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M/s Continental Carbon India Ltd. Versus Union of India And Others

2015 (10) TMI 2131 - ALLAHABAD HIGH COURT

Goods not cleared on the basis of being hazardous – Custom cargo Service Provider demanded demurrage charges for releasing goods - Petitioner contends that he is not liable to pay demurrage charges; should be paid by customs authorities - Regulation 6(1) of the Regulations of 2009 bars Respondent no.4 from demanding demurrage charges on goods that were detained by customs authorities - Respondent No. 4 states that demurrage charges are paid on goods within a period of 7 days; further contended t .....

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remain in the customs area for months on the pretext of seeking a clarification from the MOEF with regard to the nature of the goods being hazardous or not appears to unjustified and arbitrary, especially when the petitioner made a specific application for shifting the goods to a warehouse in terms of Section 49 of the Act. - - By not passing any orders on the petitioners application for provisional assessment or by not passing any orders on the application of the petitioner under Section .....

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urya Prakash Kesarwani, J. ORDER (Per: Tarun Agarwala, J.) The petitioner is a company engaged in the manufacture and sale of "Carbon Black" from its unit situate at Ghaziabad. The raw material for manufacturing carbon is "Carbon Black Feed Stock" (CBFC), which is classifiable under the Customs Tariff Act, 1975. The petitioner imported 2296.50 metric tonnes of CBFC from M/s Koppers Carbon and Chemical Ltd. from China through three invoice bills. These goods were imported in 9 .....

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s duty and, on the other hand, sent the sample for a live test to Central Revenue Control Laboratory, New Delhi (CRCL) on 6th September, 2014. Since the testing of the sample was expected to take some time, the petitioner vide letters dated 16th September, 2014 and 19th September, 2014 requested the Commissioner of Customs, Noida and the Deputy Commissioner of Customs, Noida-respondent nos.2 and 3 respectively praying for clearance of the goods on provisional assessment against test bonds as per .....

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be imported were hazardous in nature as it contained waste constituents. Based on this report, respondent no.3 directed the petitioner to obtain a no objection certificate from the Ministry of Environment and Forest (MOEF). The petitioner accordingly, approached the MOEF and eventually the MOEF issued a letter dated 15th December, 2014 indicating that the goods does not come under the category of hazardous under the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008 ( .....

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sed the imported the goods of the petitioner on 6th January, 2015. On the basis of this assessment, the petitioner deposited the customs duty at the appropriate rate on 7th January, 2015 and 9th January, 2015. On 15th January, 2015 the customs authorities permitted clearance of the goods by putting a seal on the invoice bill as "imported detached" meaning thereby that the goods could be cleared by the importer. According to the petitioner, this was a delivery order issued by the custom .....

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customs authorities directed respondent no.4 to consider the request of the importer, namely, the petitioner favourably citing that as the consignment was held up for clarification from the MOEF. Based on the petitioner's application, respondent no.4 sent an e-mail on 27th January, 2015 to the petitioner indicating that they have agreed to waive 60% of the demurrage charges subject to the condition that the payment should be made within 15 days. However, the said respondent issued an invoice .....

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nst Bill of Entry No.6572055 dated 27.8.2014, 6595305 dated 30.83.2014 and 6595308 dated 30.8.2014, without demand/payment of any amount by the Petitioner towards demurrage charges demanded by Respondent No.4 for the period during which the imported goods remained under detention pending examination by Respondent No.3, the custody of goods having been given to Respondent No.4, solely for the convenience of Respondent No.3 without any agreement with the Petitioner; B. Issue an appropriate writ, o .....

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event, this Hon'ble Court is pleased, not to grant Relief A, then an appropriate writ, order or direction be issued directing the Respondents No.2 & 3 to additionally compensate the Petitioner with an amount of ₹ 7,67,04,408/-, which is quantified on the basis of demurrage charges of ₹ 7,67,04,408/- demanded by Respondent No.4 for the period during which the imported goods were detained for examination by Respondent No.3; D. Issue any other writ, order or direction, which thi .....

