Gujarat High Court
Asian Food Industries vs Commissioner Of Customs on 24 July, 2018
Equivalent citations: AIRONLINE 2018 GUJ 97
Author: A.J.Desai
Bench: A.J.Desai
C/SCA/19287/2006 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 19287 of 2006
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE A.J.DESAI sd/-
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1 Whether Reporters of Local Papers may be allowed to No
see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
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ASIAN FOOD INDUSTRIES
Versus
COMMISSIONER OF CUSTOMS
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Appearance:
MR HRIDAY BUCH, LD.ADVOCATE WITH MR DARSHAN M
VARANDANI(7357) for the PETITIONER(s) No. 1
DELETED(20) for the RESPONDENT(s) No. 4,5
MR ANKIT SHAH(6371) for the RESPONDENT(s) No. 1
MR DEVANG VYAS(2794) for the RESPONDENT(s) No. 2
MR DHAVAL D VYAS(3225) for the RESPONDENT(s) No. 3
MR PY DIVYESHVAR(2482) for the RESPONDENT(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE A.J.DESAI
Date : 24/07/2018
CAV JUDGMENT
1. By way of the present petition under Article 226 of the Constitution of India, the petitioner, who is a partnership firm, engaged in the business of purchase and sale of various Page 1 of 19 C/SCA/19287/2006 CAV JUDGMENT kinds of cereals, pulses, beans of spices, whole gram, tuar dal, red chauli, etc. and also in the business of exporting the above goods to various overseas buyers in the middle eastern countries and other parts of the world, initially prayed to issue a writ of mandamus directing the respondents to issue detention certificate in connection with certain containers, which had been detained by issuing an order u/s.5 of the Customs Act,1962 in view of decision rendered by Division Bench of this Court in Special Civil Application No.14642 of 2006, by which, Custom Authority was directed to permit the petitioner to export the consignments, which have already been cleared by the Customs Authorities on 23-24/06/2006. Following prayers have been made at the time of filing of petition:
"11(A) YOUR LORDSHIPS may be pleased to issue appropriate writ of mandamus or any other suitable writ, order or direction which the Hon'ble Court may deem fit, just and proper, directing respondent No.1 to issue detention certificate in favour of the petitioner as the containers have been detained on account of the statutory order issued by respondent No.1 under Section 45 of the Customs Act 1962 which has been held illegal by this Hon'ble Court in Spl.C.A.No.14642 of 2006 by judgement and order dated 1.9.2006;
(B) Your Lordships may be pleased to issue appropriate writ of mandamus or any other Page 2 of 19 C/SCA/19287/2006 CAV JUDGMENT suitable writ, order or direction which the Hon'ble Court may deem fit, just and proper, directing respondents No.1 and 2 to make payment to Respondent No.3, 4 and 5 as the containers have already been cleared by the Customs Department under section 51 of the Act for shipment in the vessel from Kandla Port on 23/24th of June,2006, however, on account of wrong interpretation of Notifications by respondents No.1 and 2, made illegal demand of detention, demurrage and ground rent charges from the petitioner, which otherwise the petitioner is not liable to pay and consequently the respondent No.3 restrained Respondent No.4 and 5 from loading the containers in the vessel and insisted the payment of detention, demurrage and ground rent charges from respondents No.4 and 5 which is arbitrary, illegal and against the provisions of law for the reasons stated in the memo of petition;
(C) Your Lordships may be pleased to issue appropriate writ of mandamus or any other suitable writ, order or direction which the Hon'ble Court may deem fit, just and proper, declaring that the action of respondent No.3 restraining the petitioner from loading the containers in the vessel and also declaring the demand of the Page 3 of 19 C/SCA/19287/2006 CAV JUDGMENT respondent No.3 towards ground rent, detention and demurrage charges from respondents No.4 and 5 as illegal and arbitrary because on account of wrong interpretation of Notifications by respondents No.1 and 2, statutory order came to be issued by respondent No.1 under section 45 of the Customs Act 1962 which has been held illegal by this Hon'ble Court in Spl.C.A.No.14642 of 2006 by judgement and order dated 1.9.2006;
(D) Pending the hearing and final disposal of this Special Civil Application, Your Lordships be pleased to:
