Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 301 - DELHI HIGH COURT

2016 (5) TMI 301 - DELHI HIGH COURT - 2016 (338) E.L.T. 383 (Del.) - Release of goods - Waiver of demurrage/godown rent and container charges - Import and selling of scrap - Confiscation of consignment under Section 111 of the Customs Act 1962 - Held that:- it is not possible to examine the mala fides of the individual Customs officers in delaying the release of the goods in favour of the Petitioner. In the absence of any clear determination of such allegations it would not be possible to even d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e charges, detention and/or container charges. - As far as appellant M/s. S.K. Metal is 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 & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

w 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 scrap. The Petitioner imported 18835 kgs and 18616 kgs of scrap from Germany under the Bill of Entry ( B/E ) No. 324372 dated 24th January 2001. Though the supplier was based in Germany the consignment was shipped from Los Angeles, USA. Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s. On 9th February 2001 the said container was opened and the goods examined in the presence of the customs house agent ( CHA ), the customs officers and the officers of the Department of Revenue Intelligence. According to the customs department, the zip sliders found packed in original cardboard packing were of YKK and BOYT make. They appeared to be brand new and not scrap. 4. Representative samples of zip sliders were examined for further enquiry. An enquiry was conducted with M/s YKK, New Del .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

requested the Customs Department to mutilate the goods under customs supervision. 5. On 22nd February 2001, the Petitioner sought provisional release of the detained consignment pointing out that the quantity in dispute was 2.384 MT. The Petitioner offered to furnish a bank guarantee for differential duty and get possession of the goods since it wanted to avoid demurrage charges. Another letter was sent to the DRI on 23rd February 2001 to the same fate. On 9th April 2001, the Petitioner again w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onal 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 c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er by an order dated 2/4th June 2001 passed by the Commissioner (ICD), the zip sliders valued at ₹ 4,05,484 (enhanced from declared value of ₹ 55,905) were confiscated under Section 111(i) and (m) of the Act with a redemption fine of ₹ 45,000 along with penalty of ₹ 25,000 under Section 112(a) of the Act. 10. The Petitioner challenged the above order before the Customs, Excise and Gold (Control) Appellate Tribunal ( CEGAT ). By an order dated 23rd July 2001, the CEGAT all .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

issioner of Customs (Respondent No.2) to the Central Warehousing Corporation (Respondent No.3) ( CWC ) communicating the recommendations of the Commissioner of Customs (ICD) for consideration of the request of the Petitioner for waiving of the godown rent charges in respect of the period of investigation and adjudication i.e. from 15th February to 22nd August 2001. 12. On 19th September 2001, the Petitioner wrote letters to CWC and M/s APL (India) Pvt. Ltd. (Respondent No.4), requesting to issue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oner pointed out that mutilation had been performed in the presence of the custom officers and a gate pass has been received, but the CEGAT s order for refund of the sum of ₹ 25,000 deposited on 18th June 2001 had not yet been 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 author .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 other legal proceedings would be maintainable in respect of anything done in goo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CEGAT erred in holding the goods to be scrap. It was submitted that the manner of sale did not take away the identity of the goods. It was contended that the delay in release of the goods and the consequent demurrage charges was on account of the Petitioner first seeking immediate adjudication by waiving formal SCN but later disputed the findings leading to the issuance of the SCN. 16. It is submitted that as a prudent businessman the Petitioner could have sought release of the goods at any stag .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Customs, the CWC on 1st October 2001 immediately wrote to them stating that the request for waiving of godown rent charges could not be acceded to. It was further pointed out that 40 container which was detained was a full container load ( FCL ) and as per the prevalent practice FCL cargo was not released in part but in one go. 18. The Respondent No.4, M/s APL also filed a separate counter affidavit contending that qua M/s APL, the petition was not maintainable since its relationship with the Pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

anufacture, 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

value of the goods was defective. 22. Nevertheless, an SCN was issued to the Petitioner on 13th August 2004 stating that the goods were found to be undervalued and asking the Petitioner to show cause as to why the value of the consignment should not be loaded on the basis of price of contemporary import to the extent of US$ 1.16/piece in the case of cylindrical locks and US$ 0.35/piece in the case of lock cylinders and why said goods should not be confiscated under Section 111(m) of the Act for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

