DISPOSAL OF UNCLAIMED/UNCLEARED CARGO

[Mr. M. GOVINDARAJAN]

Section 48 of the Customs Act, 1962 (‘Act’ for short) dealt with the procedure in case of goods not cleared, warehoused or transshipped within thirty days after unloading. The said Section provides that if any goods brought into India from a place outside India are not cleared for home consumption or warehoused or transshipped within thirty days from the date of the unloading thereof at a customs station or within such further time as the proper officer may allow or if the title to any imported goods is relinquished, such goods may, after notice to the importer and with the permission of the proper officer be sold by the person having the custody thereof.

Animals, perishable goods and hazardous goods, may, with the permission of the proper officer, be sold at any time.  Arms and ammunition may be sold at such time and place and in such manner as the Central Government may direct.

If the importer files the Bill of Entry but does not clear the goods due to various reasons such as financial hardships, lack of demand for the goods etc., then such goods are called as ‘uncleared goods’.  If the importer does not come forward to file the bill of entry for clearance of goods then such goods are called as ‘unclaimed goods’.  The department is entitled to sell the goods for the recovery of customs duty and other dues if the importer does not come forward to clear the goods.

Procedure for disposal of unclaimed/uncleared cargo

In order to ensure expeditious disposal of unclaimed/ uncleared cargo, under section 48 of the Customs Act, 1962, and lying with custodians, whether in the private or public sector, the following procedure, as indicated in the circular No. 50/2005-cus, dated 01.12.2005 as amended by circular No. 52/2005, dated 09.12.2005, should be followed:-

•  The procedure shall be applicable only to unclaimed/uncleared cargo landed at least one year prior to the date on which the list of goods for customs "no objection" is prepared. In other words, this liberalized procedure would not apply to goods which have been lying uncleared for a period less than one year from the date of their import;
• The custodian will furnish the list of items to be considered for disposal to customs. The list will contain complete particulars such as Bill of Lading/Airway Bill number, description of goods, weight, name of the consignee/consignor, etc. A notice shall simultaneously be issued by the custodian to the consignee at his known address and also displayed on the custodian's notice board stating that if the goods are not cleared within 15 days they be sold by the custodian under Section 48 of the Customs Act, 1962;
• Customs shall scrutinize the list with their own files/records and intimate the custodian a list of disputed or stayed consignments or consignments required to be retained for any investigation/adjudication/court proceedings, motor vehicles or negative list items as restrictions imposed under allied acts. If no such intimation is received from the Customs within 15 days, the custodian shall go ahead with the disposal of the goods;
• The responsibility for the disposal shall exclusively be with the Custodian who shall fix a reserve price arrived at by a panel of Government  approved valuers appointed by the Custodian [irrespective of any value arrived at by the Customs Appraisers earlier], which should include an expert on the product line;
• The customs will not insist on complete and detailed inventory of the contents of the consignments to be drawn in their presence. They shall, instead choose 10% consignments for which detailed inventory shall be made in their presence for sample check;
• The disposal of the goods shall be made by public auction/ E-auction/tender. The date of the public auction/ E-auction/tender should be adequately publicized in advance through national newspapers (both in English and Hindi), departmental website as well as in at least one newspaper in the local language. The values assessed by the approved valuers appointed by the custodians shall form the "reserve price". The maximum number of auctions/tenders to which a lot is subjected should be four, with the goods to be necessarily sold for the highest bid in the last auction/tender regardless of the reserve price fixed.  Reserve price fixed would not be applicable in case of fourth auction/tender. In the event of the goods not being disposed of in the first auction, subsequent auctions/tender should be conducted in time bound manner;
• Guidelines issued by the Central Vigilance Commission particularly letter No.98/ORD/1 dated 18th December, 2003 should also be kept in view;
•  The bidding shall be on cum-duty price and duty shall be back-calculated from the sale price [Local taxes like Sales Tax etc, will however have to be charged/recovered extra from the buyer];
• The custodian should fix a date for holding the auction/tender and communicate such date to the officer in charge of the customs station and the concerned Assistant Commissioner/Deputy Commissioner. The Assistant Commissioner/Deputy Commissioner would nominate, if necessary, an officer not below the rank of Superintendent /Appraiser to witness the auction/tender. Customs shall not withdraw any consignments at the last moment from the auction/tender except with the written approval of the Commissioner of Customs;
• For each consignment which is sold, the custodian will file a consolidated Bill of Entry, buyer-wise, for assessment of the effective rate of duty by the Customs. Auctioned goods will be allowed out of charge only after the duty assessed is paid by the custodian;
• The sale proceeds shall be shared as per the provisions of section 150 of the Customs Act, 1962.               

For uncleared/ unclaimed goods which are lying for a period less than one year, the custodian would get the reserve price fixed by a panel of Government approved valuers appointed by the Custodian. Customs shall not associate itself with the valuation of  such goods lying uncleared with the custodian. However, both reserve price and bids would be approved by the Customs. Further, if these goods remain unsold and pass into the category of landed-more-than-one-year-prior, then the custodians can sell the same following the independent procedure as detailed in para 3 without any reference to customs, and adjusting the number of auctions/tenders to which the lot was already subjected to against the prescribed number of four such auctions/ tender.

Disposal of hazardous cargo

The Supreme Court in W.P. 657/1995, dated 14.10.2003 gave certain directions for the disposal of hazardous cargo.  The Board considered the judgment of Supreme Court and issued guidelines vide circular No. 31/2004-Cus, dated 26.4.2004.

• The wastes are to be categorized as either those that are banned or those that are regulated;
• The wastes in the banned category should be either re-exported, if permissible or destroyed at the risk, cost and the consequence of the importer;
• The wastes in the regulated category are permitted for recycling and reprocessing within the permissible parameters by specified authorized persons having the requisite facilities under the rules;
• Before allowing clearance for recycling and domestic use, clearances should be obtained from the Monitoring Committee on  Hazardous Waste Management;
• Where the importer of any of the categories is not traceable, the consignments shall be dealt with at the risk, cost and consequences of the importer;
• The disposal/auction shall be carried out under the supervision of the Monitoring Committee on Hazardous Waste Management.

The Board has further decided that there would be a formal mechanism for interaction between the custodians and Customs to review the pendency of uncleared cargo and to reconcile the figures. It has been decided that there should be a quarterly meeting between the Customs and Custodians at each Custom station to review the pendency of uncleared/unclaimed cargo and to update the status of the pending consignments. Further in such review meetings, the pendency with the custodian should be matched with the figures of uncleared consignments as per Customs records.

Procedure for sale of goods

Section 150 of the Act deals with the procedure of sale of goods and application of sale proceeds.   According to this Act where any goods not being confiscated goods are to be sold under any provisions of this Act, they shall, after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner.

The proceeds of such sales shall be applied-

•  firstly to the payment of the expenses of the sale;
• next to the payment of the freight and other charges, if any, payable in respect of the goods sold, to the carrier, if notice of such charges has been given to the person having custody of the goods;
• next to the payment of the duty, if any, on the goods sold;
• next to the payment of the charges in respect of the goods sold due to the person having the custody of the goods;
• next to the payment of any amount due from the owner of the goods to the Central Government under the provisions of this Act or any other law relating to customs, and the balance, if any, shall be paid to the owner of the goods.

Where it is not possible to pay the balance of sale proceeds, if any, to the owner of the goods within a period of six months from the date of sale of such goods or such further period as the Commissioner of Customs may allow, such balance of sale proceeds shall be paid to the Central Government.