(i) direct the respondents No.3, 4 and 5 to allow the petitioners to load the cargo in the vessel in view of the decision of the Hon'ble Division Bench of this Court, on 1.9.2006, in Spl.C.A.No.14642 of 2006, without insisting the payment of ground rent, demurrage and detention charges and if at all it is payable, the same is payable by respondents No.1 and 2 to respondents No.3, 4 and 5 and not by petitioner because the containers have been detained on account of wrong interpretation of the Notifications by respondent No.1 and 2 and subsequent statutory order passed Page 4 of 19 C/SCA/19287/2006 CAV JUDGMENT by respondent No.1 under Section 45 of the Customs Act 1962 which has been held illegal by this Hon'ble Court in Spl.C.A.No.14642 of 2006 by judgement and order dated 1.9.2006; and
(ii) permit the petitioner to load the cargos in the vessel, without the rights and contentions of the petitioner and subject to providing bank guarantee of the illegal demand made by the respondents No.1 and 2 with the rider that it is the responsibility of the Respondent No.1 to make payment of demurrage, detention and ground rent charges because the goods are in perishable nature and worth Rs.6 Crores is stuffed in the containers and it has been happened on account of their wrong interpretation of the notifications because and for the reasons stated in the memo of the petition and in the interest of justice and fairness of things;
(E) Any other reliefs, which is deemed fit and proper by Your Lordships may please be granted in the interest of justice."
2. Since the decision dated 01/09/2006 passed by the Division Bench was challenged before the Hon'ble Apex Court Page 5 of 19 C/SCA/19287/2006 CAV JUDGMENT and containers were lying with the respondent authority since June,2006 and the petitioner had paid huge amount to the agencies towards container charges and demurrage, the cargo was called back by the petitioner and was sold in local market. Though there was no fault of the petitioner, he had to pay huge amount towards container charges and demurrage and therefore, the petitioner has moved an application for amendment being Civil Application No.4309 of 2007, which came to be allowed vide order dated 04/10/2007 and ultimately several grounds have been added in the main writ petition and following prayer was added in the writ petition:
"(CC)Your Lordships may be pleased to issue appropriate writ of mandamus or any other suitable writ, order or direction which the Hon'ble Court may deem fit, just and proper, directing the respondents No.2 and
3 both jointly and severally to pay Rs.62,85,667/ which was paid by the applicant to M/s.Intermark Shipping Agencies Pvt Ltd and M/s.Saturnship Agencies Pvt Ltd towards demurrage, container charges etc, in the interest of justice."
3. Pursuant to the Notice issued by this Court, respondent No.2 has filed an Affidavit and opposed to grant the reliefs, as prayed for, by the petitioner. Similarly respondent Nos.3 and 4 have also filed Affidavit opposing to grant the reliefs, as prayed for, by the petitioner.
Page 6 of 19 C/SCA/19287/2006 CAV JUDGMENT4. Brief facts, arise from the record, are as under:
That the petitioner, which is partnership firm and engaged in the business of purchase and sale of various kinds of cereals, pulses, beans of spices, whole gram, tuar dal, red choli, etc. He is also doing the business of exporting the said goods to various overseas buyers. The petitioner used to export the goods from various ports and one of the ports is Kandla Port, which is under jurisdiction of the Commissioner of Customs, who is regulating the import and export activities done by various importers and exporters under the provisions of The Customs Act as well as Policies framed by The Director General of Foreign Trade, Ministry of Commerce & Industry (respondent No.2 herein). Respondent No.3 is The Assistant Traffic Manager of Kandla Port Trust whereas respondent Nos.4 and 5 are Shipping Agencies. The petitioner intended to export approximately 2100 M.Tonnes of whole gram, Tuar Dal, Red Chowli, through the above shipping agencies in 67 containers. Initially in all, the petitioner had intended to export 87 such containers out of which, 20 containers were already sent between 22/06/2006 and 24/06/2016. All the 87 containers had already been cleared for export by the custom authority, after following provisions of Sections 50 and 51 of the Customs Act and remaining 67 containers having aforesaid goods, were lying for shipping at Kandla Port, belongs to respondent Nos.4 and 5.
