2026 (3) TMI 423 - HC - Customs

Deteriorated imported goods: equitable relief allowed-order set aside, disposal authorised and demurrage waiver directed.

Quashing the adjudicating order dated 6.10.2022, the HC declined to decide technical classification and valuation disputes on merits because the ... Quashing of order-in-original - classification of goods - valuation of imports - non- issuance of show cause notice - detention of imported goods - entitlement to directions for disposal of deteriorated goods and issuance of a demurrage waiver certificate. Quashing of order-in-original - HELD THAT:- The Court recorded that the imported goods had completely deteriorated and were of no commercial utility following a joint inspection. Rather than adjudicating the rival contentions on classification and valuation, and in view of the futile nature of continuing proceedings over a small consignor, the Court exercised its supervisory jurisdiction under Article 226 to put a quietus to the matter by setting aside the order in original. The Court emphasised the need for a pragmatic approach in cases involving small entrepreneurs and negligible consignments so as to protect trade while safeguarding Revenue interest, and declined to traverse the merits of the classification or valuation dispute in the circumstances of spoilage. Order in original dated 6.10.2022 quashed and set aside and the petition disposed of in terms of the Court's observations. Authority to deal with seized deteriorated goods - HELD THAT:- On the petitioner's concession that the goods had completely deteriorated and had no market value, the Court permitted the Respondents to either auction or destroy the goods and to appropriate any amounts realised. The Court directed that any surplus remaining after appropriation for liabilities such as warehousing charges should be paid to the petitioner. This direction follows from the factual finding of spoilage and the practical need to conclude the matter without further futile proceedings. Respondents permitted to auction or destroy the goods and appropriate proceeds; any surplus to be paid to the petitioner to discharge warehousing charges. Demurrage waiver certificate - HELD THAT: - Without adjudicating the competing contentions on why the goods were detained or seized, the Court applied its prior decision in Writ Petition No.13178 of 2023 which, when ordering provisional release in that matter, had directed issuance of a demurrage waiver certificate. The present petition was disposed of by directing the Respondents to follow that precedent and issue the waiver certificate for the goods in question. Respondents to issue a demurrage waiver certificate in respect of the goods subject matter of Bill of Entry No.6184455. Final Conclusion: The petition is disposed of: the impugned order in original is quashed and set aside; Respondents are authorised to auction or destroy the deteriorated goods and appropriate realisations with any surplus payable to the petitioner after warehousing charges; and Respondents are directed to issue a demurrage waiver certificate in respect of the goods. No costs. Issues: Whether the order in original dated 6.10.2022 passed by the adjudicating authority sustaining classification/valuation and detention of imported goods should be quashed; and whether the petitioner is entitled to directions for disposal of deteriorated goods and issuance of a demurrage waiver certificate.Analysis: The Court examined the factual matrix: detention and seizure of goods on 1.3.2022, the adjudication by Respondent No.3 on 6.10.2022, the petitioner's contention of non receipt of a show cause notice, and the joint inspection report showing complete deterioration of the goods. The Court noted competing contentions on classification and valuation but refrained from resolving those technical disputes on merits in view of the condition of the consignment and the disproportionate impact on a small importer. The Court considered equitable reliefs appropriate where goods have no market value and followed its prior order in Writ Petition No.13178 of 2023 regarding provisional release and demurrage waiver certificates. The Court directed that the Department may deal with the deteriorated goods (auction or destruction), that any realisation be appropriated with surplus to the petitioner, and that a demurrage waiver certificate be issued in respect of the subject bill of entry.Conclusion: The order in original dated 6.10.2022 is quashed and set aside; the Respondents are permitted to deal with the deteriorated goods by auction or destruction with realisation appropriated and any surplus returned to the petitioner; and the Respondents are directed to issue a demurrage waiver certificate in respect of Bill of Entry No.6184455 dated 9.11.2021.