2021 (4) TMI 135 - HC - Customs

Seeking provisional release of goods - waiver of demurrage, rent and detention charges - whether the direction given by the customs authority waiving the warehouse rent is valid or not? - customs cargo services provider or not - HELD THAT - Clause 2(1)(b) of the Handling of Cargo in Customs Areas Regulations, 2009, defines the Customs Cargo Services provider as meaning any person responsible for receipt, storage, deliver, dispatch or otherwise handling of imported goods and export goods and includes a custodian as referred to in section 45 of the Act and persons as referred to in sub-section (2) of Section 141 of the said Act - In the case on hand, the goods imported were very much in the custody of the warehousing entity. Therefore, even a plain meaning of the aforesaid provision would clearly lead one to the conclusion that Al-Hilai Storage, Tuticorin is a customs cargo services provider. There are no hesitation to reject the initial contention urged by the learned senior counsel for warehouse entity. This is because the said entity had not only received and stored goods but eventually delivered the same to the importer in the months of January and November 2012. Therefore, it would be rather futile to claim that the said entity falls out side the statutory definition of customs cargo services provider. The goods could not released only for the reason that they were detained by the customs authority. Clause 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 states that the customs cargo services provider shall not charge any rent or demurrage on the goods detained by the customs authorities - the importer cannot be fastened with any liability whatsoever. The statutory scheme is very clear. Whether the warehousing entity should be left utterly remediless? - HELD THAT - The answer will have to be in the negative. The warehousing entity cannot be left remediless. The time-line or the sequence of events would speak for themselves. The goods had arrived way back in November 2010. The goods are edible items/perishable commodities. It is of course open to the customs authority to entertain reasonable suspicion and detain the goods, but then, this cannot be stretched to an unreasonable period - A warehousing entity as a part of its license obligations cannot charge rent/demurrage on the detained goods, if a waiver certificate is issued by the customs authority. But Clause 6(1)(l) of the Regulations will not be applicable for the period beyond a reasonable time-limit. Whoever is responsible for the resulting state of affairs must bear the burden. It can be the importer or the customs authority. Of course, if there is any delay due to Court, the maxim 'actus curiae neminem gravabit' will become applicable. Whether the warehousing entity has to be compensated and if so, by whom and what will be quantum of damages are issues that will have to be determined in the lights of the facts obtaining in each case. If the Court cannot undertake the exercise of confiscation, it can mandate the customs authorities to do it. A claim petition is to be submitted for compensation before the Chief Commissioner of Customs (Preventive), No.1 - petition closed.

Summary

Issues Involved:
1. Detention of consignments and food safety concerns.
2. Valuation dispute and provisional release of goods.
3. Waiver of demurrage, rent, and detention charges.
4. Validity of customs authority's direction to waive warehouse rent.
5. Compensation to the warehousing entity.

Detailed Analysis:

1. Detention of Consignments and Food Safety Concerns:
The case revolves around the detention of five consignments of betel nuts imported by M/s. Empire Exports in November 2010. The goods were detained at Tuticorin port due to alleged food safety issues and a valuation dispute. The customs authorities referred the matter to the jurisdictional laboratory twice, and it was later determined that the food safety concerns were baseless. Consequently, two consignments of whole betel nuts were released in January 2012 without charging any rent from the warehouse entity.

2. Valuation Dispute and Provisional Release of Goods:
The Assistant Commissioner, Customs House, Tuticorin, raised an issue of undervaluation for the remaining three consignments and issued a notice to the importer on 03.05.2012. The importer challenged this notice by filing W.P.(MD)No.6961 of 2012 and sought provisional release of goods by waiving demurrage, rent, and detention charges. The Single Judge granted interim relief on 19.06.2012, directing the release of goods on payment of duty amount. The customs authorities appealed, and the Division Bench modified the order, directing release on payment of duty, 30% of the differential duty, and execution of a personal bond for the remaining 70%. The goods were eventually released in November 2012.

3. Waiver of Demurrage, Rent, and Detention Charges:
The customs authorities directed the warehousing entity, Al-Hilai Storage, Tuticorin, to release the goods without charging rent. This direction was challenged by the warehousing entity in W.P.(MD)No.15985 of 2012. The customs department reiterated that the waiver was pursuant to the High Court's order dated 19.06.2012.

4. Validity of Customs Authority's Direction to Waive Warehouse Rent:
The warehousing entity contended that they should not suffer loss and that the customs authority's direction lacked application of mind. They argued that the relationship was contractual, and they were entitled to charge rent under Section 63 of the Customs Act, 1962. However, the court held that the warehousing entity is a "customs cargo services provider" under the Handling of Cargo in Customs Areas Regulations, 2009, and is bound by Clause 6(1)(l), which prohibits charging rent or demurrage on detained goods. The court sustained the customs authority's direction, releasing the importer from any liability for rent or demurrage.

5. Compensation to the Warehousing Entity:
The court acknowledged that the warehousing entity should not be left remediless. It held that the customs authorities are responsible for compensating the warehousing entity for the unreasonable delay in resolving the detention and valuation issues. The court permitted the warehousing entity to submit a claim for compensation to the Chief Commissioner of Customs (Preventive), who is to decide on the matter within a specified time frame.

Conclusion:
W.P.(MD)No.15985 of 2012 was disposed of, allowing the warehousing entity to seek compensation from the customs authorities. W.P.(MD)No.6961 of 2012 was closed, as the goods had already been released. The court emphasized the statutory obligations of customs cargo service providers and the need for timely resolution of disputes by customs authorities.