Meanwhile, exercising power under section 5 of Foreign Trader (Development and Regulation) Act,1992, respondent No.2 issued a Notification on 27/06/2006 and prohibited export of various goods for a period of six months from the date of issuance of such notification. In view of the said Notification, the goods lying in those 67 containers were Page 7 of 19 C/SCA/19287/2006 CAV JUDGMENT amongst prohibited goods, the authority did not permit to export those 67 containers, though Clearance Certificate was issued by the Custom Authority.
The petitioner being dissatisfied with the action of the respondent authorities, filed a writ petition being Special Civil Application No.14642 of 2006 and challenged the said Notification. Division Bench of this Court allowed the said petition and held that Notification dated 27/06/2006 would be applicable from the date of issuance of the said notification and those consignments, which have been cleared by the customs department prior thereto, would not be covered under the said notification and therefore, accordingly allowed the aforesaid petition on 01/09/2006. While disposing of the said petition, authorities were directed to permit the petitioner to load the cargo, which is lying at Kandla Port area for export forthwith. The petitioner thereafter approached the Traffic Manager of Kandla Port Trust - respondent No.3 with the order of the Court and requested him to load the goods in view of the urgency since the petitioner is paying huge rent to respondent Nos.4 and 5 from which the containers were hired and the petitioner was paying huge ground rent for the same. The respondent did not act as per the direction and therefore, the present petition came to filed and as stated hereinabove and several prayers were made at the time of filing of the petition.
5. The aforesaid decision of Division Bench of this Court was challenged by the respondent authorities before Hon'ble Apex Court. Though there was no order passed by the Hon'ble Apex Court staying the aforesaid judgement of Division Bench of this Court, the authority was not permitting Page 8 of 19 C/SCA/19287/2006 CAV JUDGMENT the petitioner to export the goods and therefore, the petitioner, who had made huge expenditures towards ground rent/ dumerrages, called back all the goods, which were meant for export and sold the same to the local market. There were several cases pending before several High Court in connection with the Notification dated 27/06/2006, by which, certain items were prohibited for export. The decisions of various High Courts were challenged before the Hon'ble Apex Court. All such civil appeals arising out of SLP came to be disposed of by Hon'ble Apex Court on November 7, 2006. The decision of Division Bench of this Court rendered in Special Civil Application No. 14642 of 2006 was upheld and it was held that action of the respondents in not permitting the goods for export, even though clearance certificate was issued under the Customs Act, is an illegal action. Since the Hon'ble Apex Court finally decided the issue, the petitioner sought reliefs as made in amended prayer in Paragraph 11(CC) as he had already called back the goods lying in the containers and had sold the same in the local markets.
6. Mr.Hriday Buch, learned advocate assisted by the Mr.Darshan Varandani, learned advocate appearing for the petitioner has vehemently submitted that action of respondent No.2 acting on behalf of Government of India exercising its power u/s.5 of the Foreign Trade (Development and Regulation) Act,1992, exercised the same beyond the scope of powers conferred under section 5 of the Foreign Trade (Development and Regulation) Act,1992. He would submit that Director General of Foreign Trade, while issuing Notification dated 27/06/2006 being a foreign trade policy added certain goods as prohibitory articles in the Schedule of Page 9 of 19 C/SCA/19287/2006 CAV JUDGMENT export and import items, which includes the goods which the petitioner intended to export. However, had not clarified about the goods, which have already received clearance certificate under sections 50 and 51 of the Customs Act. So far as the petitioner is concerned, all 87 containers had received clearance certificate for export, however only 20 containers were physically exported and remaining 67 were lying in the containers of respondent Nos.4 and 5, for which, the petitioner had to give ground rent and demurrage. The respondent by his another Notification dated 04/07/2006 tried to clarify that the decision of government prohibiting certain items for export was announced and got widely published on 22/06/2006, the same would be applicable from the said date and not from the date of actual publication i.e. 27/06/2006, has been held illegal by Division Bench and confirmed by the Hon'ble Apex Court. He would submit that the petitioner was not at fault at any point of time since he had got all clearance certificate for export from the customs department and the authority under the guise of Notification, did not permit the petitioner to export 67 containers for considerable long period.
