TaxTMI 
TaxTMI 
2016 (5) TMI 301
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....324372 dated 24th January 2001. Though the supplier was based in Germany the consignment was shipped from Los Angeles, USA. The B/E described the goods in the consignment as "Zinc Diecast Scrap Saves", classified under CTH 7902 00, the customs duty chargeable at 35%, 10% thereof as surcharge, 16% as countervailing duty and 4% as special additional duty. 3. On 29th January 2001, the container containing 18616 kgs scrap was examined. The goods were found to be matching with declaration and were cleared. On 7th February 2001, the other container containing 18835 kgs was weighed and the gross weight was found to be 19900 kgs. On 9th February 2001 the said container was opened and the goods examined in the presence of the customs house agent ("CHA"), the customs officers and the officers of the Department of Revenue Intelligence. According to the customs department, the zip sliders found packed in original cardboard packing were of "YKK and BOYT" make. They appeared to be brand new and not scrap. 4. Representative samples of zip sliders were examined for further enquiry. An enquiry was conducted with M/s YKK, New Delhi and by a letter dated 14th February 2001 they conveyed that th....
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....puty Commissioner, ICD Patparganj, Delhi. Thereafter by an order dated 2/4th June 2001 passed by the Commissioner (ICD), the zip sliders valued at Rs. 4,05,484 (enhanced from declared value of Rs. 55,905) were confiscated under Section 111(i) and (m) of the Act with a redemption fine of Rs. 45,000 along with penalty of Rs. 25,000 under Section 112(a) of the Act. 10. The Petitioner challenged the above order before the Customs, Excise and Gold (Control) Appellate Tribunal ("CEGAT"). By an order dated 23rd July 2001, the CEGAT allowed the appeal filed by the Petitioner holding that there was nothing on record to suggest that the Petitioner had not entered into contract with German firm for supplying the scrap and further that M/s YKK Japan had also confirmed that the goods were sold as scrap. Accordingly the CEGAT set aside the adjudication order dated 2/4th June 2001 and directed that the goods be mutilated in the presence of the customs officers. 11. A letter dated 14th September 2001 was written by the Additional Commissioner of Customs (Respondent No.2) to the Central Warehousing Corporation (Respondent No.3) ("CWC") communicating the recommendations of the Commissioner of ....
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.... 15. Reference is also made to the decision of the Supreme Court in International Airport Authority of India v. Grand Slam International (1995) 3 SCC 151, in which it was held that the liability to pay the detention/demurrage charge is on the importer. It was further pointed out that there was admittedly a mis-declaration of the goods even if the CEGAT allowed conditional release on mutilation. According to the Customs Department, the CEGAT erred in holding the goods to be scrap. It was submitted that the manner of sale did not take away the identity of the goods. It was contended that the delay in release of the goods and the consequent demurrage charges was on account of the Petitioner first seeking immediate adjudication by waiving formal SCN but later disputed the findings leading to the issuance of the SCN. 16. It is submitted that as a prudent businessman the Petitioner could have sought release of the goods at any stage while still filing the petition and claiming the demurrage charges. It was submitted that on 19th September 2001, the Customs gave an option to the Petitioner to have the goods released after mutilation of the zip sliders but this option was not availed b....
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....ds were found to be undervalued and asking the Petitioner to show cause as to why the value of the consignment should not be loaded on the basis of price of contemporary import to the extent of US$ 1.16/piece in the case of cylindrical locks and US$ 0.35/piece in the case of lock cylinders and why said goods should not be confiscated under Section 111(m) of the Act for mis-declaring the value and the penalty under Section 112(a) of the Act should not be levied. 23. On that date itself the Petitioner replied to the SCN, pointing out that the value in NIDB data was not the imported price but one loaded by the Department and therefore could not be taken to be final and authentic. The Petitioner pointed out that damage had been caused to goods on account of open verification in rain and due to manhandling. The Petitioner requested for compensation for damages and waiver of demurrage. 24. An Order-in-Original was passed by the Additional Commissioner on 17th August 2004 holding that the value of the consignment should be loaded to US$1.16 per piece for cylindrical locks and US$0.35 per piece for the lock cylinder and computed the differential duty to be paid accordingly. The goods....
