TMI Blog2016 (5) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, as already noticed, pursuant to the interim orders passed by the Court, the goods have already been de-stuffed from the containers and auctioned and some amount realised. Similarly, in the case of M/s. Modern Overseas as already noticed, the goods had been directed to be released on fulfilling specified conditions. - Decided against the appellant - W. P. (C) 6216/2001, W. P. (C) 3440-41/2005 & CM 6302/2005 - - - Dated:- 6-5-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr. Shashwat Bajpai, Advocate For the Respondents : Mr. K.K. Tyagi and Mr. Iftikhar Ahmed, Mr. Rahul Kaushik, Mr. Bhavishya Sharma, Advocate JUDGMENT Dr. S. Muralidhar, J. 1. A common question that arises for consideration in both these writ petitions is about the liability of an importer to pay demurrage/godown rent and container charges under circumstances in which the importer is ultimately able to show that the import of the goods detained was validly made. Facts concerning M/s. S.K. Metal Co. 2. The facts in W.P.(C) No. 6216 of 2001 filed by M/s S.K. Metal Co. are that the Petitioner is a proprietorship concern dealing in import and selling of sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zinc zipper slider was 2.384 MT. It again requested for mutilation of the disputed quantity and undertook to furnish a bank guarantee to the differential amount of duty on the aforementioned disputed quantity while still keeping the said quantity under bond and releasing the balance cargo. 6. The Petitioner further drew the attention of the Additional Commissioner of Customs to Public Notice No.38/2001 issued on 22nd March 2001 giving instructions regarding detention of the mutilated cargo. It was pointed out that once the DRI had classified 2.384 MT in a different chapter, the B/E should be finalized. Either the disputed quantity should be detained and the balance material be released or the bank guarantee should be accepted for the disputed quantity. Alternatively, the disputed quantity should be mutilated. 7. On 16th April 2001, the consignment was re-examined and confiscated under Section 111 of the Customs Act 1962 ( Act ). A panchnama of the same date was drawn up. 8. According to the Respondent, the Petitioner waived the requirement of formal show cause notice ( SCN ) under Section 110 of the Act and requested for adjudication. This, however, has been denied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en complied with. The Petitioner also pointed out that it had not received any reply from M/s APL and CWC regarding waiver of the demurrage charges. 13. It is thereafter that the present petition (W.P.(C) No. 6216 of 2001) was filed for a direction to the customs authorities to pay/remit godown charges and the demurrage that had become payable by the Petitioner for the period from 9th February 2001 till the date of release. The second prayer was for a direction to the Respondent Nos. 1 and 2 to refund the penalty of ₹ 25,000 with interest in view of the order of the CEGAT. The Petitioner also prays for compensation and costs. 14. Pursuant to the notice issued in the writ petition, a counter affidavit has been filed by the Customs Department, in which the stand taken is that although the order of the CEGAT is erroneous, no further appeal was filed by the Customs Department to avoid litigation and also since the duty involved was not high. It is stated that penalty of ₹ 25,000 has been refunded on 11th October 2001. As regards the prayer for payment of the demurrage charges, the Customs Department referred to Section 155 of the Act, which states that no suit or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Modern Overseas 19. W.P.(C) No. 3440-41 of 2005 has been filed by M/s Modern Overseas, a partnership firm having its head office in Aligarh, Uttar Pradesh. 20. The Petitioner is engaged in manufacture, export and import of various items of building hardware made of different metals such as brass, zinc and aluminium. The facts are that on 21st July 2004, the Petitioner filed B/E No. 368463 for the clearance of shipment of goods declared as door locks and lock cylinders which were imported from M/s Shivalaya (Hong Kong) Ltd., Hong Kong. The door locks were classified in CTH 83014090 and lock cylinder in CTH 8301.60. The total value declared of the shipment was US$26227.16. According to the Petitioner, on examination of the goods, the customs authority found it to be matching with the declaration. 