He would further submit that even after the pronouncement of judgement by Division Bench, by which, directions were issued to the respondents, the authority was not permitting the petitioner to export the containers. There was no alternate option with the petitioner, but to call back the entire goods of 67 containers, so that he may not have to pay demurrages to respondent Nos.4 and 5 and all the goods were called back and sold the same in the local market. However, at no fault of the petitioner, a huge amount of ground rent/ demurrage were paid to respondent Nos.4 and 5 Page 10 of 19 C/SCA/19287/2006 CAV JUDGMENT for which the respondent Nos.1, 2 & 3 are responsible. He would submit that when the notification dated 27/06/2006 was not applicable from the beginning, the authority ought to have permitted the petitioner to export the goods and for such action, the petitioner has to made huge expenditure towards demurrage. He would submit that respondent Nos.1, 2 and 3 are therefore liable to pay the demurrage and therefore restricted his prayer in terms of para 11(C) since the petitioner had already recalled the goods and sold the same in the local market.
In support of his submission, he has relied upon the decision rendered by the Hon'ble Apex Court in the case of Shipping Corporation of India Ltd. V/s. C.J.Jain Wollen Mills and others reported in (2001)5 SCC 345. He has also relied upon unreported decision of Division Bench of this Court rendered in the case of Unisilk Ltd. V/s. Commissioner of Customs & Another dated 11/06/2012 and would submit that the petition may be allowed accordingly.
7. On the other hand, Mr.P.Y.Divyeshwar, learned advocate appearing for respondent No.2 would submit that when the petition was filed only prayer made was of implementation of the order and permitting the petitioner to export, however when the Hon'ble Apex Court finally disposed of the civil appeal by confirming the judgement of Division Bench of this Court on November 7, 2006, a civil application for amendment was moved by the petitioner and demurrages have been claimed, which is an afterthought and, therefore, the same cannot be allowed. He would submit that section 5 of The Foreign Trade (Development and Regulation) Act,1992 Page 11 of 19 C/SCA/19287/2006 CAV JUDGMENT empowers the Central Government to formulate and annoyance the Foreign Trade policy and accordingly exercising the power under the same, notification was issued on 27/06/2006. Since a wide publicity was given on 22/06/2006, the claim of the petitioner about having right to export the goods would not be made applicable though clearance certificate was issued by the competent authority. He would submit that since this is a policy decision by the Central Government, officers are bound to comply the same and have no power to interfere the same and therefore, the petitioner is not entitled for any relief as prayed for. Neither further arguments were advanced nor had relied upon any decision in support of his arguments.
8. I have heard learned advocates appearing for the respective parties. So far as the facts are concerned, there is no dispute that the petitioner intended to export the goods of 87 containers from Kandla Port Trust. As per the provisions of The Customs Act, the petitioner after following the procedure, ultimately got clearance certificate for all 87 containers, which were issued by the Customs Officer under the provisions of Sections 50 and 51 of the Customs Act, before 27.6.2006. Since the shipment was not available (as claimed by the petitioner in the memo of the petition and not denied by the respondent) remaining 67 containers could not be physically exported beyond the territory of India and therefore, while dealing with the applicability of notification dated 27/06/2006, Division Bench of this Court as well as Hon'ble Apex Court, the action of the respondent authorities in not permitting the petitioner to load the goods, held to be illegal. By not permitting the petitioner to export the goods, at Page 12 of 19 C/SCA/19287/2006 CAV JUDGMENT no fault of the petitioner, he was paying ground rent/ demurrages to respondent Nos.4 and 5, whose containers were used for storing the goods for export.
