2010 (7) TMI 304 - SC - Customs

Containers contained war material/explosives - goods were not as per the description given in the bills of lading, the same were confiscated by the Customs Department - special civil applications filed by respondent were summarily dismissed by the learned Single Judge without calling upon the appellant and respondent, without considering counter affidavits to admit or controvert the averments contained therein - appellant had a legitimate right to file counter affidavits in the appeals preferred by respondent Held that - High Court was duty bound to consider the contents of the counter affidavits and then decide the issue relating to liability of respondent - to pay container storage charges and ground rent in the backdrop of the fact that the containers together with their contents had been confiscated by the Customs Department on the ground that war material/explosives were smuggled in the country under the garb of importing Heavy Metal Scrap and Hollow Section Tubes - High Court granted relief to respondent only on the ground that representations made by the said respondent for release of containers after de-stuffing the goods were not decided - Division Bench was not justified in relying upon the order passed in that case for the purpose of quashing the demand of container storage charges and ground rent - order is set aside and the matter is remitted to the High Court for fresh disposal of the letters patent appeals in accordance with law.

Summary

Issues Involved:
1. Legitimacy of demand for container storage charges and ground rent.
2. Confiscation of goods by Customs due to misdescription.
3. Responsibility for de-stuffing the goods from containers.
4. Applicability of the rule of not charging storage charges/ground rent for 75 days.
5. Relevance of previous judgments and orders in similar cases.

Detailed Analysis:

1. Legitimacy of Demand for Container Storage Charges and Ground Rent:
The appeals were directed against the Gujarat High Court's order that quashed the demand for container storage charges and ground rent. The appellant argued that the Division Bench erred by quashing the demand based on an earlier Supreme Court order without considering the specific facts of this case. The containers were confiscated by Customs due to smuggling of war material under the guise of importing Heavy Metal Scrap and Hollow Section Tubes. The appellant emphasized that there is no provision in the Major Port Trusts Act, 1963 allowing them to de-stuff goods seized by Customs, and thus, respondent No.1 could not claim relief based on non-entertainment of their representations for release of containers.

2. Confiscation of Goods by Customs Due to Misdescription:
The goods transported by respondent No.1 were described as Heavy Metal Scrap and Hollow Section Tubes but were found to contain war material/explosives. Consequently, the goods were confiscated by the Customs Department. This misdescription and subsequent confiscation were central to the appellant's argument that respondent No.1 should bear the storage charges and ground rent.

3. Responsibility for De-stuffing the Goods from Containers:
Respondent No.1 made representations to the appellant for the release of containers after de-stuffing the goods, but the appellant communicated with the Superintendent of Police and General Staff Officer, who declined to take possession of the war material/explosives. The appellant argued that they could not de-stuff the goods as per the provisions of the Major Port Trusts Act, 1963, and thus, the responsibility could not be shifted to them.

4. Applicability of the Rule of Not Charging Storage Charges/Ground Rent for 75 Days:
The Division Bench of the High Court did not consider the counter affidavits and allowed the appeals by referring to a previous Supreme Court order, which did not address the specific issue of goods being seized and confiscated by Customs. The appellant contended that the rule of not charging storage charges/ground rent for 75 days should not apply when goods are confiscated for smuggling war material, a matter requiring serious consideration.

5. Relevance of Previous Judgments and Orders in Similar Cases:
The High Court relied on the Supreme Court's order in Kutch Shipping Agency Private Limited v. Board of Trustees, Kandla Port Trust, which did not address the issue of confiscated goods due to smuggling. The appellant argued that the Division Bench erroneously applied this precedent without considering the unique facts of the case. The Supreme Court agreed that the High Court should have examined the issue more thoroughly.

Conclusion:
The Supreme Court allowed the appeals, set aside the High Court's order, and remitted the matter for fresh disposal of the letters patent appeals in accordance with the law. The Court emphasized the need for serious consideration of the specific issue of goods seized and confiscated by Customs. Additionally, the Court appreciated the efforts of the learned Solicitor General in highlighting the national security threat posed by the import of war material under the guise of scrap metal and ensuring strict supervision of such imports.