2001 (4) TMI 83 - SC - Customs

Whether the appellant who under the terms of the contract between him and the owner of the goods having a lien over the goods until the dues are paid can be forced to release the goods without charging any demurrage merely because the customs authorities issued a detention order for a specified period ? Held that - The conclusion of the High Court to the effect that the detention of the goods by the customs authorities was illegal and 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. In the aforesaid premises we see no infirmity with the directions given by the Delhi High Court on 18-1-1999. The goods in question having already been directed to be released without the payment of the demurrage charges the importer must have got the goods released. Having regard to the fact situation of the present case it would be meet and proper for us to direct the Shipping Corporation and Container Corporation if an application is filed by the customs authorities to waive the demurrage charges. The appeal is disposed of accordingly.

Issues Involved:
1. Liability for demurrage charges when customs authorities detain goods.
2. Rights of carriers under the Bills of Lading.
3. Legality of the customs authorities' actions in detaining and confiscating goods.
4. Impact of court orders on the liability to pay demurrage charges.
5. Interpretation of provisions under the Customs Act and the Contract Act.

Detailed Analysis:

1. Liability for Demurrage Charges:
The primary issue was whether the appellant, who had a lien over the goods under the contract, could be forced to release the goods without charging demurrage merely because customs authorities issued a detention order. The Supreme Court emphasized that under the terms and conditions of the Bills of Lading, the carrier had a lien over the goods until all dues, including demurrage charges, were paid. The Delhi High Court had directed the release of goods without demurrage charges, but the Supreme Court noted that this liability could not be re-opened as the High Court's order had reached finality.

2. Rights of Carriers under the Bills of Lading:
The Court examined the rights of the carriers under the Bills of Lading Act and the Contract Act. It highlighted that the carrier's lien over the goods for unpaid charges was a contractual right that could not be nullified by a customs detention certificate. The Court found no provision in the Customs Act that authorized customs authorities to compel carriers not to charge demurrage.

3. Legality of Customs Authorities' Actions:
The customs authorities had detained and confiscated the goods, which was later found to be illegal by the High Court. The Supreme Court agreed with the High Court's finding that the customs authorities' actions were illegal and that the importer should not be liable for demurrage charges due to this illegal detention.

4. Impact of Court Orders on Liability to Pay Demurrage Charges:
The Supreme Court upheld the High Court's decision that the importer was absolved of liability to pay demurrage charges due to the illegal detention by customs authorities. The Court noted that the customs authorities could not prevent the carrier from charging demurrage, as there was no provision in the Customs Act to support such an action.

5. Interpretation of Provisions under the Customs Act and the Contract Act:
The Court analyzed various sections of the Customs Act, including Sections 8, 33, 34, 45, 47, 49, 57, 58, 62, and 68, and found no provision that could prevent the carrier from charging demurrage. The Court also referred to Sections 170 and 171 of the Contract Act, which support the bailee's right to retain goods until due remuneration is paid. The Court concluded that the customs authorities' issuance of a detention certificate could not override the carrier's contractual rights.

Conclusion:
The Supreme Court found no infirmity in the Delhi High Court's order directing the release of goods without demurrage charges. It emphasized that the customs authorities' illegal detention of goods did not absolve them of liability for demurrage charges. The Court directed that if an application was filed by the customs authorities, the Shipping Corporation and Container Corporation should waive the demurrage charges. The appeal was disposed of accordingly.

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