9. In Special Civil Application No.14642 of 2006 especially in paragraph no.15, Division Bench has held as under:
"15. Hence, the respondent authorities cannot prevent the petitioner from exporting consignments which have already been cleared by the Customs Authorities admittedly on 2324/6/2006. Accordingly, the respondent authorities are directed to permit the petitioner to load the cargo which is lying at Kandla Port area for export forthwith, viz., the goods which have already been cleared under section 51 of the Customs Act on 23/6/2006 and 24/6/2006. The petition is accordingly allowed. Rule made absolute. There shall be no order as to costs."
Even though specific directions, as referred hereinabove were issued, the respondent authorities were not permitting the petitioner to export the consignments. Though specific request was made by the petitioner and petitioner had to incur huge expenses towards ground rent/ demurrages towards such attitude of the officers and when the action of respondent authorities from the beginning was declared illegal, in my opinion, are required to be deprecated and are bound to face the consequences.
Page 13 of 19 C/SCA/19287/2006 CAV JUDGMENT10. In case of Shipping Corporation of India Ltd. (Supra), the Hon'ble Apex Court has held that even confiscation of goods, which ultimately find out to be unsuccessful, the Court has held the same as illegal, parties would be entitled for demurrages, etc. Following observations have been made in paragraph nos.7 and 8, which are relevant in the present case.
"7. Before examining the correctness of the rival submissions, one thing is crystal clear that the relationship between the importer and the carrier of goods in whose favour the Bill of lading has been consigned and who has stored the goods in his custody, is governed by the contract between the parties. Section 170 of the Indian Contract Act engrafts the principle of bailee's lien, namely, 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 them until his dues are paid. But it is not necessary in the case in hand to examine the common law principle and the bailee's lien inasmuch as the very terms of the contract and the provisions of the Bill of Lading, unequivocally conferred power on the appellant to retain the goods, until the dues are paid. Such rights accruing in favour of the appellant cannot be nullified by issuance of a certificate of detention by the customs authorities unless for such issuance of detention certificate any provisions of the Customs Act authorise. We had not been shown any provisions of 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 may be undoubtedly true that the customs Page 14 of 19 C/SCA/19287/2006 CAV JUDGMENT authorities might have bona fide 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 who continues to retain a lien over the imported goods, so long as his dues are not paid, not to charge any demurrage charges nor the so called issuance of detention certificate would also 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. The importer also will not be entitled to remove his goods from the premises unless customs clearance is given. But that would not mean that demurrage charges could not be levied on the importer for the space his goods have occupied, since the contract between the importer and the proprietor of the space is in no way altered because of the orders issued by the customs authorities. The learned Additional Solicitor General, vehemently argued and pressed subsection 2(b) of Section 45 in support of his contention that the imported goods have to be dealt with in accordance with the permission in writing of the proper officer of the customs department and in exercise of such power when customs authorities initiate adjudication proceeding and ultimately confiscate and levy penalty, when such order is struck down and a detention certificate is issued, the said issuance of detention certificate would come within the expression "otherwise dealt with" used in Section 45(2)(b), and therefore, the proprietor of the space would be bound not to charge any demurrage charges. We are unable to accept this contention inasmuch as the expression otherwise dealt with used in Section 45(2)
(b), in the context in which it has been Page 15 of 19 C/SCA/19287/2006 CAV JUDGMENT used, cannot be construed to mean, it authorises the customs officer to issue a detention certificate in respect of the imported goods, which would absolve the importer from paying the demurrage charges and which would prevent the proprietor of the space from levying any demurrage charges. Having scrutinized the provisions of the Customs Act, we are unable to find out any provision which can be remotely construed to have conferred power on the customs authorities to prevent the proprietor of the space from levying the demurrage charges and, thereby absolving the importer of the goods from payment of the same. In fact the majority decision in Grand Slam Internationals case, 1995(3) SCC 151, clearly comes to the aforesaid conclusion with which we respectfully agree.
