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M/s Paswara Chemicals Ltd. Versus Union of India & Others

2016 (2) TMI 539 - ALLAHABAD HIGH COURT

Levy of demurrage charges - levy of Warehouse charges for detained goods - Mis-declaration of description of the goods - import of waste Oil or Heavy Cut Oil - Held that:- the word demurrage merely signifies a charge, which may be levied on goods after expiration of free days. - The Central Warehouse Corporation or its partner, respondent no. 5 could not demand any warehouse charge on the goods, which were detained by the Customs Authority. They were bound to comply with the terms and condit .....

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n that the respondent nos. 3, 4 and 5 had no authority of law to demand warehouse charges on the goods seized or detained by the Customs Department. - The petitioner was entitled for release of the goods without payment of warehouse charges. We are, however, of the opinion that once a stand was taken by the respondents to release the goods on payment of charges, the petitioner should have got the goods released upon payment of the charges, as demanded by the respondents, by depositing the sa .....

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mus is issued holding that the respondents no. 3, 4 and 5 are not entitled to demand warehouse charges on the goods that was initially detained but subsequently released by the Customs authority till 11.04.2014, i.e., the date when the counter affidavit of respondent nos. 3 and 4 was filed before the High Court and their stand became clear. For the period 12.04.2014 onwards till the date of actual clearance, the petitioner would be liable to pay warehouse charges. - Civil Misc. Writ Petition No. .....

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etitioner has mis-declared the description of the goods in the bill of lading. Samples of the product were taken and were sent for testing to the Central Revenues Control Laboratory (CRCL), Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, Government of India, New Delhi. A report was submitted on 10.02.2012 indicating that the goods that were imported by the petitioner was a "waste Oil" and was covered by the Hazardous Waste Management Rules,2008 (hereina .....

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tted a reply giving detailed evidence to show that the goods imported was not a "Waste Oil" but "Heavy Cut Oil". 2. It transpires that the Customs Department sought clarification from the Ministry of Environment & Forest, Government of India, New Delhi with regard to the product in question. The Ministry of Environment & Forest issued a clarification dated 31.08.2012 indicating that the goods imported by the petitioner was not "Waste Oil". 3. The competent a .....

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dingly, dropped the show cause notice. 4. Based on the said order, the petitioner paid appropriate rate of duty and asked for release of the goods. The Assistant Commissioner, Customs, Excise & Service Tax issued an order dated 03.01.2014 to the Manager, Central Warehousing Corporation, who was Incharge of the goods to waive the warehousing charges in view of the Handling Of Cargo In Customs Area Regulations, 2009. A reminder was again issued on 29.01.2014 for release of the goods after waiv .....

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ding the respondents to release the consignment of "Heavy Cut Oil" in five containers pursuant to the bill entry dated 23.11.2011 without payment of any warehousing charges. 5. This Court while entertaining the writ petition after considering the matter and considering the urgency of the situation passed an interim order dated 07.02.2014 directing the respondent nos. 3,4 and 5, i.e., Central Warehousing Corporation and its service provider to release the goods or show cause by filing a .....

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d that the subject goods were detained by the Custom Department. On adjudication by the Addl. Commissioner, Customs, Excise and Service Tax Commissionerate, Ghaziabad dated 3.1.2014, the consignment under bill of entry dated 23.11.2011 was ordered to be released at appropriate value at the time of import of said goods. It is submitted that despite the directions to release of goods issued by the adjudicating authority, the respondent no.5 has not permitted release of the goods. The respondent no .....

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goods under Section 7 of the Customs Act. The said respondents further indicated that they were appointed as the custodian of the goods, which are unloaded in the customs area under Section 45 of the Act, which would remain in their custody till it is approved by the Commissioner of Customs in accordance with the Act. The said respondent contended that that under Section 45 of the Act they are responsible for safe custody of the goods till it is cleared by the Commissioner of Customs and that u .....

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no such provision to make Regulations in respect of waiver of charges and, therefore, in the absence of any such provision not enumerated under Section 141(2) read with Section 157 of the Act, the Regulations could not be framed. It was also contended that as per Section 148 read with Section 170 of the Contract Act,1872, the said respondents had a lien on the goods till remuneration were not received and therefore there was a bailor and bailee relationship, which continues till adequate remuner .....

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that pursuant to the order of the High Court dated 07.02.2014, a letter dated 13.03.2014 was issued to the petitioner to take delivery of goods on payment of ₹ 36,13,160.52 calculated towards warehousing charges upto 14.03.2014. The stand of the respondent no.5 was that in view of Section 45 of the Act read with Section 63 of the Act coupled with Sections 148 and 170 of the Contract Act the respondents have a lien on the goods in question and the same would be released only upon receiving .....

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nsel appearing on its behalf contended that the goods were neither detained nor seized and only an enquiry was made which after proper investigation the proceedings were dropped and an order was passed for releasing the goods. The learned counsel for the respondents contended that a direction was also issued to the Central Warehousing Corporation as well as to respondent no. 5 to release the goods without payment of warehouse charges in view of the Regulation 6(l) of the Regulations of 2009. The .....