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petitioner. In this backdrop, we have heard Sri S.D. Singh, the learned Senior Counsel assisted by Sri N ishant Mishra, the learned counsel for the petitioner, Sri B.K.S. Raghuvanshi, the learned counsel for the Custom Department and Sri A.K. Verma, the learned counsel along with Sri Rajiv Joshi and Sri Siddharth Yadav, the learned counsels for respondent no.4. The learned Senior Counsel contended that the demand of demurrage charges is completely without authority of law, inasmuch as the Custo .....

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ction 49, no demurrage is payable by the petitioner. On the other hand, Sri B.K.S. Raghuvanshi, the learned counsel for the customs department contended that the goods in question were neither seized nor detained nor confiscated by the custom authorities and that before clearance they only sought clarification from the MOEF as to whether the goods were hazardous in nature. It was submitted that immediately upon receiving the clarification, the duty was assessed and the goods were detached and th .....

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ervice Provider and under clause 5 of the Regulations of 2009, the respondents has provided various facilities. The learned counsel contended that the moment the goods lands in their customs area, the same is under their supervision till the goods are cleared and, consequently, demurrage charges are payable after the expiry of free period, which in the instant case is, 7 days from the date of the landing of the goods in the customs area. The learned counsel contended that after paying the duty, .....

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contended that in the instant case, the delivery order or the endorsed invoices have not been placed before the said respondent till date and, consequently, the goods cannot be delivered to the petitioner, quite apart from the fact that the goods can only be cleared upon payment of handling charges, other charges and demurrage charges. Before proceeding, it would be appropriate to refer to a few provisions of the Customs Act. The custom authorities exercise their powers under the provisions of .....

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ading of imported goods at any place other than the place approved under Section 8(a) of the Act. Section 34 of the Act provides that the imported goods shall not be unloaded from any conveyance except under the supervision of the proper Officer. Section 45 of the Act provides for clearance of imported goods. The said provision is extracted hereunder: "45. Restrictions on custody and removal of imported goods. (1) Save as otherwise provided in any law for the time being in force, all import .....

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roper officer; (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer. [(3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the d .....

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ge of imported goods in warehouse pending clearance. For facility, Section 49 of the Act is extracted hereunder: "49. Storage of imported goods in warehouse pending clearance. - Where in the case of any imported goods, whether dutiable or not, entered for home consumption, the Assistant Commissioner of Customs is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored in a public ware .....

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of the Act and licence of private warehouse under Section 58 of the Act is granted by the Commissioner of Customs. Section 63 of the Act provides for payment of warehouse charges at rates fixed under any law by the Commissioner of Customs. For facility, the said provision is also extracted hereunder:- "63. Payment of rent and warehouse charges. - (1) The owner of any warehoused goods shall pay to the warehouse-keeper rent and warehouse charges at the rates fixed under any law for the time .....

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id, it is apparent that the customs authorities have full power and control over the imported goods and without the permission of the customs authorities, the goods cannot be cleared. At the same time, we find that there is no provision in the Act, which restrains the custodian from charging demurrage charges for the services rendered for storing the imported goods. The word "demurrage" has not been defined under the Act but the same has been defined under Regulation 2(g) of the Intern .....

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Pyarelal and others, 1976 (1) SCR 72 held that the word demurrage merely signifies a charge, which may be levied on goods after expiration of free days. The Supreme Court in Shipping Corporation of India Ltd. Vs. C.L. Jain Woolen Mills and others, 2002 (5) SCC 345 held that demurrage charges are levied for the place the goods occupy and for the period they remain not released on account of lack of customs clearance. Section 45(2) of the Act has been interpreted in International Airports Authorit .....

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ction (2) of Section 45 of the Act does not in any way impose an obligation on the custodian approved under sub-section (1) thereof not to collect charges leviable on the consignee. Similar view was again given by the Supreme Court in Shipping Corporation of India (supra) as well as in Monika India Vs. Union of India, 2012 (283) ELT 33 by the Delhi High Court and by the Supreme Court in Trustees of Port of Madras M/s K.P.V. Sheikh of Mohd. Rowther and Co. Pvt. Ltd., AIR 1999 SC 1922. In the ligh .....

