Delhi High Court
Modern Overseas vs Union Of India (Uoi) on 28 April, 2006
Equivalent citations: 2006(204)ELT218(DEL)
Author: J.M. Malik
Bench: T.S. Thakur, J.M. Malik
JUDGMENT J.M. Malik, J.
1. At this stage, the only legal jangle between the parties is as to who would pay the demurrage charges? The petitioner has prayed that the goods in question should be released without saddling any kind of liability upon it. The indisputable facts of the above said case are these:
The petitioner is engaged in manufacture, export and import of various items of building hardware. Petitioner's goods were illegally withheld and detained by the Customs officer for unusually long time on the ground that the same were undervalued. The petitioner represented before the Dy. Commissioner of Customs vide representation dated 21-7-2004 and 11-8-2004. The Customs Department also alleged that petitioner had misled the department as to nature and description of the goods. The goods of the petitioner were confiscated and penalty was imposed upon the petitioner.
2. The Commissioner of Customs vide his order dated 17-8-2004 asked for payment of differential duty and penalty besides offering an option for release of the goods. The petitioner preferred an appeal. The Commissioner of Customs (Appeals) allowed the appeal and ordered the unconditional release of the goods as prayed for.
3. The Commissioner of Customs issued detention certificate dated 4-11-2004 for a period ranging from 21-7-2004 to 3-12-2004 assigning the reason of detention as investigation for suspected under valuation. The Commissioner of Customs also preferred an appeal before Customs Excise and Service Tax Appellate Tribunal challenging the order dated 13-10-2004 passed by the Commissioner of Customs (Appeals). The petitioner sent representation before the Commissioner of Customs dated 4-12-2004 and to M/s. German Express Shipping Agency (India) Pvt. Ltd., respondent No. 4 to the effect that the liability to pay the damages and demurrage charges lies with the Commissioner of Customs and he is responsible for withholding their goods illegally. M/s. German Express Shipping Agency (India) Pvt. Ltd. replied that they could waive Rs. 50,000/- out of demurrage charges accrued up to 3-1-2005 in case the delivery of the cargo is taken up to 10-1-2005. In the meantime, the Commissioner of Customs again issued the detention certificate on 10-1-2005 to the effect that the detention certificate issued earlier up to the period of 3-11-2004 be read as up to 3-1-2005. Petitioner served a legal notice on 10-1-2005 calling upon Union of India through Secretary, Ministry of Finance, Department of Customs and Excise and Commissioner of Customs, Respondent Nos. 1 and 2 respectively to ensure the release of the goods immediately without any further delay pursuant to the orders passed by the Commissioner of Customs (Appeals) besides paying a sum of Rs. 7 lacs towards demurrage because of the delay so caused.
4. In the meantime, the appeal filed by the Commissioner of Customs was dismissed by the Tribunal on 7-2-2005 [2005 (184) E.L.T. 65 (Tri.-Del.)]. It is averred that the petitioner is facing financial stringency. The petitioner borrowed the money on interest and appropriated towards import in question and it has incurred interest thereon. It is prayed that the goods be ordered to be released in favor of the petitioner without payment of damages, demurrage and detention charges, which are actually to be paid by the respondents. The goods of the petitioner were illegally detained. The goods were kept detained despite the order passed by the Commissioner of Customs (Appeals) for an unconditional release thereof. The filing of appeal by the Commissioner was mala fide. No fault was ever attributed to the petitioner.
5. We have heard the counsel for the parties and have gone through the various authorities cited by both the parties. The learned Counsel for the respondents have drawn our attention towards the celebrated authority reported in International Airports Authority of India etc. etc. v. Grand Slam International and Ors. etc. etc. , wherein it was observed, From the above decisions of this Court it becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1962, would be entitled to charge demurrages for the imported goods in its custody and make the importer or consignee liable for the same even for periods during which he/it was unable to clear the goods from the Customs area, due to fault on the part of the Customs authorities or of other authorities who might have issued detention certificates owning such fault.
It was further held, The view, I have so taken makes the judgments of High Court of Delhi under appeals unsustainable, for the view of its earlier decisions in M/s. Trishul Impex case (supra) and Grand Slam case (supra) which it has followed, also cannot be sustained.