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....ans to get those goods released but to make payments under protest and therefore approached this Court praying for directions to Respondent Nos. 1 and 2 to unconditionally release the goods in favour of the Petitioner without imposing any liability on it. 31. Pursuant to the order dated 28th April 2006, the Petitioner deposited a sum of Rs. 50,000 for obtaining release of the goods and the said amount was directed by a further order dated 22nd September 2006 to be paid over to CCI subject to the outcome of the writ petition. The decision in Grand Slam International 32.1 The question whether an importer is liable to pay the demurrage charges, notwithstanding that he ultimately succeeded in demonstrating that the import was validly made, came up for consideration before the three Judge Bench of the Supreme Court in International Airport Authority of India v. Grand Slam International (supra). 32.2 The facts in that case were that the Customs Department had issued detention certificate and informed the International Airport Authority of India ("IAAI") and the Central Warehousing Corporation ("CWC"), where the goods were detained, that no demurrage may be charged for the per....
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....ad filed four bills of entry in respect of synthetic waste (soft quality). The Customs Department on testing the samples concluded that the goods imported were prime fibre and not soft waste and that the value did not commensurate with the quality of goods under import. Accordingly an SCN was issued. 33.2 The goods were not being released and the imported consignment was incurring heavy demurrage charges and container charges. An order was passed in an application in the writ petition filed before the High Court noting the statement of the counsel for the Department that, in case after the inspection, the goods are found to be synthetic waste, then the entire demurrage and container charges would be borne by the Customs Department. Thereafter, the Principal Collector was directed to adjudicate the issue within a time-bound programme. Ultimately, the Chief Commissioner by an adjudication order directed the unconditional release of goods under all the four bills of entry. 33.3 On account of delay in disposal of departmental proceedings, a fresh writ petition was filed before the High Court for release of the goods. The writ petition was allowed by the High Court holding that th....
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....y delay on the part of the respondent in taking delivery of the goods after 5.4.1997, the respondent will have to bear the consequences. For the period prior to 5.4.1997, however, the order of the High Court does not require any intervention from us. The appellants shall file a progress report relating to the departmental inquiry by 30th November, 1998. 19. The appeal is dismissed with no order as to costs." The decision in C. L. Jain Woollen Mills 34.1 It is obvious that the decision in Union of India v. Sanjeev Woollen Mills (supra) came to be delivered in the peculiar circumstances detailed in the said judgment itself. Nevertheless there was a perceived conflict of the decisions in International Airport Authority of India v. Grand Slam International (supra) and Union of India v. Sanjeev Woollen Mills (supra). This was sought to be resolved in the decision in Shipping Corporation of India Limited v. C.L. Jain Woollen Mills (2001) 5 SCC 345. 34.2 A three Judge Bench of the Supreme Court in Shipping Corporation of India Limited v. C.L. Jain Woollen Mills (supra) affirmed the decision in International Airport Authority of India v. Grand Slam International (supra) and dis....
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....the contract against the Customs Authorities, making the said authorities liable to pay the demurrage charges?" 34.7 The Supreme Court noted that while the customs authorities exercise their power under the provisions of the Act, the claim of the CWC or the SCI as the case may be, was based upon the terms and conditions of the contract between the importer and the carrier. The Court then examined the bill of lading, which pertained to the carrier in that case, namely, SCI. It was noted that the relationship between the importer and the carrier of goods in whose favour the bill of lading had been consigned and who has stored the goods in its custody is governed by the contract between the parties. 34.8. Reference was made to Section 170 of the Indian Contract Act, 1872, which engrafted the principles of bailee"s lien, i.e., if somebody has received the articles on being delivered to him and is required to store the same until cleared for which he might have borne the expenses, he has a right to detain it until his dues are paid. It was noted that the bill of lading unequivocally conferred power on the SCI to retain the goods, until its dues were paid. The Supreme Court noted t....
