The petitioner has approached this court for a direction to the second and third respondents to pay demurrage charges.
2. The case of the petitioner is that is imported two consignments of diodes on 29.6.2000 and 11.10.2000 through and by two bills of entry Nos.294360 dated 27.9.2000 299700 dated 2.11.2000. The said import was investigated by the third respondent on suspicion of gross under valuation of the goods and the goods were detained by the second respondent in the first respondent premises.
3. After investigation, a show cause notice dated 23.3.2000 was issued for which a personal hearing was granted by the second respondent. By an order dated 1.5.2003 the second respondent dropped all the charges made under the show cause notice dated 23.3.2000. By the said order the second respondent accepted the value declared by the petitioner firm and both bills of entry and the third respondent advised the petitioner to contact the second respondent for further action. After passing of the proceedings, the customs officers examined the goods and assessed the bills of entries on the same day i.e. on 24.7.2003. A release order was passed on the same day, as the amount was paid on 1.5.2003.
4. The case of the petitioner is that the transits dues (demurrage) incurred from 29.7.2002 to 24.7.2003, the period of detention by the respondent-customs was not paid. The petitioner has not paid the customs duty amount. Hence the petitioner made two separate applications for issuance of detention certificate from 27.9.2000 to 24.7.2003. Since no response came from the second respondent, it was followed by reminders and subsequently filing of writ petition No.25720 of 2003 before this court praying for an order to direct the second respondent to issue detention certificate. Pursuant to the order in the above writ petition, the second respondent issued detention certificate dated 10.11.2003 for considering waiver of transit dues (demurrage) for the period of detention of goods.
5. The petitioner submitted that the goods imported through bill of entry No.294360 dated 27.9.2000 were allowed clearance by M/s. CCTL, Chennai after full waiver of demurrage charges based on the detention certificate issued by the second respondent. However in respect of other bill of entry, the first respondent refused to waive the demurrage charges and sent a letter dated 2.12.2003 to the petitioner and demanded a sum of Rs.2,03,201/- being the demurrage charges. The said order passed by the first respondent is impugned in this writ petition before this court.
6. Learned counsel for the petitioner submitted that the imports made by the petitioner was according to law and the value declared by the petitioner was accepted after adjudication and the investigation conducted by the second respondent shows that the petitioner is no way responsible the detention and it is not liable to pay the demurrage charges and that the petitioner is not liable and only the second respondent custom authority is liable to pay the amounts.
7. On the other hand Mr.Arunkumar, learned Central Government Standing Counsel submitted that the first respondent port trust has to waive the demurrage charges. In Paragraph 5 of the counter affidavit filed by the respondents 2 and 3 as states as follows:
"5)It is true that Port Authorities are bound to consider the waiver application filed by the petitioner on the strength of the Detention Certificate issued by the second respondent. The contention of the petitioner that inasmuch as M/s.C.C.T.L., Chennai have accepted the Detention Certificate issued by the second respondent and waived the demurrage charges, the first respondent too ought to have accepted the Detention Certificate issued by the second respondent and waived the demurrage charges, the first respondent too ought to have accepted the Detention Certificate issued by the second respondent and waived the demurrage charges is correct."
8. Based on that, learned Central Government Standing counsel submitted that the Port Trust is bound to consider the waiver application filed by the petitioner on the basis of detention certificate issued by the custom authority. Mr.M.Jagadeesan, learned counsel for the first respondent submitted that the first respondent is only a custodian and charges have to be paid for the space occupied by the goods of the petitioner. The counsel further submitted that the Madras Port Trust is governed by Tariff Authority for Major Ports and is also governed by scales of rates. The charges regarding detention of goods has been stated in para 2 of the counter affidavit filed by the customs.
"GOODS DETAINED BY CUSTOMS:
The period during which the goods are detained by the Commissioner of Customs for the purpose of analytical test or technical test, other than the ordinary process of appraising and issuance of certificate by the Commissioner of Customs to be not attributable to any fault or negligence on the part of the Exporter, for such periods of detention, the demurrage charges shall be recovered as under:
Actual demurrage charges at full rates shall be worked out as per Scale of Rates at the appropriate slab as applicable after 45 days and the concessional rate mentioned above shall be applied thereon the full demurrage charges leviable.
