2016 (5) TMI 652 - HC - Customs

Seeking direction for release of cargo without insisting for any payment towards demurrage charges and refund erroneously paid by the petitioner towards demurrage charges - Import of 13,050 metric tons of Muriate of Potash from Israel - Cargo off-loaded from Vessel and stored in E1 Shed on transit basis in the Port area. Pursuant to the order of the Customs Department, the petitioner cleared 80% of the cargo and remaining 20% of the cargo had to be detained by the petitioner in the transit shed on account of the direction issued by the Customs Department. Petitioner contended that 20% of the cargo could not be moved by them on account of restraint imposed by the Customs Authorities, therefore, they are entitled for 45 free days. Held that - when the 3rd respondent, Customs Department had specifically stated that the goods were detained for conducting verification and tests and that the detained goods were released on 13.01.2016 after the receipt of the report from the Regional Fertilizer Control Laboratory on 04.01.2016, the contention of the respondents 1 & 2 that unless the goods were detained by the Customs Department, the petitioner is liable to pay the demurrage charges, cannot be accepted. When the counter filed by the Customs Department clearly says that the goods were detained, the respondents 1 & 2 cannot take a different stand stating that the goods were not detained by the Customs Department. Even by the order of the Customs Department, they ordered for the release of only 80% of the cargo and 20% of the cargo was not released by the said order. Therefore, it also implies that 20% of the goods were detained by the Customs Department without issuing an order for release. This stand of the petitioner is also now supported by the counter filed by the Customs Department. When the goods were released only on 13.01.2016, the petitioner approached the respondents on the same day for the release of the goods, however, the respondents 1 & 2 levied demurrage charges stating that there was no order of detention. Since it is clear that the goods were detained by the Customs Department, the stand taken by the respondents 1 & 2 cannot be accepted. The respondents 1 & 2 are liable to release the cargo stored in E1 Shed without insisting for any payment towards demurrage charges. The respondents 1 & 2 should also refund the amount received by them towards the demurrage charges for the 20% of the cargo. Therefore, the respondents are directed to release the cargo stored in E1 Shed without insisting for any payment towards demurrage charges and also to refund the amount paid by the petitioner towards demurrage charges for 20% of the cargo, which was not released pursuant to the order dated 07.12.2015. - Petition disposed of

Summary

Issues:
1. Demurrage charges on detained cargo.
2. Customs Department's role in cargo release.
3. Dispute over demurrage payment and cargo release.

Issue 1: Demurrage charges on detained cargo
The petitioner filed a Writ Petition seeking a mandamus to direct the respondents to release the cargo stored in E1 Shed without demanding demurrage charges and to refund the amount paid towards demurrage. The petitioner argued that they were entitled to 45 free days for the detention of 20% of the cargo, as per Chapter IV of the Scale of Rates. However, the respondents insisted on collecting demurrage charges amounting to ?9,39,867.53p. The Customs Department had detained the cargo for verification and testing, which led to the delay in releasing the remaining 20% of the goods.

Issue 2: Customs Department's role in cargo release
The Customs Department ordered the release of 80% of the cargo on 07.12.2015 but retained 20% for verification purposes. The test report received on 04.01.2016 confirmed that the cargo met the required standards, leading to the release of the remaining 20% on 13.01.2016. The Customs Department clarified that there was no delay in releasing the cargo, and the total clearance time was less than 45 days. The Customs Department's actions played a crucial role in the detention and subsequent release of the cargo.

Issue 3: Dispute over demurrage payment and cargo release
The respondents, including the Port Trust and Customs Department, argued that demurrage charges were necessary to expedite cargo clearance and prevent misuse of the transit area as a warehouse. They contended that since there was no Detention Order issued by Customs for the 20% of the cargo, demurrage charges were applicable. However, the Court rejected this argument, emphasizing that the Customs Department had indeed detained the goods for testing and verification purposes, as confirmed by their own statements. The Court directed the respondents to release the cargo without demanding demurrage charges and to refund the amount paid by the petitioner towards demurrage for the detained portion of the cargo.

In conclusion, the Court ruled in favor of the petitioner, directing the respondents to release the cargo without imposing demurrage charges and to refund the erroneously collected demurrage amount. The judgment highlighted the importance of adherence to regulations and the role of the Customs Department in cargo clearance processes, ultimately resolving the dispute over demurrage payment and cargo release.