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....etention prevented the importer from releasing the goods, the customs authorities would be bound to bear the demurrage charges in the absence of any provision in the Customs Act, absolving the customs authorities from that liability. Section 45(2)(b) of the Customs Act cannot be construed to have clothed the customs authorities with the necessary powers, so as to absolve them of the liability of paying the demurrage charges....." 34.12 However, the ultimate relief granted by the Court was to direct that, with the goods having already been released without payment of demurrage charges, "it would be meet and proper for us to direct the Shipping Corporation and Container Corporation, if an application is filed by the Customs Authorities, to waive the demurrage charges." Summary of the legal position 35. At this point it is necessary, therefore, to summarize the principles that can be culled out from the aforementioned decisions in International Airport Authority of India v. Grand Slam International (supra) as well as Shipping Corporation of India Limited v. C.L. Jain Woollen Mills (supra). The principles are set out as under: i. There is no provision in the Act that ....
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....ine the goods and draw samples to verify and determine the duty liability. (2) The customs authorities can issue detention certificate or for good reasons may be called upon and directed by the Courts to issue detention certificate in respect of imported goods. (3) Detention certificate issued by the customs authorities is not a mandate on the shipping company or warehousing companies. These corporations/companies are entitled to claim demurrage/container charges. These corporations cannot be compelled and mandamus cannot be issued to waive demurrage on the ground that the importer/consignee was unable to clear the goods due to fault of the custom authorities. (4) Whether and in what circumstances customs authorities can be compelled and asked to pay demurrage to the warehousing companies/shipping companies, is a matter of considerable debate. Decision in the case of Sanjeev Woollen Mills (supra) states that in some cases customs authorities can be asked to pay demurrage to the warehousing company or shipping company. However, for this exceptional relief, grounds are required to be made out and established." 39. In Union of India v. Navshakti Industrie....
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....ificate is issued by the custom authorities, the goods would be released subject to furnishing of bond and/or security as may be prescribed that in case any fine, penalty, personal penalty and/or warning is imposed by the customs authorities, the Importer would pay the demurrage charges." 40.3 In the facts of that case in one writ petition it was held that the Petitioner should furnish a security bond and the bank guarantee securing the demurrage charges and undertake to pay the demurrage charges in case on conclusion of the adjudication proceedings any fine, penalty, personal penalty and/or warning is imposed by the customs authorities. In the other writ petition since fine and penalty has been imposed, the Petitioner was held not to be entitled to the benefit of the policy for waiver. It was held that the goods could be released only on payment of the demurrage charges. Orders in the present petitions 41. However, there have been some decisions of this Court which are not consistent with the above settled position of the law as explained in International Airport Authority of India v. Grand Slam International (supra) and reiterated in Shipping Corporation of India Limited....
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....sequent order dated 22nd September 2006, a sum of Rs. 50,000/- paid by the Petitioner was directed to be handed over to the Container Corporation to be appropriated towards its claim for demurrage charges subject to the result of the writ petition. The Petitioner furnished the security bond ultimately on 27th September, 2006. 44. In view of the clear enunciation of law as has been settled and summarised hereinabove, the orders passed by this Court in Om Petro Chemicals v. Union of India (supra), Yang Ming Marine Transport Corporation v. Commissioner of Customs Inland Container Depot, Tughlakabad (supra) and even the interim order in Modern Overseas cannot be said to be good law. 45. An attempt was made by Mr. Rawal, learned Senior Advocate appearing on behalf of the Petitioner in W.P. (C) No.3440-3441/2005, to point out the unfair conduct of the customs authorities in continuing to retain the goods despite knowing that such detention was unjustified. It was alleged that the proper investigation was never made into the complaints given by the Petitioner. Further, the offer of the Petitioner Modern Overseas to furnish a bond for release of the goods in its favour was also unfai....