2017 (3) TMI 280 - SC - Customs

Remission of demurrage charges - consignment shipped on CAD Basis - non-clearance of the goods - the question regarding the liability of the appellant to pay the demurrage was never raised before the High Court nor did the High Court consider that question - Held that - though the question was not raised before the High Court, the appellant need not be barred from raising this question before us because it is a pure and substantial question of law. No enquiry into any fact is really necessary to decide the said question of law. The only fact which is not clearly established on record is the point of time at which the title in the goods passed to the appellant. But, in our opinion (for the reasons to be given later), that fact is wholly irrelevant for determining the authority of the 1st respondent to collect demurrage from the appellant. Whether the Madras Port Trust was acting as an agent of the consignee or the steamer agent when it took charge of goods discharged from the vessel? - Held that - High Court held that the steamer agent s responsibility ceases once the goods are handed over to the Port Trust and the bill of lading is endorsed. The High Court further held that upon the endorsement of the Bill of lading, the property in the goods vests in the consignee and therefore the steamer agent s responsibility for the custody of the goods ceases - High Court, concluded that only the consignee was liable. The fact that the appellant was not permitted to clear the goods because of the pendency of some proceedings initiated by the customs authorities by itself does not create a right of remission in favour of the appellant. Though it may constitute a relevant circumstance for considering granting remission if the 1st respondent so chooses as a matter of policy. As a matter of fact, remission of a part of the demurrage was granted by the 1st respondent. The authority of the 1st respondent to grant or decline remission of any amount due towards any rate payable under THE ACT must be based on rational consideration and a sound policy. Such a requirement is inherent in the fact that 1st respondent is a statutory body discharging important statutory obligations. 1st respondent could not bring anything on record to our notice which demonstrates the reasons for declining remission as claimed by the appellant nor any clear policy of the respondent which regulates the discretion - we deem it appropriate to set aside the decision of 1st respondent dated 16.09.1995 in declining the remission and leave it open to the respondent to take appropriate decision on the application duly recording the reasons for such decision. Appeal disposed off - decided partly in favor of appellant.

Issues Involved:
1. Liability to pay demurrage.
2. Entitlement to remission of demurrage.
3. Allegation of discriminatory treatment in remission.

Detailed Analysis:

1. Liability to Pay Demurrage:
The appellant argued that they acquired title to the goods after they arrived at the port, and thus, demurrage for the period before the acquisition should be collected from the steamer agent. The appellant also contended that they should not be liable for services not rendered to them. The court examined the legal framework, including the Customs Act, the Major Port Trusts Act, and relevant case law, to determine the rights and obligations of the parties involved.

The court concluded that the appellant's liability to pay demurrage does not hinge on the point of time when the title to the goods passed to them. The court emphasized that the right of the Board to recover dues from the consignee or the steamer agent is established by statutory provisions and does not depend on the title of the goods. The court referred to previous judgments, including ROWTHER-I and ROWTHER-II, to support its conclusion that the Board could recover the rates due either from the steamer agent or the consignee.

2. Entitlement to Remission of Demurrage:
The appellant claimed entitlement to complete remission of demurrage, arguing that the delay in clearance was due to procedural formalities and not attributable to them. The court noted that the guidelines issued by the Government of India permit remission of up to 80% of demurrage in appropriate cases, with the possibility of complete remission in exceptional circumstances.

The court divided the period of delay into two phases:
- Phase I: Before the appellant's right to take delivery arose, where the delay was due to the original consignee's failure to clear the goods.
- Phase II: After the appellant's right to take delivery arose, where the delay was due to compliance with statutory obligations.

The court held that the appellant could not claim remission for Phase I as they knew or ought to have known about the potential demurrage when purchasing the goods. For Phase II, the court acknowledged that the delay was due to procedural formalities but did not create an automatic right to remission. The court emphasized that remission is a discretionary matter for the Board, guided by policy considerations.

3. Allegation of Discriminatory Treatment in Remission:
The appellant alleged discrimination, claiming that another importer, Gilt Pack, was granted complete remission in similar circumstances. The court noted that the High Court did not record any conclusion on this allegation. Upon examining the facts, the court found that the cases of Gilt Pack and the appellant were not identical. Gilt Pack's remission was granted under different circumstances where the original consignee cleared the goods after resolving licensing issues.

The court stressed that the Board's authority to grant or decline remission must be based on rational considerations and sound policy. The court found no clear policy or reasons provided by the Board for declining remission to the appellant and set aside the Board's decision, directing it to reconsider the application for remission and record reasons for its decision.

Conclusion:
The appeal was allowed in part. The court set aside the impugned judgment and remanded the matter to the Board for reconsideration of the remission application, ensuring a reasoned decision. The court did not award costs.

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