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was initially appointed as a custodian of import and export cargo at ICD, Dadri by an order dated 19th April, 2006, which was issued in exercise of the powers conferred under Section 45 of the Act. The appointment was subject to certain terms and conditions. Relevant condition nos.(i) and (xvii) are extracted hereunder:- "(i) Custodian of the goods meant for import and export would be required to comply with the provisions of section 45(2) of the Customs Act, 1962 as well as Rules and regu .....

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custodian would not charge any rent/demurrage charge on the goods detained by the customs department under the Act. The appointment of respondent no.4 was renewed by an order dated 18th May, 2011 as a customs cargo service provider again in the exercise of the power conferred under Section 45 of the Act read with Handling of Cargo in Customs Area Regulation, 2009. Clause (2), (3), (4) and (6) are relevant for the purpose of the case, which are extracted hereunder: "(2) The Customs Cargo se .....

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ities assigned under Regulation 6 of the Handling of Cargo in Customs Areas Regulations-2009 as amended vide Notification No.96/10-cus(NT) dated 12.11.2010. (6) The Customs Cargo Service Provider shall publish a schedule of charges associated with various services in relation to imported/ export goods in the customs area and its display at prominent places including web page or website of the custodian in terms of Regulation 6(3) of the Handling of Cargo in Customs Areas Regulations-2009 as amen .....

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ons of 2009 provides various responsibilities, which are required to be carried out by the customs cargo service provider, namely, by respondent no.4. Regulation 6(1)(l) is extracted hereunder: "6(1). The customs cargo service provider shall:- (l) subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the proper officer." The aforesaid provision indicates that subject to any other law for the time b .....

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d. We are of the opinion that in view of the provision of Section 45 of the Act read with the Regulation 2(b), 5 and 6 of the Regulations of 2009 the customs cargo service provider is responsible for providing storage facilities for the purpose of unloading imported goods and, consequently, is entitled to charge demurrage charges. However, we are of the opinion that the custodian, namely, the service provider-respondent no.4 is not entitled to charge demurrage charges where the goods have been d .....

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thority of India and Trustees of Port of Madras were charging demurrage charges on the basis of Rules and Regulations framed under the Act by which they were being governed. The Supreme Court in that scenario held that there was no embargo upon the custodian, namely International Airport Authority and Trustees of Port of Madras to recover demurrage charges under Regulation 2(g) of the Regulations framed under the Regulations of 1980 and the bye-laws framed under the Port Trust Act. In the instan .....

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question which now arises is, whether the customs department had seized or detained or confiscated the imported goods which landed in the customs area. According to the stand of the custom department, they had neither seized nor detained nor confiscated the goods and had only referred the matter to the MOEF to seek clarification as to whether the goods so imported were hazardous or not. Upon receiving the clarification from the MOEF, the duty was assessed at the earliest opportune moment and, t .....

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ds in the warehouse pending clearance. No orders were passed by the customs authorities on this application. The stand of the customs department is that provisional assessment is allowed only when classification of the goods or the valuation of the goods are under investigation but when there was a fear as to whether the goods are hazardous waste or otherwise, provisional assessment order could not be passed. The customs department also contended that on account of the bulk of liquid cargo, it w .....

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thorities that it exercises its power in good faith and for public benefit. Admittedly, an application for provisional assessment or for storage of the goods in a warehouse was moved by the petitioner. If the request of the petitioner was not permissible, the said application should have been rejected. Since no orders were passed on the petitioners application, the contention of the respondents as depicted in paragraph 14 and 15 of the counter affidavit clearly appears to be a afterthought. By n .....

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argo from the customs area. They are always fixed in such a way that they would make it unprofitable for exporters/ importers to use the customs area as a warehouse. It is further necessary to levy high rates of demurrage charges to avoid congestion of free movement of loading and unloading of the goods in the customs area. Consequently, permitting the cargo to remain in the customs area for months on the pretext of seeking a clarification from the MOEF with regard to the nature of the goods bei .....

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