waiver of demurrage. 24. An Order-in-Original was passed by the Additional Commissioner on 17th August 2004 holding that the value of the consignment should be loaded to US$1.16 per piece for cylindrical locks and US$0.35 per piece for the lock cylinder and computed the differential duty to be paid accordingly. The goods were confiscated under Section 111(m) of the Act with redemption fine of ₹ 3,50,000. Further, a penalty of ₹ 1,50,000 was imposed under Section 112 of the Act. 25. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s issued by the Deputy Commissioner of Customs for the period from 21st July to 3rd November 2004, assigning the reasons for detention as investigation for suspected under valuation . 26. The Petitioner wrote to the Commissioner of Customs on 4th December 2004, seeking unconditional release of the goods and offered to furnish a security bond. Thereafter on 24th December 2014, the Petitioner wrote to M/s German Express Shipping Agency (India) Pvt. Ltd. (Respondent No.4) seeking release of the goo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hile 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 Servic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dated 28th April 2006, the Petitioner deposited a sum of ₹ 50,000 for obtaining release of the goods and the said amount was directed by a further order dated 22nd September 2006 to be paid over to CCI subject to the outcome of the writ petition. The decision in Grand Slam International 32.1 The question whether an importer is liable to pay the demurrage charges, notwithstanding that he ultimately succeeded in demonstrating that the import was validly made, came up for consideration before .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reating the entire period as a free period, the IAAI and the CWC granted rebate and calculated demurrage in accordance with the Rate Schedule framed by them. With the demurrage in each case being twice or thrice the value of the goods, the Petitioners therein approached the High Courts, which allowed the writ petitions and held that the IAAI or the CWC being the custodians of the Customs Department could not ignore the Detention Certificate. Therefore, no demurrage could be charged for the perio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

murrage 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

I only if it were shown that the Authority had, expressly or impliedly, consented to such arrangement. The decision in Sanjeev Woollen Mills 33.1 The issue was revisited by a two Judge Bench of the Supreme Court in Union of India v. Sanjeev Woollen Mills (1998) 9 SCC 647. There the importer had filed four bills of entry in respect of synthetic waste (soft quality). The Customs Department on testing the samples concluded that the goods imported were prime fibre and not soft waste and that the val .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e borne by the Customs Department. Thereafter, the Principal Collector was directed to adjudicate the issue within a time-bound programme. Ultimately, the Chief Commissioner by an adjudication order directed the unconditional release of goods under all the four bills of entry. 33.3 On account of delay in disposal of departmental proceedings, a fresh writ petition was filed before the High Court for release of the goods. The writ petition was allowed by the High Court holding that there was no ju .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