6. Similar view was taken in authorities reported in -
(i) Trustees of Port of Madras v. Nagavedu Lungi and Co. and Ors. ;
(ii) Shipping Corporation of India Ltd. v. C.L. Jain Woollen Mills and Ors. ; and
(iii) Union of India and Ors. v. R.C. Fabrics (P) Ltd. and Anr. .
7. However, in Union of India v. Sanjeev Woollen Mills the facts were be bit different. The Customs Department had itself made a statement before the High Court that in case after inspection the goods are found to be synthetic waste, the entire demurrage and container charges would be borne by the Customs Department and Customs Department would issue the requisite certificate. Consequently, importer was not made to pay the demurrage charges.
8. Secondly, in Shipping Corporation of Indian Ltd. v. C.L. Jain Woollen Mills and Ors. (supra) last portion of the judgment is hereby reproduced:
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 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.
9. The learned Counsel for the petitioner vehemently argued that it is difficult to understand as to why the demurrage charges should be paid by the petitioner because of no fault of it. It is apparent that the Customs Department subsequently found that the goods imported by the petitioner were not undervalued. In support of his case, he has cited an authority reported in Om Petro Chemicals v. Union of India and Ors. 2002 III AD (Delhi) 268, wherein it was observed:
Would that however mean that the petitioner must pay demurrage charges even though it is not at fault. Answer to the question must be rendered in negative. The decisions of the Apex Court therefore are authorities for the proposition in certain situation, the court may direct the customs authorities to bear the demurrage charges. In the instant case the customs authorities still insisted that the goods were illegally imported. It sought to justify its stand even before this Court. This Court is not only a court of law but also a court of equity. In a situation of this nature we are of the opinion that this Court may find that in place of the importer or the consignee, the customs authorities should bear the charges. Once it is held that the petitioner herein has not committed any illegality in importing the goods in question, in our opinion, it cannot ordinarily be saddled with the liability of payment of demurrage. The petitioner in the fact situation of this case must be held to have been sinned against than sinning.
It was further held:
We, therefore, are of the opinion that the interest of justice would be met, if the Central Govt, is directed to take possession of the goods for which the clearance shall be given by the Customs Authorities forthwith and in case any necessity arises the same may be used or destroyed in any manner they like, or as may be advised by the Central Pollution Control Board. Demurrage, if any, would be paid by the Customs Authorities to the concerned department. The petitioner herein shall not claim the price of the said goods or any damage from the respondents.
This case was decided by their Lordships Mr. Justice S.B. Sinha, Chief Justice and Mr. Justice A.K. Sikri.
10. In case Yang Ming Marine Transport Corporation and Anr. v. Commissioner of Customs and Ors. WP (C) No. 2235/2002, the same Bench reviewed its own judgment passed in Om Petro Chemicals v. Union of India and Ors. It was held:
We, therefore, are of the opinion that subject to an undertaking, which may be furnished by the petitioners herein that in the event the Supreme Court directs that detention charges are to be borne by the writ petitioners herein or by M/s. Om Petro Chemicals, it is desirable that the containers are directed to be released forthwith.
11. Keeping in view the facts and circumstances of the present case, we are of the considered view that till the matter in Om Petro Chemicals v. Union of India and Ors. and Yang Ming Marine Transport Corporation and Anr. v. Commissioner of Customs and Ors. is decided by the Apex Court which are pending therein, the goods in question ought be released in favor of the petitioner on the following conditions:
(i) The petitioner deposits Rs. 50,000/- towards demurrage, with the Customs Department, which would be subject to refund if the present writ petition is allowed and the liability towards demurrage quashed.
(ii) The petitioner furnishes property security against the remaining amount to the satisfaction of the Registrar of this Court.
(iii) The petitioner files an undertaking before this Court to the effect that in case the present writ petition is eventually dismissed, he would pay the balance amount held payable to the respondents.
(iv) CM Nos. 2651 and 9772 of 2005 filed by the petitioner for release of the goods are accordingly allowed and disposed of with the above directions.