2023 (3) TMI 184 - HC - Customs

Non-compliance of the directions of this Court - Seeking waiver of the demurrage and detention charges - seeking release the consignment comprising Chinese Knotted Woollen Carpets which were detained by the respondent no.2 - HELD THAT - In absence of any notice of seizure of goods, on provisional basis, the goods were not released which otherwise is permissible taking the bond from the owner in proper form and with certain security conditions. There were certain inquiries pending, for which, the petitioner was being called and he could not attend to the summons because of the reason of his health as put forward by him and he approached this Court by invoking the writ jurisdiction. He, however, had ensured to cooperate with the inquiry after furnishing the bond before this Court. This Court had specifically held that there was sufficient independent device and mechanism under the law for him to be asked to appear and assist the inquiry/investigation and non-appearance cannot be a valid ground for the authority to hold back the goods without following the legal procedure as contemplated under the law of seizure. Therefore, release was directed within one week from the date of receipt of copy of the order. As held by the Apex Court in case of Mumbai Port Trust vs. M/s. Shri Lakshmi Steels and Ors. 2017 (7) TMI 977 - SUPREME COURT , this Court had already permitted the petitioner to approach the respondent authority for exemption and remission of demurrage for the authority concerned to take a sympathetic view while considering the case of the petitioner. At the same time, the detention charges of the shipping lines are to be paid on the basis of the contract between the petitioner and the shipping line. The Apex Court had been quite clear that the High Court cannot in writ proceedings direct the DRI/Customs to pay the detention charges to the shipping line, firstly because there was a contract between the importer and the shipping line and moreover, under the writ jurisdiction, these aspects are not to be adjudicated as there are many aspects on facts which would need the proper adjudication. The petitioner had 14 days of free period to clear the consignment by making payment of all the due charges and releasing the empty container to the present respondent no.5. In default of such clearance and non-return of the empty container to the respondent no.5 within the scheduled time frame, the detention as well as the demurrage charges would start applying to the consignment. The charges are due and payable by the petitioner as a pre-condition to get the delivery order of the subject consignment. The detention of the cargo by the customs as well as the DRI was held to be legal and therefore, the release was directed by an order and judgment of this Court. It appears that without passing any order of seizure under Section 110 of the Customs Act, when there was a detention and there was a specific denial for shifting the goods to the public warehouse under Section 49 in order to save the demurrage and detention charges, the respondent authority cannot insist on the demurrage which is in its hand. So far as the detention charges are concerned, the contract of the parties would govern the detention charges if eventually it is found that it was without any valid and justifiable reasons, the other respondents, other than respondent no.5, are the reasons for this detention charges, the Court concerned can definitely decide. It was the action of the other respondents which was under challenge by the petitioner in earlier litigation The only aspect that needs to be determined by this Court is as to whether the same can be directed against the authorities which also has its defence of the petitioner not responding to its summons officially issued. The detention of the goods without the seizure under Section 110 of the Act was not found sustainable under the law and the respondent had acted as if it was powerless and it needed to continue to use this tactic of detaining the goods till the petitioner actually attends to the proceedings of inquiry/investigation. It is worth noting that now that inquiry is completed and there has been a cooperation of the petitioner as well. The respondent Customs Authority has acted fairly by expressing that it is not going to charge the demurrage charges, however, the shipping line would have a right and lien over the goods until the matter is decided by the CESTAT. There shall a need to direct furnishing of some security which should be in the form of the bank guarantee, in the given circumstances. The petition is partly allowed - The respondents shall release the consignment imported under B/E No. 4956991 dated 06.08.2021 on the petitioner furnishing the bank guarantee to the tune of Rs. 16,00,000/- for a period of six (06) months.

Issues Involved:
1. Non-compliance with court directions.
2. Waiver of demurrage and detention charges.
3. Contractual lien and rights of the shipping line.
4. Legal procedures and jurisdiction under Article 226 of the Constitution of India.
5. Role and obligations of customs authorities.

Detailed Analysis:

1. Non-compliance with Court Directions
The petitioner filed a petition under Article 226 of the Constitution of India seeking the release of a consignment of Chinese Knotted Woolen Carpets detained by the customs authorities. The court had directed the consignment to be released within one week of the receipt of the order. Despite these directions, the consignment was not released, prompting the petitioner to file another petition.

2. Waiver of Demurrage and Detention Charges
The respondent no.5 (Shipping Line) was directed by the customs authorities not to charge any detention charges on the consignment till clearance, as per Regulation 10(1) of the Sea Cargo Manifest Transport Regulations, 2018. However, the shipping line denied the waiver request and insisted on payment of demurrage charges. The petitioner sought a writ of mandamus directing the respondents to release the consignment without charging demurrage/detention charges.

3. Contractual Lien and Rights of the Shipping Line
The shipping line argued that it had a contractual lien over the goods and was entitled to charge demurrage and detention charges as per the terms of the Bill of Lading. The respondent relied on the Supreme Court's decision in Mumbai Port Trust vs. M/s. Shri Lakshmi Steels, which held that demurrage and detention charges are to be paid based on the contract between the importer and the shipping line.

4. Legal Procedures and Jurisdiction under Article 226
The court noted that the issues of demurrage and detention charges involve contractual disputes between private parties, which are typically not adjudicated under Article 226. The court referred to several judgments, including the Supreme Court's decision in Shipping Corporation of India Ltd. vs. C.L. Jain Woolen Mills, which emphasized that such matters should be resolved through proper legal channels rather than writ proceedings.

5. Role and Obligations of Customs Authorities
The customs authorities relied on the Sea Cargo Manifest and Transshipment Regulations, 2018, which state that authorized carriers should not demand container detention charges for goods detained by customs. The court observed that the customs authorities had acted within their rights to direct the waiver of demurrage charges but noted that the shipping line's right to detention charges was governed by the contract with the petitioner.

Conclusion:
The court ordered the release of the consignment upon the petitioner furnishing a bank guarantee of Rs. 16,00,000 for six months. The fate of the detention charges claimed by the shipping line would be determined by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The court emphasized that it had not opined on the merits of the contractual dispute, which should be resolved independently by the CESTAT. The petition was disposed of accordingly.

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