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petitioner, Sri V. V. Gautam along with Sri Sambhu Chopra and Sri Ashutosh Shukla, the learned counsel for the respondent no. 5, Sri Ravi Prakash Pandey, the learned counsel holding brief of Sri M. C. Chaturvedi, the learned counsel for the respondent nos. 3 and 4, Sri Amit Mahajan, the learned counsel for the respondent no. 2 and Sri Krishna Agrawal, the learned counsel for the respondent no. 1. 10. After having heard the learned counsel for the parties at some length, we are of the opinion th .....

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xtracted 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 imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, wh .....

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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 date of delivery of an import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried." 12. Under the aforesaid provision the imported goods would remain in the custody of the person approved by the Commissioner of Customs until .....

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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 warehouse, or in a private warehouse if facilities for deposit in a public warehouse are not available; but such goods shall not be deemed to be warehoused goods for the purposes of this Act, and accordingly the provisions of Chapter IX shall not apply to such goods." 14. "Warehouse" has been defined under Section 2(4 .....

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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 being in force or where no rates are so fixed, at such rates as may be fixed by the Commissioner of Customs. (2) If any rent or warehouse charges are not paid within ten days from the date when they became due, the warehouse-keeper may, after notice to the owner of the warehoused goods and with the permission of the prop .....

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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 International Airports Authority (Storage and Processing of Goods) Regulation, 1980, which has been issued in exercise of the powers conferred to sub-Section (1) of Section 37 of the International Airports Authority Act as the rate or amount payable to the airport by a shipper or consignee or carrier for not removing the c .....

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the goods occupy and for the period they remain not released on account of lack of customs clearance. 17. Section 45(2) of the Act has been interpreted in International Airports Authority of India Vs. M/s Grand Slam International and others, 1995 (77) ELT 753. The Supreme Court held that the authority created under a statute would be entitled to charge demurrage charges and an importer would be liable to pay the demurrage charges. The Supreme Court found that Section 45 of the Act does not provi .....

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of India, 2012 (283) ELT 33 by the Delhi High Court and by the Supreme Court in Trustees of Port of Madras Vs. K.P.V. Sheikh of Mohd. Rowther and Co. Pvt. Ltd., AIR 1999 SC 1922. 19. In the light of the aforesaid, it is clear that demurrage charges can be levied by the custodian under Section 45 of the Act. 20. The Inland Container Depot (ICD) at Loni has been notified under Section 8 of the Act as the area for loading of goods for export and for unloading of imported goods. The Central Warehous .....

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ff, as may be necessitated from time to time, consequent upon the growth in the volume of Import and Export Trade handled at the Inland Container Depot. It is further emphasized that the Custodian shall- ........................................................ ....................................................... VII. Not charge any rent/demurrage on the goods detained by the Customs Department under the Customs Act or any other Act for the time being in force. However, the Customs department .....

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fication dated 21.03.2012 under Section 45 of the Act. Clause (2) and (4) of the said appointment order is extracted hereunder: "(2) The Customs Cargo Service Provider (Custodian) shall abide by all the conditions as mentioned in the earlier Public Notice No. 02-Cus./2007 dt. 22.03.07 and shall observe all the rules and regulations prescribed under Customs Act, 1962. (4) The Customs Cargo Service Provider4 shall abide and shall carry and discharge all the responsibilities assigned under Reg .....

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igned under the Regulation 6(l) of the Regulations of 2009. 23. From the aforesaid, it is apparently clear that the Central Warehouse Corporation or its partner, respondent no. 5 could not demand any warehouse charge on the goods, which were detained by the Customs Authority. They were bound to comply with the terms and conditions of their appointment letter read with clause 6 (l) of the Regulations of 2009. The contention of the respondents that clause 6(l) is not applicable in view of the word .....

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nt nos. 3, 4 and 5 to realize warehouse charges and insist that Section 63 of the Act would prevail over Regulation 6(l) of the Regulations, 2009. 24. Reliance placed by the learned counsel for the respondents on the decision of the Supreme Court given in Appeal (Civil) 4593 of 1999, The Printers (Mysore) Ltd. Vs. M.A.Rasheed & others decided on 05.04.2003 is of no avail. It only explains the meaning of the words 'subject to'. We are of the opinion that so long as the specific terms .....

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ation 6(l) of the Regulations of 2009. Reliance by the respondents on the decisions in the case of International Airport Authority of India Vs.Grand Slam International of India, A1995(77) E.L.T. 753(SC), Shipping Corporation of India (Supra) and Trustees of Port of Madras Vs. M/s Aminchand Pyarelal and others, 1976(1) SCR 721 is misplaced inasmuch as the said decisions are distinguishable and not applicable in the instant case. In the said decision of International Airport Authority of India (Su .....

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spectively. In the instant case, Central Warehouse Corporation has been appointed as the custodian under Section 45 of the Act read with Regulations of 2009. 25. At this stage Clause 6(l) of the Regulations, 2009 is extracted hereunder: "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 Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as .....

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ioner was entitled for release of the goods without payment of warehouse charges. We are, however, of the opinion that once a stand was taken by the respondents to release the goods on payment of charges, the petitioner should have got the goods released upon payment of the charges, as demanded by the respondents, by depositing the same under protest and thereafter should have contested the matter. By not getting the goods released, the containers are still in the custody of respondent no. 5. Th .....

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