(Per : HONOURABLE MR. JUSTICE AKIL KURESHI) 1. The petitioner, a Company incorporated under the relevant laws of Hong Kong (hereinafter to be referred to as 'the exporter') has filed this petition making several prayers. At the time of hearing the petition, however, the counsel for the petitioner pressed only prayer 9(B) of the petition and did not press the remaining prayers. Prayer 9(B) reads as under:-
“(B) YOUR LORDSHIPS may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction, directing the respondent Customs to pay to the petitioner an amount of Rs.25,72,765/- (being compensation towards payment of Containers' Detention Charges along with ground rent) along with 18% interest thereon, from the date such payment was made by the petitioner, till the final payment is made.”
2. The petition arises with the following factual background. In the year 1998, the petitioner exported 100% Mulberry Raw Silk to its various Indian buyers under 31 different consignments. The goods were shipped from Hong Kong and Singapore. The Indian buyers however, did not take the release of the documents from the bank. The petitioner, therefore, attempted to find new buyers in India who would be interested in purchasing such goods. Upon finding such buyers, the exporter filed necessary Bill of Lading with the customs authorities duly amended in this respect. The customs authorities however did not release the goods in favour of such new buyers. The petitioner, therefore, alternatively prayed for re-shipment of the goods which request was also not considered.
3. The respondent authorities, however, issued seizure orders some time in March 1998 purportedly under section 110 of the Customs Act, 1962. Subsequently, the customs authorities passed four different orders dated 16-2-1999, 17-2- 1999, 1-3-1999 and 8-3-1999 confiscating the goods in question.
3.1 The petitioner had filed four different petitions being Special Civil Application No.8203, 8206, 8209 and 8210 all of 1998 in which the court directed the customs authorities to decide the applications of the petitioner for re-shipment of the goods. Instead of doing so, the customs authorities issued notices dated 23-11-1998 to the Indian buyers who were mentioned in the Bill of Lading, proposing to confiscate the goods and impose penalty. However, no notice of the above proposed action was issued to the exporter. The petitioner, therefore, once again approached this court by filing Special Civil Application No.2570 of 1999 and prayed for several reliefs including a direction to the respondents to permit re-export of the goods in question. During the pendency of that petition, the confiscation orders noted above were brought in the court and also challenged.
4. Special Civil Application No.2570 of 1999 came to be disposed of by a Division Bench of this court by a judgment dated 18-9-2000. The court noted that no notice of confiscation was issued to the petitioner. The court was of the opinion that such a notice in terms of the provisions contained in section 124 of the Customs Act was mandatory. The court, therefore, held that non-service of notice for grant of opportunity to the petitioner company as the owner of the seized goods was a fatal infirmity and the confiscation order was in contravention of section 124 of the Act. It was further held that due to such illegality, the consequence would be that the petitioner would be entitled to the return of the seized goods. The court, therefore, disposed of the petition in the following manner:-
“19. As a result of the discussions aforesaid, this petition must succeed and it is therefore allowed. The impugned orders dated 14th December, 1998 (Annexure H) and cumulatively marked as (Annexure G) dated 16th February, 1999, 17th February, 1999, 1st March, 1999 and 8th March, 1999 of confiscation of the imported goods are all hereby quashed. The respondent authorities are directed to restore the goods seized and illegally confiscated to the petitioner company. It is however made clear that the Custom Authorities are at liberty to make further investigation into the alleged illegal import of the quantity of Raw Silk by the petitioner company and take permissible action in that regard. It is however also made clear that as a result of restoration of the illegally confiscated goods to the petitioner company, the Custom Authorities would consider the prayer of the petitioner company, based on its investigation and inquiry, to either allow the petitioner company to dispose of its goods to other licenced importers in India or to re- ship them, as is permissible in law. Rule is made absolute with no order as to costs.
Sd/- (D.M. Dharmadhikari, CJ) Sd/- (A.R. Dave, J)”
5. Despite such order of the Division Bench of this court, the customs authorities initially did not release the goods in order to test the legality of the decision of this court before the Apex Court. However, having filed such S.L.P. challenging the judgment of the High Court and during the pendency of such S.L.P., the Commissioner of Customs, Kandla on 21-7-2001 restored the ownership of the goods to the petitioner exporter by passing the following order:-
“Please refer to this office letter even number dtd.
17.07.2001 on the above referred subject.
In the facts and circumstances of the case and respectfully abiding by the order passed by the Hon'ble High Court, Ahmedabad, ownership of the goods is restored to you. Further, you are permitted to re-ship back the goods subject to fulfillment of the formalities under the provisions of Customs Act, 1962.”
6. We may note that part of the consignment was already sold by the customs authorities to National Consumer Co-operative Federation in purported exercise of powers under section 48 of the Customs Act. In view of the counsel for the petitioner not pressing other reliefs claimed in the petition, we are not concerned with this dispute and have confined our inquiry only with respect to the question of payment of demurrage charges by the customs authorities as prayed for in para 9(B) of the petition.
7. Subsequently, the S.L.P. came to be disposed of in the following manner:-
“UPON hearing counsel the Court made the following ORDER Delay is condoned.
