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2023 (3) TMI 79 - HC - CustomsLevy of demurrage charges - issuance of notification No. 15 (Re-2006) 2204-09 dated 27.06.2006 whereby amendment had been made in the Import Export Policy, prohibiting the export of tuvar dal, whole gram choli by inserting the entry at sr. no. 44 in Chapter-7 of the Table-B under Schedule-2 of the Indian Trade Classification (ITC) - prohibition of export of certain items for a period of six months from the date of issuance of notification dated 27.06.2006 was made with retrospective effect by subsequent notification bearing no. 19(RE-2006)2004-09 dated 04.07.2006. The respondent no.1 made several representations to various authorities and contended that the goods which are lying at Kandla Port does not cover the said notification issued by the DGFT because before issuance of the said notification, the goods were passed out of charge by the Customs Authority under Sections 50 and 51 of the Customs Act and the said notification cannot be made applicable in the case of the petitioner especially in view of para-9.12 of the Import Export Policy. Whether the policy decision which otherwise the authority is entitled to, would save it from payment of the demurrage charges? HELD THAT - In case of INTERNATIONAL AIRPORTS AUTHORITY VERSUS GRAND SLAM INTERNATIONAL OF INDIA 1995 (2) TMI 70 - SUPREME COURT , the question was about the demurrage for the period for which the detention certificate issued for wrongful detention of the imported goods by Customs Authorities. There was a public notice issued in 1986 by the Collector of Customs in purported exercise of power under Sections 8, 33, 34 and 45 of the Customs Act read with Rules 56, 57, 58 and 59 of the Aircraft Rule, 1920 directing the approved custodian of imported goods in Kandla Customs area i.e. International Airport Authority of India/ Central Warehousing Corporation to calculate the warehousing/storage charges by excluding the charge for the period of detention of the goods at the instance of the customs as certified by the Assistant Collector of Customs. Per majority, the notice had been held ultra vires Section 45 of the Customs Act - The Court held that custodian does not entitled the Customs Authority to debar IAAI/CWC from charging demurrage even for period covered by the detention certificate. IAAI and CWC being proprietor of the storage space at the Airport, Custom Public Notice would be effective only if IAAI or CWC accept the same. Concurring with this decision, it was held that Custom Authority by issuing such direction in the public notice did not act within the powers conferred under the Customs Act, its rules and regulations. In yet another decision of UNION OF INDIA VERSUS RC. FABRICS (P) LTD. 2001 (11) TMI 82 - SUPREME COURT , the Customs Authorities on examining the goods belonging to the respondent-importer found the fabric to be excess in length. On request of the importer for waiver of show-cause notice, the Assistant Collector passed an order whereby the importer was allowed the release of the excess goods after payment of fine as well as personal penalty. The amount was deposited along with the customs duty on the excess goods. The DRI officers detained the consignment on the basis of information available with them and seized the detained goods - The High Court had set aside the order as the Department violated the principles of natural justice in not waiting for the reply of the importer. On remand, the Collector discharged the show-cause notice and dropped the proceedings by holding that in view of the order of adjudication, there could not be another adjudication order in respect of the same consignment. Whether is this a case where the DRI Custom Authorities can be directed to pay the demurrage/ detention charges. Can it be said to be an Act which is malafide or of a gross abusive powers that the officials of the customs or the DRI could be asked to compensate the importer for the extra burden which he had to bear? - HELD THAT - Here is a case where the importer is of the strong feeling that it had been unjustly dealt with and the goods ought to have been cleared by the Customs Authorities. Many of its requests have been not paid any heed to. It had already paid the charges due and now have claimed the reimbursement - the submissions made by the appellant that the respondent no.1 ought to have a taken a recourse of the civil law by preferring the suit and this could not have been decided without adducement of evidence and also following the procedure of cross examining the person, cannot be agreed upon. The learned Single Judge has committed no error in directing the respondent authority to pay the demurrage. We must not be oblivious of the fact that the Apex Court in case of Shipping Corporation of India 2001 (4) TMI 83 - SUPREME COURT had been quite clear that the goods in question had already been directed to be released without payment of demurrage charges. It was also the case where the Court found that High Court had already concluded to the effect that the detention of the goods by the Customs Authorities was illegal and such illegal detention prevented the importer from releasing the goods. Therefore, the Customs Authorities would be bound to bear the demurrage charges in absence of any provision absolving the Customs Authority from that liability. Here the facts have grossed out. Appeal disposed off.
Issues Involved:
1. Legality of the retrospective application of the export prohibition notification. 2. Entitlement to compensation for demurrage charges due to the delay caused by the Customs Authorities. 3. Appropriateness of the remedy sought by the respondent (writ petition vs. civil suit). Issue-wise Detailed Analysis: 1. Legality of the retrospective application of the export prohibition notification: The respondent, an exporter, had received export orders for various cereals and pulses. On 23.06.2006 and 24.06.2006, the respondent handed over 84 containers to the shipping agent, and the Customs Department granted permission under Sections 50 and 51 of the Customs Act. However, a notification dated 27.06.2006, issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, prohibited the export of certain items, including tuvar dal and whole gram choli, with retrospective effect from 27.06.2006. The Customs Department subsequently refused the shipment of these goods. The Court held that the goods cleared by the Customs Authorities before the notification should not be affected by the retrospective application of the notification, deeming the action of the Customs Authorities as illegal. 2. Entitlement to compensation for demurrage charges due to the delay caused by the Customs Authorities:The respondent incurred significant demurrage charges due to the Customs Authorities' refusal to allow the shipment of goods despite having issued clearance certificates. The learned Single Judge directed the Customs Authorities to pay the demurrage charges with interest at 6% per annum from 24.06.2006 until payment. The Court cited several precedents, including International Airport Authority of India vs. Grand Slam International, Union of India vs. R.C. Fabrics (P) Ltd., and Mumbai Port Trust vs. Shri Lakshmi Steels, to substantiate that the Customs Authorities are liable to pay demurrage charges when their actions unjustly delay the clearance of goods. 3. Appropriateness of the remedy sought by the respondent (writ petition vs. civil suit):The appellant argued that the respondent should have filed a civil suit for recovery of damages rather than a writ petition. However, the Court upheld the respondent's approach, emphasizing that the learned Single Judge had appropriately addressed the issue within the writ jurisdiction. The Court referenced the case of Shipping Corporation of India Ltd. vs. C.L. Jain Woolen Mills, where it was held that the Customs Authorities are liable for demurrage charges due to illegal detention of goods, reinforcing the legitimacy of the respondent's claim through a writ petition. Conclusion:The Court dismissed the appeal, affirming the learned Single Judge's decision to direct the Customs Authorities to pay the demurrage charges incurred by the respondent due to the unjust delay in the shipment of goods. The judgment emphasized that the retrospective application of the export prohibition notification was illegal concerning goods already cleared by the Customs Authorities and that the respondent was entitled to compensation for the demurrage charges resulting from the Customs Authorities' actions.
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