2007 (7) TMI 310 - HC - Customs

Seizure of the polyster fabric imported - demurrage charges which was sought to be deducted from the sale proceeds - Held that - On confiscation under Section 126 of the Customs Act, the goods vest with the said authority. When the goods were in custody and possession of the customs department, they were stolen. Admittedly, the goods were covered by a valid licence and, therefore, goods could not have been seized. The goods have to be returned to the respondent or the value thereof paid. Since the goods were stolen, while they were in custody of the customs department, they are liable to make good the loss suffered by the respondent. As there was delay in selling the goods even after the orders were passed by this Court and, therefore, the aforesaid burden to pay demurrage charges cannot be fasten on the respondent. Thus modify the order of the learned Single Judge to the extent that the demurrage charges would not be payable by the respondent for the period after expiry of six months from 4th April, 1988. The appellant will be liable to pay demurrage charges for this period.

Summary

Issues: Seizure of imported polyster fabric, validity of licenses, theft of goods in custody, demurrage charges deduction, liability of customs authorities, interest payment, disbursement of deposited amount.

In this judgment, the High Court of Delhi addressed multiple appeals concerning the seizure of polyster fabric imported by the respondent due to alleged lack of valid licenses. It was later established that the consignments were indeed covered by valid licenses and imported lawfully. The court noted that the goods, being perishable, were allowed to be sold during the proceedings, with the sale proceeds to be kept in a fixed deposit account. The stolen goods, while in custody of the appellant, were valued at Rs. 8,37,879, and demurrage charges were disputed by the respondent. The Single Judge's order directed the appellant to reimburse the respondent for the stolen goods' value, exclude demurrage charges from payment, and pay interest at 7% per annum from seizure till payment.

The primary issues considered were the liability of the customs authorities for the stolen goods and the deduction of demurrage charges. The court ruled that since the stolen goods were under the customs department's custody, covered by valid licenses, and should not have been seized, the authorities were responsible for reimbursing the respondent. Regarding demurrage charges, delays in selling the goods, despite court orders, led to the decision that the charges post six months from the specified date were not the respondent's burden. The court upheld the interest payment order and directed the appellant to disburse the entitled amount to the respondent.

The judgment concluded by ordering the disbursement of the deposited amount, with the Registry tasked to calculate and distribute the funds accordingly. All three appeals were disposed of based on the court's findings on the liability for stolen goods, demurrage charges, and interest payment.