Heard learned ASC for the petitioner and Mr. DA. Dave, the learned senior counsel for the respondent-caveator. Mr. DA. Dave, the learned senior has brought to our notice the order passed by the Commissioner Customs. Having perused the said order we do not think that it will be appropriate to interdict the re-shipment. We are not inclined to interfere with the order under challenge. The Special Leave Petition is therefore dismissed.”
8. It is the case of the petitioner that even after the Commissioner of Customs, Kandla passed the order dated 21- 7-2001 restoring the goods to the petitioner, the re-shipment thereof was not permitted for some time. However, after the S.L.P. was disposed of, such reshipment was also allowed. At that stage, the petitioner moved the present petition and prayed that the customs authorities should be directed to pay an amount of Rs.25,72,765/- towards the payment of containers' detention charges alongwith ground rent with 18% interest thereon from the date when such payments were made till actual reimbursement.
9. Learned counsel Shri Gupta for the petitioner taking us through various documents on record vehemently contended that the respondents had no authority in law to seize the goods or at any rate, order confiscation thereof without any notice to the petitioner exporter. He submitted that the petitioner had made detailed correspondence with the customs authorities requesting the substitution of the import in favour of new buyers in view of the original buyers defaulting and failing to take delivery of the goods by making payment to the banks. The petitioner, in the alternative, had also prayed that the entire consignment be permitted to be re-shipped. The customs authorities gave no reply to such letters and had, at all stages, totally ignored the pleas of the petitioner.
9.1 The counsel further submitted that the order of seizure was illegal and unlawful. In any case, the final order of confiscation was passed without any notice to the petitioner and was, therefore, bad in law and in fact, quashed by this court by a judgment dated 18-9-2000. Consequent to such decision, the confiscation having been declared illegal, the petitioner cannot be saddled with the demurrage charges for the containers and the ground rent which the petitioner had to pay to the company.
9.2 In this respect, the counsel relied on the decision of the Apex Court in the case of Shipping Corporation of India Ltd. vs. C.L. Jain Woolen Mills reported in 2001 (129) E.L.T. 561 (S.C.) wherein the Apex Court under similar circumstances held the customs authorities liable to bear the charges of demurrage once the order of confiscation was held and declared to be illegal.
9.3 The counsel also relied on the decision in the case of Sandvik Asia Ltd. vs. Commissioner of Income Tax-I, Pune reported in 2006 (196) E.L.T. 257 (S.C.) to contend that such demurrage charges to be paid by the customs authorities must carry interest.
10. On the other hand, learned counsel Ms. Mandavia for the Department opposed the petition contending that the goods were imported in favour of non-existent parties. The import, therefore, was illegal. The importers not having lifted the goods, in terms of section 48 of the Customs Act, the authorities had power to dispose of such goods. Relying on the affidavit dated 17-3-2011 filed by Shri Sanket Subhash Kale, Assistant Commissioner of Customs, the counsel submitted that the Department would have proceeded to take such steps to dispose of the remaining quantity of goods also but for the petitioner approaching this court by filing Special Civil Application No.2570 of 1999. She pointed out that in such petition, by an order dated 12-4-1999, this court had prevented the customs authorities from disposing of or dealing with such goods till the final disposal of the petition.
11. Having thus heard the learned counsel for the parties, few important facts arising from the record may be restated. The petitioner exported 31 consignments of Mulberry Raw Silk. The original importers did not take the delivery of the goods by making payment. The petitioner, therefore, desired that the new Indian buyers should be permitted to take delivery thereof or alternatively, the goods should be permitted to be re-shipped.
12. The customs authorities, however, holding a prima facie belief that the import of the goods itself was illegal, initially issued seizure orders in March 1998, in exercise of powers under section 110 of the Customs Act. These orders were not served on the petitioner exporter. Eventually, without any notice to the petitioner, the customs authorities also passed four separate orders in February/March, 1999 confiscating the goods. Such orders came to be struck down by a Division Bench of this court by the judgment dated 18-9- 2000. In the said decision, the court held that the exporter was the owner of the goods and as owner of the goods, in terms of the provisions contained in section 124 of the Customs Act, it was entitled to a notice before any order of confiscation could have been passed. The court held that such requirement was mandatory in nature. Eventually, therefore, the court set aside all four orders of confiscation. Consequently the respondents were directed to restore the goods seized and illegally confiscated to the petitioner company. While doing so, however, the Bench kept liberty open to the respondents to make further investigation into the alleged import of the goods and thereafter take action as may be permissible. It was made clear that as a result of restoration of the illegally confiscated goods to the petitioner company, the customs authorities would consider the prayer of the petitioner based on its investigation and inquiry to either allow the petitioner Company to dispose of its goods to other licensed importers in India or to re-ship them as may be permissible under the law.
13. It is not in dispute that despite such liberty, no further inquiry or investigation was carried out. In any case, no show-cause notice was issued to the petitioner exporter of any further proposed action. In fact, the Commissioner of Customs, Kandla passed an order on 21-7-2001 and restored the ownership of the goods to the petitioner as permitted by this court and also permitted the petitioner to re-ship the said goods subject to fulfillment of the formalities under the Customs Act.