The first 45 days shall be reckoned with as follows:
(i) first 45 days after expiry of free days if cargo detained by the Customs before expiry of free days and (ii)first 45 days from the date of detention if cargo is detained by the Customs after accrual of demurrage charges. The detention certificate for availing the above concession shall be submitted within a period of six months from the date of clearance of goods. Note: (i) The above time limits will be inclusive of all holidays. (ii) The time limits can be relaxed in cases of Acts of God or the extra ordinary circumstances beyond human control."
9. By relying upon the guidelines, learned counsel submitted that since the port trust is liable to charge, charges for detention of goods there was no application filed to waive the charges based upon the detention certificate. He further submitted that the first respondent is a statutory body and it cannot be carried away by the act of any third person except to follow the scales of rate fixed by the Tariff Authority for Major Ports. He further submitted that under
Section 170 of the Indian Contract Act, the first respondent is entitled to have rights to retain a lien over the goods until dues are paid.
10. Mr.Desrick Sam, learned counsel appearing for Mr.S.S.Radhakrishnan, learned counsel for petitioner on record submitted that the issue was already settled by the Hon'ble Supreme Court by three judges bench in Shipping Corporation of India Limited vs. C.L.Jain Woolen Mills reported in 2001 (129) E.L.T 561 (Supreme Court). In that case also similar issues arose. The detention order was passed against the importer and that order was challenged by the importer before the Hon'ble Delhi High Court. It declared that the confiscation of goods as illegal. As the confiscation was declared illegal, the question of payment of demurrage arose and the Hon'ble Supreme Court after elaborate discussion of the various provisions of the customs Act and Indian Bills of lading Act 1956 and
Section 170 of Indian Contract Act held that in the absence of any provisions in the Customs Act entitling the custom officer to prohibit the owner of the space, where the imported goods have been stored, from levying the demurrage charges; Levy of demurrage charges for non-release of goods is in accordance with the terms and conditions of contract and as such would be a valid levy. The conclusion of the High Court to the effect that the detention of the goods by the custom authorities was illegal and such illegal detention 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 demurrage charges. Similarly His lordship Altamas Kabir the Judge of the Hon'ble High Court,Culcutta, in Donald & Macarthy (P) ltd. versus Union of India reported in 1997 (89) E.L.T 53 (Cal.) held that when the goods were detained by the customs authority and not due to any negligence on the part of party, the demurrage charges have to be paid by Custom authorities. Similarly a Division Bench of the Hon'ble High Court Andrapradesh at Hyderabad in Sujana Steels Ltd. versus Commissioner of Customs & Central excise (Appeals) Hyderabad reported in 2002 (141) E.L.T 343 (A.P.) held that when the importer is unable to clear the goods from the customs area due to the fault on the custom authority, Central Warehousing authority could not be directed to release the goods to the petitioner company without payment of storage and demurrage charges and that the customs authority are held liable to pay demurrage charges being responsible for the delay in releasing the goods.
11. Learned Central Government Standing Counsel does not dispute the proposition of law and only submitted that the custom authority cannot be held liable.
12. In view of categorical pronouncement of the judgements by the Hon'ble Supreme Court and other High Courts, the demurrage charges in respect of petitioner's goods which were detained in the first respondent premises at the instance of the second respondent custom authority, the custom alone is liable to pay demurrage charges. Apart from that confiscation/retention of goods on suspicion was dropped by virtue of the order passed by the Assistant Commissioner of Customs on 1.5.2003 itself and that is the position, the customs authority cannot escape from the liability of paying demurrage charges in respect of the goods covered by bill of entry No.299700 dated 2.11.2000 to the first respondent namely the Chennai Port Trust. Accordingly the order passed by the first respondent is sustained and a direction is issued to the second respondent to pay demurrage charges to the first respondent in respect of the aforesaid bill. The second respondent is granted two weeks time to pay the demurrage charges to the first respondent and after payment of said demurrage charges by the second respondent the first respondent is directed to release the goods within one week from the date of payment. Till the goods are released, the petitioner is directed to pay any tariff if payable by them to the customs in respect of the goods within 10 days from the date of the receipt of a copy of this order.
vk To:
1.Board of Trustees, Rep. by Chairman, Chennai Port Trust, Rajaji Salai, Chennai-600 001.
2.The Commissioner of Customs, "Custom House", 33,Rajaji Salai, Chennai-600 033.
3.The Directorate of Revenue Intelligence, Zonal Unit, No.25,Gopalakrishna (Iyer)Road, T.Nagar, Chennai 600 017