21. On 25th June 2004, the Petitioner wrote to the Deputy Commissioner of Customs, Tughlakabad requesting release of the goods. On 11th August 2004, a further representation was made to the Commissioner of Customs pointing out that for three weeks since import of goods no decision had been taken. It was pointed out that the method employed by the customs department to determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, the Petitioner wrote to M/s German Express Shipping Agency (India) Pvt. Ltd. (Respondent No.4) seeking release of the goods and further stating that the underlying liability to pay the damages and demurrage charges lies with the Commissioner of Customs for illegally withholding the goods. A request for waiver was also made to the Container Corporation of India Ltd. (Respondent No. 3) ( CCI ). However, CCI was prepared to approve waiver of only ₹ 50,000 out of the demurrage charges accrued up to 3rd January 2005, subject to the condition that the delivery of the cargo was taken by 10th January 2005. 27. Meanwhile on 10th January 2005, a second detention order was issued by the Superintendent of Customs extending the period of the earlier detention certificate up to 3rd January 2005, i.e. up to the date of out of charge . 28. The Petitioner then issued a legal notice on that date, calling upon the Respondent Nos. 1 and 2 to release the goods immediately and also to pay ₹ 7 lakhs towards the demurrages suffered because of the delay caused. 29. On 7th February 2005, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), dismissed the Department s ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods of the consignee without collecting from him demurrage charges levied in accordance with their respective regulations merely because there was a Detention Certificate issued by the Collector of Customs or his delegate to the IAAI or the CWC, which had been approved as custodians of such goods under Section 45(1) of the Act. 32.5 In arriving at the above conclusion, the Court took note of the fact that both the IAAI and the CWC were statutory corporations governed by their own sets of rules and regulations. The Court, however, recognised the power of the Central Government under Section 35 of the International Airports Authority Act and Section 111 of the Major Port Trust Act, 1963 to issue to the IAAI and the Board of Trustees respectively not to levy demurrage charges for period covered by Detention Certificates, after giving those authorities an opportunity, as far as practicable, of expressing their views. It was further clarified that what was stated in the Customs Public Notice No. 30 of 1986 would be effective against the IAAI only if it were shown that the Authority had, expressly or impliedly, consented to such arrangement. The decision in Sanjeev Woollen Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manding illegal gratification for releasing the goods which upon testing were confirmed to be synthetic waste of soft quality. The Supreme Court then directed the Department to file affidavits to explain what steps they had taken with respect to that complaint. 33.5 Thereafter the Supreme Court concluded as under: 18. Looking to the totality of circumstances pertaining to the import of the consignments under the four Bills of Entry and the inordinate delay of about six years for their release, the High Court has passed the impugned orders directing the appellants to issue a detention certificate and bear the demurrage and container detention charges. They are obviously orders passed in the special circumstances of the present case, and particularly the conduct of the Customs authority in not releasing the goods even after the order of unconditional release dated 11.8.1995 passed by their own Chief Commissioner. The conduct of the Customs officers concerned is also under investigation. We do not think that this is a case were any investigation at our hands is required. The apprehension of the appellants that this will constitute a precedent is not justified because it is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention charges and the contempt petition was dismissed. 34.5 Consequently, the owner filed an application before the Division Bench, which called upon the Customs Department as well as CCI and SCI to sort out the matter within a specified time period. It directed the carrier of the goods including the SCI to release the goods if the Customs Department paid the detention/demurrage charges. When the goods were still not released, a fresh contempt petition was filed and thereafter the SCI as well as the Customs Department approached the Supreme Court. 