was dismissed.

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