8. We have also examined the decision of this Court in Union of India vs. Sanjeev Woolen Mills, 1998(9) SCC 647 and we do not find any apparent inconsistency between the decisions of this Court in Grand Slam and that of the Sanjeev Woolen Mills. In Sanjeev Woolen Mills, the imported goods were synthetic waste (soft quality), though the customs authorities detained the same, being of the opinion that they were prime fibre of higher value and not soft waste.
On account of nonrelease, the imported goods incurred heavy demurrage charges but the customs authorities themselves gave an undertaking before the High Court that in the event the goods are found to be synthetic waste, then the Revenue itself would bear the entire demurrage and container charges. Further the Chief Commissioner of Customs, later had ordered unconditional release of goods and yet the goods had not been released. It is under these circumstances and in view of the specific undertaking given by the customs Page 16 of 19 C/SCA/19287/2006 CAV JUDGMENT authorities, this Court held that from the date of detention of the goods till the customs authorities intimated the importer, the importer would not be required to pay the demurrage charges. But in that case even subsequent to the orders of the customs authorities on a suit being filed by one of the partners of the importer firm, an order of injunction was issued and, therefore it was held that for that period, the importer would be liable for paying the demurrage and container charges. The judgment of this Court in Sanjeev Woolen Mills, therefore, was in relation to the peculiar facts and circumstances of the case and the Court had clearly observed that the order in question is meant to do justice to the importer, looking to the totality of the circumstances and the conduct of customs authorities. Thus, we see no inconsistency between the ratio in Sanjeev Wollen Mills and the Judgment of this Court in Grand Slam. That apart, the judgment in Grnd Slam was a three judge bench judgment. In the case in hand, as has already been stated earlier, the earlier judgment of Delhi High Court dated 9.9.94 in C.W.P. No. 1604/91, has become final, which entitles the importer to get the goods released without payment of the detention and demurrage charges. In the contextual facts, notwithstanding the judgment of the High Court, the goods not having been released, the impugned order and direction dated 18.1.1999, cannot be held to be infirm in any manner. In the absence of any provision in the Customs Act, entitling the customs 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 nonrelease of the goods is in accordance with the terms and conditions of the contract and as such would be a valid levy. The conclusion of the High Court to the effect that the Page 17 of 19 C/SCA/19287/2006 CAV JUDGMENT 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. In the aforesaid premises, we see no infirmity with the directions given by the Delhi High Court on 18.1.1999. The goods in question, having already been directed to be released, without the payment of the demurrage charges, the importer must have got the goods released. Having regard to the fact situation of the present case, 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. The appeal is disposed of accordingly."
11. Similarly in unreported decision rendered in the case of Unisilk Ltd. (supra), Division Bench of this Court has considered the same as having similar facts and held that persons would be entitled for demurrages.
12. So far as submission made by learned advocate Mr.Divyeshwar about amending the prayers and demanding the demurrage at later stage is concerned, the same is to be discarded since the same was carried out in the year 2007 and was not challenged by the respondent authorities at the time of hearing of the civil application and subsequent to passing the order of amendment.
Page 18 of 19 C/SCA/19287/2006 CAV JUDGMENT13. Having heard learned advocates appearing for the respective parties and considering the peculiar facts and circumstances of the case, this petition is allowed. Respondent No.2 is hereby directed to pay the demurrages, after examining the details supplied by the petitioner within a period of eight weeks from the date of receipt of copy of this order, with interest at the rate of 6% per annum from 24/06/2006 till the amount is paid. Rule is made absolute to the aforesaid extent.
sd/-
[A.J.DESAI,J.] *dipti Page 19 of 19