2016 (12) TMI 1248 - HC - Customs

Detention of goods - demand of detention and demurrage charges - import of defective/secondary cold rolled sheets/coils from South Korea - goods detained for inspection - whether goods were hot rolled steel or cold rolled steel, in dispute - thickness of product also in dispute - Held that - The inspection report, as submitted by the Chartered Engineer clearly opined that the goods imported by the petitioner were cold rolled sheets/coils, as claimed by the petitioner in the bills of entry. There was some issue raised regarding thickness of part of the consignments which, according to the Chartered Engineer, was only to the extent of about 10%. As the requirement of DRI, Ludhiana for 100% examination of the consignments before release had been satisfied, the same should have been released. Minor variation of thickness in about 10% of the consignments could be expected for the reason that the material was defective/secondary cold rolled sheets/coils. Detention and demurrage charges - Held that - once it is found that detention of goods was not on account of any fault of the petitioner, rather, found to be illegal action on the port of DRI and customs, the petitioner cannot be burdened for detention and demurrage charges and the liability has to be put on customs department, who shall be at liberty to seek waiver thereof. The Authority, as constituted under the 1963 Act, is only meant to fix the rates to be charged by the port authorities. Under Section 53 of he 1963 Act, the Board can deal with only such cases which seek waiver of charges. In the case in hand, the direction of the Government is as a matter of policy, which is applicable uniformly in all cases, where detention of goods is by customs and the certificate is issued. It is not in dispute that in the case in hand, the certificate has been issued, hence, in terms of Regulation 6(l) of the 2009 Regulations, which are binding on the Port Trust, customs can waive off the demurrage charges. Malafide of respondent No.7-Santokh Singh Senior Intelligence Officer and respondent No. 8-Roopesh Kumar, Intelligence Officer, DRI - Held that - This court is not going into much detail on this aspect, but it can safely be opined that the action was not bonafide, if not strictly mala fide. Things could have been taken in right perspective with positive attitude ensuring that neither the revenue suffers any loss nor the importer on account of merely delay of clearance of goods. The instructions issued by the department, time and again, were blatantly violated. The stand taken by the petitioner was vindicated when finally the goods were found to be cold rolled steel. It was never the case of the department that the goods imported were prohibited. The only issue raised about these being hot rolled or cold rolled steel or its thickness could be taken care of without any delay. Payment of detention charges of Shipping Line - Held that - No doubt, the 2009 Regulations are not applicable on the Shipping Line, however, once it is found that detention of goods for inordinate period was not on account of any fault on the part of the petitioner, he is not liable to be burdened with that cost. It is only the DRI and customs, who should bear the cost, demanded by the Shipping Line. Petitions allowed - The amount of customs duty having already been paid by the petitioners, the respondents are directed to release the goods. The Port Trust cannot charge any demurrage in view of Regulation 6(l) of the 2009 Regulations, customs having issued the detention certificate. The detention charges demanded by the Shipping Line shall be borne by DRI and/or customs. However, they shall be entitled to get the same waived off or reduce from the Shipping Line. The petitioners shall be entitled to cost of Rs. 50,000/- each to be paid by the department, however, with liberty to recover from the guilty officer/official(s) - decided in favor of petitioner.

Issues Involved:
1. Illegal detention of goods.
2. Demand of detention and demurrage charges.
3. Responsibility for payment of detention and demurrage charges.
4. Application of the 2009 Regulations.
5. Allegations of mala fide against respondents No. 7 and 8.
6. Payment of detention charges to the Shipping Line.

Issue 1: Illegal Detention of Goods

The petitioner imported defective/secondary cold rolled sheets/coils from South Korea, supported by pre-inspection reports and preferential certificates of origin, which entitled duty-free import under the Korea-India Comprehensive Partnership Agreement. Bills of entry were filed on 4.12.2015, 11.12.2015, and 29.12.2015, but the goods were not released. The Directorate of Revenue Intelligence (DRI) directed the customs to hold the consignments for 100% examination due to suspected evasion of provisional safeguard duty under notification No. 2/2015-Cus (SG) dated 14.9.2015. Despite repeated requests from the petitioner for provisional release, the goods were not examined promptly, leading to the filing of CWP No. 572 of 2016. The customs authorities conducted Positive Material Identification tests and engaged a Chartered Engineer, Rajendra S. Tambi, who confirmed the goods as cold rolled steel. Despite this, the customs sent samples to TCR Engineering Services Pvt. Ltd., which lacked proper testing facilities, resulting in contradictory reports. The delay in testing and release was attributed to the customs and DRI's actions, leading to the conclusion that the detention was illegal.

Issue 2: Demand of Detention and Demurrage Charges

The petitioner argued that the delay in releasing the goods led to incurring heavy demurrage and detention charges. Despite the customs authorities receiving reports confirming the goods as cold rolled steel, the consignments were not released. The DRI's directive to draw random samples and re-test further delayed the process. The customs issued a provisional release order on 7.3.2016, superseding an earlier order, and directed the release of goods after measuring the thickness. The petitioner claimed that the customs authorities' actions were mala fide and discriminatory, as similar consignments of other importers were released without such stringent conditions.

Issue 3: Responsibility for Payment of Detention and Demurrage Charges

The court held that the petitioner was not at fault for the detention of goods and that the customs and DRI were responsible for the delay. The court referred to various judgments where the customs authorities were held liable for demurrage charges due to illegal detention of goods. The court directed that the customs department bear the detention and demurrage charges and be at liberty to seek waiver from the Port Trust and Shipping Line.

Issue 4: Application of the 2009 Regulations

The court examined the applicability of the Handling of Cargo in Customs Area Regulation, 2009 (2009 Regulations). Section 141 of the Customs Act, 1962, as amended, provides that imported or export goods in a customs area shall be handled as prescribed. The 2009 Regulations, framed under Section 141(2) and Section 157, define 'Customs Cargo Service provider' and impose responsibilities, including non-charging of rent or demurrage on goods detained by customs. The court held that the Port Trust, being a customs cargo service provider, is bound by the 2009 Regulations. The Port Trust's argument that it is not a service provider under the 2009 Regulations was rejected, and the court directed that no demurrage charges be levied on the detained goods.

Issue 5: Allegations of Mala Fide Against Respondents No. 7 and 8

The petitioner alleged mala fide actions by respondents No. 7 and 8, officers of the DRI, claiming they discriminated against the petitioner and harassed him due to personal animosity. The court noted that specific allegations of mala fide were not denied by the respondents through affidavits, leading to the conclusion that the actions were not bona fide. The court observed that the officers' actions were arbitrary and directed that the customs department bear the costs incurred by the petitioner due to the delay.

Issue 6: Payment of Detention Charges to the Shipping Line

The Shipping Line argued that it was not a party to the dispute between the petitioner and the customs authorities and that it had a lien on the goods for unpaid charges. The court held that the petitioner should not be burdened with detention charges due to the illegal detention of goods by the customs authorities. The court directed that the customs department bear the detention charges demanded by the Shipping Line and seek waiver or reduction of these charges.

Conclusion

The court allowed the writ petitions, directing the release of the goods upon payment of customs duty. The Port Trust was instructed not to charge demurrage, and the customs department was held responsible for detention charges demanded by the Shipping Line. The court awarded costs of Rs. 50,000 to the petitioner, payable by the customs department, with liberty to recover from the guilty officers. The judgment emphasized the need for upgrading testing facilities to avoid delays in the clearance of imported goods.

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