2013 (4) TMI 237 - HC - Customs

Liabiltiy of pay demurrage charges - illegal confiscation - reimbursement of payment of Containers Detention Charges along with ground rent - Held that - in view of the order of this court declaring the confiscation illegal, and such judgment of this court having attained finality, the customs authorities cannot escape the liability to bear the burden of demurrage charges for such seized and ultimately confiscated goods which would include container charges and ground rent. - the seizure orders pertained to the containers also. To the extent such demand is found genuine and payment actually made, the customs authorities shall reimburse the petitioner with simple interest at the rate of 9% per annum from the date of payment by the petitioner till its reimbursement by the respondents. - Decided in favor of assessee.

Summary

Issues Involved:
1. Legality of the seizure and confiscation of goods.
2. Entitlement of the petitioner to demurrage charges and ground rent.
3. Interest on the demurrage charges and ground rent.

Detailed Analysis:

Legality of the Seizure and Confiscation of Goods:
The petitioner, a Hong Kong-based company, exported 100% Mulberry Raw Silk to Indian buyers who failed to take delivery. The petitioner sought new buyers and requested customs authorities to amend the Bill of Lading accordingly. Customs authorities seized the goods in March 1998 under Section 110 of the Customs Act, 1962, and later issued confiscation orders in February and March 1999 without notifying the petitioner. The petitioner filed multiple petitions, and a Division Bench of the High Court quashed the confiscation orders on 18-9-2000, citing non-service of mandatory notice under Section 124 of the Customs Act. The court directed the restoration of the goods to the petitioner.

Entitlement to Demurrage Charges and Ground Rent:
Despite the High Court's order, customs authorities delayed releasing the goods, leading to the petitioner incurring demurrage charges and ground rent. The petitioner claimed Rs. 25,72,765/- towards these charges. The court observed that the seizure and confiscation were illegal due to non-compliance with Section 124 of the Customs Act. Citing the Supreme Court's decision in Shipping Corporation of India Ltd. v. C.L. Jain Woollen Mills, the court held that customs authorities must bear the demurrage charges when confiscation is declared illegal.

Interest on Demurrage Charges and Ground Rent:
The petitioner also sought interest on the demurrage charges. The court referred to the Supreme Court's decision in Sandvik Asia Ltd. v. Commissioner of Income Tax-I, Pune, which supports the claim for interest on such charges. The court directed customs authorities to verify the actual payment of demurrage and ground rent charges and reimburse the petitioner with simple interest at 9% per annum from the date of payment until reimbursement.

Conclusion:
The High Court quashed the confiscation orders due to the lack of mandatory notice under Section 124 of the Customs Act, declared the seizure and confiscation illegal, and directed customs authorities to bear the demurrage charges and ground rent incurred by the petitioner. The court also mandated reimbursement with interest at 9% per annum. The petition was disposed of with these directions, and the rule was made absolute accordingly.