w the High Court gave one more chance to CCI and SCI to comply with the earlier directions. 33.4 The above orders of the High Court directing release of the goods without recovery of any demurrage or container charges was challenged before the Supreme Court. The plea of the Customs Department was that it should not be asked to issue a certificate or to bear the container detention charges. The Respondents maintained their stand that the Customs officers had acted mala fide in handling the four b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ears 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 a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uences. For the period prior to 5.4.1997, however, the order of the High Court does not require any intervention from us. The appellants shall file a progress report relating to the departmental inquiry by 30th November, 1998. 19. The appeal is dismissed with no order as to costs. The decision in C. L. Jain Woollen Mills 34.1 It is obvious that the decision in Union of India v. Sanjeev Woollen Mills (supra) came to be delivered in the peculiar circumstances detailed in the said judgment itself. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ority of India v. Grand Slam International (supra) and distinguished the decision in Union of India v. Sanjeev Woollen Mills (supra). 34.3 The facts in Shipping Corporation of India Limited v. C.L. Jain Woollen Mills (supra) were that the importer filed a petition challenging the action of the Customs Department in detaining the imported goods despite the import being valid. The adjudication proceedings ended in favour of the importer with the High Court disposing of the writ petition and direct .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Division Bench of the High Court for appropriate directions regarding payment of demurrage/detention 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 good .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 illegal, then in such circumstances whether the carrier of the goods who had lien over the goods for non- payment of duty, can enforce the terms and conditions of the contract against the Customs Authorities, making th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ds in whose favour the bill of lading had been consigned and who has stored the goods in its custody is governed by the contract between the parties. 34.8. Reference was made to Section 170 of the Indian Contract Act, 1872, which engrafted the principles of bailee s lien, i.e., 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 it until his dues are paid. It was noted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the power to direct the carrier, which continues to retain a lien over the imported goods, as long as its dues are not paid, not to charge any demurrage/detention charges. 34.9 The Supreme Court specifically negated the plea advanced on behalf of the customs authorities that in terms of Section 45(2)(b) of the Act once the order of confiscation and levy of penalty was struck down and a detention certificate was issued, the said issuance of the detention certificate would come within the express .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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..... 34.12 However, the ultimate relief granted by the Co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and Slam International (supra) as well as Shipping Corporation of India Limited v. C.L. Jain Woollen Mills (supra). The principles are set out as under: i. There is no provision in the Act that enables the customs authorities to direct a carrier of goods to waive demurrage charges or container charges even in terms of Section 45(2)(b) of the Act. That would be governed entirely by the contract between the importer and the carrier and the terms and conditions of the bill of lading, if any. ii. Wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ld to be illegal by the courts. iv. The only option is for the Central Government to make a request to the owner of the container or the space where the goods were stored to waive demurrage charges and if it is so conceded then to that extent 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 Truste .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction 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 legal positions were culled out after discussion of the entire case law: .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ontainer charges. These corporations cannot be compelled and mandamus cannot be issued to waive demurrage on the ground that the importer/consignee was unable to clear the goods due to fault of the custom authorities. (4) Whether and in what circumstances customs authorities can be compelled and asked to pay demurrage to the warehousing companies/shipping companies, is a matter of considerable debate. Decision in the case of Sanjeev Woollen Mills (supra) states that in some cases customs authori .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in Trustees of the Port of Madras through its Chairman v. K.P.V. Sheikh Mohd. Rowther & Co. Pvt. Ltd. (1997) 10 SCC 285. 40.1 Recently in Trip Communication Pvt. Ltd. v. Union of India (2014)302 ELT 321 (Del), a Division Bench of this Court answered the very same issue concerning waiver of the demurrage/detention charges claimed by the Celebi Delhi Cargo Terminal Management India (Pvt.) Limited ( CELEBI ) for the period the goods were in their warehouse pursuant to a seizure order issued by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessable 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 a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

judication proceedings, provisional release order is issued and a certificate is issued by the custom authorities, the goods would be released subject to furnishing of bond and/or security as may be prescribed that in case any fine, penalty, personal penalty and/or warning is imposed by the customs authorities, the Importer would pay the demurrage charges. 40.3 In the facts of that case in one writ petition it was held that the Petitioner should furnish a security bond and the bank guarantee sec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

here have been some decisions of this Court which are not consistent with the above settled position of the law as explained in International Airport Authority of India v. Grand Slam International (supra) and reiterated in Shipping Corporation of India Limited v. C.L. Jain Woollen Mills (supra). One such judgment is Om Petro Chemicals v. Union of India (2002) 140 ELT 353(Del). In fact this decision was also relied upon in WP (C) No.6216/2001 on account of apparent conflict between the said judgm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iated towards the cost of auction and the remaining to be deposited by the CWC in this Court. The container was directed to be returned to the shipper, i.e., Respondent No.4. Ultimately on 4th March, 2005, the Full Bench noted that the decision in Union of India v. R.C. Fabrics (P) Ltd.(supra) is by the Supreme Court, whereas the decision in Om Petro Chemicals 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 B .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

[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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

w of the clear enunciation of law as has been settled and summarised hereinabove, the orders passed by this Court in Om Petro Chemicals v. Union of India (supra), Yang Ming Marine Transport Corporation v. Commissioner of Customs Inland Container Depot, Tughlakabad (supra) and even the interim order in Modern Overseas cannot be said to be good law. 45. An attempt was made by Mr. Rawal, learned Senior Advocate appearing on behalf of the Petitioner in W.P. (C) No.3440-3441/2005, to point out the un .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version