34.6 At the outset, the Supreme Court noted that the decision of the Delhi High Court in the writ petition challenging the legality of the order of the Customs Authority in confiscating the goods and levying penalty having attained finality, the liability of the importer to pay the demurrage charges ceased and that issue could not be reopened. The Court then addressed the larger issue, namely, if the customs authorities do not release the goods and initiate proceedings and finally pass an order of confiscation but that order is ultimately set aside in appeal and it is held by Court of law that the detention of the goods was illeg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in Shipping Corporation of India Limited v. C.L. Jain Woollen Mills (supra) affirmed the earlier decision in International Airport Authority of India v. Grand Slam International (supra). The Court also did not see any inconsistency between International Airport Authority of India v. Grand Slam International (supra) and Union of India v. Sanjeev Woollen Mills (supra). It was explained that the judgment in Union of India v. Sanjeev Woollen Mills (supra) was in relation to the peculiar facts and circumstances of the case and the Court had clearly observed 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. 34.11 The conclusion of the three Judge Bench in Shipping Corporation of India Limited v. C.L. Jain Woollen Mills (supra) was as under: 8. ....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 non-release of the goods is in accordance with the terms and conditions of the contract and as such would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent the importer would be able to get some relief. Later case law 36. It may be noted at this stage that International Airport Authority of India v. Grand Slam International (supra) has been consistently followed in a large number of cases. These include Trustees of Port of Madras v. Nagavedu Lungi Co. (1995) 3 SCC 730 where the Supreme Court reiterated that the importer cannot avoid its liability to pay demurrage charges and other incidental charges in respect of the goods illegally detained under the customs area by the customs authorities under the Act. 37. Again in Union of India v. R.C. Fabrics (P) Ltd. (2002) 1 SCC 718, the decision in International Airport Authority of India v. Grand Slam International (supra) was followed. There the direction issued by the High Court that the Customs Department should pay the demurrage, the container charges and the ground rent to the CWC was held to be contrary to the decision in the International Airport Authority of India v. Grand Slam International (supra). It was held that the Corporation was entitled to recover the charges from the importer. 38. In Monika India v. Union of India 2012 (283) ELT 33 (Del.) the following l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The said policy lays down that the demurrage charges shall not be waived where any fine/penalty/personal penalty/warning is imposed by the Customs Authority or delay by reason of dispute in the assessable value or for revalidating or correcting the license in ordinary course of appraisal. The Court also analysed the Handling of Cargo under Customs Area Regulations, 2009 ( HCCAR ) which have been framed to provide for the manner in which the imported goods/export goods shall be received, stored, delivered or otherwise handled in a customs area. 40.2 The Court in Trip Communication Pvt. Ltd. v. Union of India (supra) harmoniously construed the policy for waiver framed by the AAI as well as HCCAR and summarised the legal position as under: (1) In cases where on conclusion of the adjudication proceedings there is no imposition of any fine, penalty, personal penalty and/or warning by the customs authorities: (i) the Policy for Waiver would be applicable; and (ii) the importer would be entitled to be considered for its benefit when the goods were seized, detained or earlier confiscated; and (iii) waiver would be granted subject to other compliances. (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... micals v. Union of India (supra) was by this Court and therefore, there was no question of conflict, which required to be resolved by the Full Bench and the matter was directed to be listed before the Regular Bench. 43. As regards W.P. (C) No.3440-3441/2005 by Modern Overseas, the application for release of goods was heard and a judgment on the said application was delivered on 28th April, 2006, reported as (2006) 204 ELT 218 (Del.), where reliance was placed by the Court on the decisions of this Court in Om Petro Chemicals v. Union of India (supra) and an order dated 31st May 2002 by another Division Bench in W.P. (C) No. 2235 of 2002 [Yang Ming Marine Transport Corporation v. Commissioner of Customs Inland Container Depot, Tughlakabad]. The Division Bench in the Modern Overseas case further permitted the Petitioners to deposit ₹ 50,000/- towards demurrage to the Customs Department, which would be subject to refund if the writ petition was allowed and the liability towards demurrage quashed. The Petitioner was directed to furnish security as far as the remaining amount was concerned to the satisfaction of the Registrar of this Court. The Petitioner was also directed to fi ..... 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