2006 (3) TMI 177 - HC - Customs

Summary

Issues Involved:
1. Legality of the orders dated 17-12-1998 and 29-12-1998 and the demand dated 8-1-1999.
2. Legality of the claim of demurrage and wharfage charges amounting to Rs. 17,16,648/- with interest.
3. Liability of the third respondent (Collector of Customs) to make the payment if the petitioners are found liable.

Detailed Analysis:

1. Legality of the Orders and Demand:
The petitioners challenged the orders dated 17-12-1998 and 29-12-1998 and the demand dated 8-1-1999 as illegal and null and void. The petitioners argued that the detention of their consignment by the Customs Authorities was illegal as the order of levying penalty on the export consignment for overvaluation was quashed by the Customs, Excise and Gold Control Appellate Tribunal (CEGAT). The petitioners contended that the detention certificate issued by the Customs Authorities should have been accepted by the Port Trust Authorities, and the demurrage and wharfage charges should not be levied against them. The Court, however, found that the Port Trust Authorities had considered the case of the petitioners both under the policy and Section 53 of the Major Port Trusts Act, 1963. The authorities had concluded that the petitioners' case did not constitute a special case warranting remission under Section 53. Thus, the orders and the demand were upheld as valid.

2. Legality of the Claim of Demurrage and Wharfage Charges:
The petitioners sought a declaration that the claim of demurrage and wharfage charges amounting to Rs. 17,16,648/- with interest was illegal. The Court noted that the petitioners' consignment was detained due to overvaluation allegations. Although the penalty was later quashed, the Court held that the Port Trust Authorities were not bound to accept the detention certificate and were entitled to levy demurrage and wharfage charges. The Court referred to the judgment of the Apex Court in the case of International Airports Authority of India and Others v. Grand Slam International and Others, which established that an authority created under a statute is entitled to charge demurrage for goods in its custody, even if the delay was due to the fault of Customs Authorities. Consequently, the claim of demurrage and wharfage charges was deemed lawful.

3. Liability of the Third Respondent (Collector of Customs):
The petitioners argued that if they were found liable to pay the demurrage charges, the third respondent (Collector of Customs) should be directed to make the payment due to the illegal detention of the consignment. The Court, however, held that the Customs Authorities were protected under Section 155 of the Customs Act, which provides immunity for actions taken in good faith. The Court found no evidence of mala fide action by the Customs Authorities and noted that the petitioners had not pleaded or argued any case of mala fide. The Court referred to the judgment of the Division Bench of this Court in Modern Rubber Industries v. Union of India, which held that the Customs Authorities could not be saddled with the liability of demurrage charges unless there was a case of mala fide. Therefore, the Court rejected the petitioners' contention and held that the Customs Authorities were not liable to pay the demurrage charges.

Conclusion:
The Court dismissed the writ petition, upholding the validity of the orders dated 17-12-1998 and 29-12-1998 and the demand dated 8-1-1999. The claim of demurrage and wharfage charges was deemed lawful, and the petitioners were found liable to make the payment. The Court also held that the Customs Authorities were protected under Section 155 of the Customs Act and were not liable to pay the demurrage charges. The petition was dismissed with no order as to costs.