14. What emerges from the above sequence of events is that the orders of confiscation with respect to the goods exported by the petitioner, came to be declared illegal and quashed since such confiscation was made without any notice to the petitioner who was held to be the owner of the goods. Such order became final and conclusive. Pursuant to the order of this court, the goods were restored to the petitioner and in fact, allowed to be re-shipped. In that view of the matter, we are of the opinion that the petitioner cannot be saddled with the liability to bear the demurrage charges for detention of the containers and the ground rent.
15. Sub-section (1) of section 110 of the Customs Act which pertains to seizure of the goods, provides inter alia that if the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize such goods. Sub-section (2) of section 110 in turn provides that where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. Such period, however, may be extended for a further period not exceeding six months.
16. In the present case, admittedly, no notice was issued to the petitioner. Under sub-section (2) of section 110 of the Customs Act, therefore, the seizure could not have operated beyond such period of six months from the initial seizure. In any case, the Division Bench of this court in the judgment dated 18-9-2000 held that the confiscation itself was wholly illegal. Significantly, the seizure orders were never served on the petitioner. In that view of the matter, as held by the Apex Court in the case of Shipping Corporation of India Ltd. vs. C.L. Jain Woolen Mills (supra), the customs authority should bear the demurrage charges incurred during detention and confiscation of goods when such detention and confiscation was held illegal. In the said case, the customs authorities had confiscated the goods imported. Such confiscation was quashed and set aside by Delhi High Court upon a petition filed by the importer. The question of bearing the burden of demurrage charges thereupon arose and the Apex Court held that the Delhi High Court having set aside the order of confiscation and levying penalty and such order having reached finality, the liability of the importer to pay demurrage charges ceases and that question cannot be re-opened. The court thereafter proceeded to decide the question, namely if the customs authorities do not release the goods and initiate proceedings and finally pass the order of confiscation but that order is ultimately set aside in appeal and it is held by the court of law that detention of the goods was illegal, then in such circumstances, whether the carrier of the goods who had lien over the goods for non-payment of duty, can enforce the terms and conditions of the contract against the customs authorities, making the said authorities liable to pay the demurrage charges. In this respect, the Apex Court held that there is nothing in the Customs Act which would enable the customs authorities to compel the carrier not to charge demurrage charges, the moment a detention certificate is issued. It was observed that it may be true that the customs authorities might have bonafide initiated the proceedings for confiscation of the goods which however, ultimately turned out to be unsuccessful and the court held the same to be illegal. But that by itself would not clothe the customs authorities with the power to direct the carrier not to charge any demurrage charges nor the so-called issuance of detention certificate would prohibit the carrier from raising any demand towards demurrage charges for the occupation of the imported goods of the space, which the proprietor of the space is entitled to charge from the importer. While making such observations, the Apex Court relied on the earlier decision in the case of International Airports Authority of India vs. Grand Slam International reported in 1995 (3) SCC 151. The Apex Court concluded that “the conclusion of the High Court to the effect that the detention of the goods by the customs 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 the demurrage charges.”
17. In the present case also, as already noted, the goods were seized and confiscation ordered without any notice to the owner i.e. the present petitioner. Despite the fact that the petitioner exporter had been corresponding continuously with the customs authorities and raising the issue of re- shipment of consignment and several other connected issues, the customs authorities even after order of seizure, proceeded to pass the order of confiscation without any notice to the present petitioner. Such notice was held mandatory under section 124 of the Customs Act by this court in the judgment dated 18-9-2000. The entire action of confiscation was declared illegal. Even while doing so, the authorities were given liberty to make further inquiry or investigation with respect to the alleged improper import of the goods. No further inquiry was carried out.
18. In the facts and circumstances of the case, looking to the conduct of the authorities and particularly in view of the order of this court declaring the confiscation illegal, and such judgment of this court having attained finality, the customs authorities cannot escape the liability to bear the burden of demurrage charges for such seized and ultimately confiscated goods which would include container charges and ground rent. We may note that the seizure orders pertained to the containers also.
19. However, with respect to the amount actually paid by the petitioner for such demurrage towards container and ground rent charges, there are no documents establishing the payment. In the prayer, the petitioner has claimed such charges of Rs.25,72,765/-. No supporting documents have been produced with this petition. In that view of the matter, such verification of actual demand and payment of container detention and ground rent charges must be left to the customs authorities.
20. Under the circumstances, the customs authorities are held liable to bear the demurrage charges actually paid by the petitioner from the date of the seizure till the actual release of the goods. Actual quantification thereof is left to the Commissioner of Customs, Kandla who may, upon the documents which the petitioner may produce within a period of four weeks from the date of receipt of this order, examine the genuineness of the demand of such charges and actual payment by the petitioner. To the extent such demand is found genuine and payment actually made, the customs authorities shall reimburse the petitioner with simple interest at the rate of 9% per annum from the date of payment by the petitioner till its reimbursement by the respondents. The petition is accordingly disposed of. Rule is made absolute accordingly.
( Akil Kureshi, J. ) ( Harsha Devani, J. ) hki