Detention on Imported Cargo and Export Cargo Instructions – reg. - Customs - 38/2001

OFFICE OF THE COMMISSIONER OF CUSTOMS (IMPORT) NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI P. N. No. 38/2001 Date: 22.03.2001 Sub: Detention on Imported Cargo and Export Cargo Instructions reg. Instances of detention of imported cargo and export cargo, have been noticed which resulting in liability of demurrage to the importer/exporter. Often, the department has been called upon to pay such demurrage/warehousing container detention charges. Such detention is generally by or at the instance of various agencies like the SIIB, Directorate of Revenue, Intelligence, Directorate of Anti Evasion and Directorate of Enforcement and also the Central Bureau of Investigation for the purpose of investigation. Such investigation may result in imposition of fine/penalties on the importer/exporter. 2. The custodians of Ports/Air Cargo complex/ICDs/CFSs etc. demand the warehousing charges/Container detention charges from the parties for the period the goods are kept in their custody. Such warehousing charges are fairly high if the period of detention is longer. 3. Hitherto the custodians were remitting the detention/demurrage charges on the basis of the detention certificates issued by Commissioner of Customs. However,the issues like the quantum of demurrage and pay ability of demurrage, had been examined by the Hon ble Supreme Court in the case of International Airport Authority of India Vs. Grandalam International, (1995(77) ELT 753 SC) and Trustees of Port of Madras Vs. Nagavedu Lungi Co. (1995 (80) ELT 241 SC). In these cases it has been held that the detention charges and warehousing charges are payable to the custodians and shall be paid by the Exporter or the Importer even where it is finally held that detention is not proper or legal. 4. The Hon ble Supreme Court has further observed :- The Customs Department on its part may consider the feasibility of framing a policy by dividing the imported goods in different categories. Where the import is not prohibited or it is against licence or permit and the only dispute is about valuation or the tariff item under which it falls, it may be released on furnishing of bank guarantee or security sufficient to secure the interest of Department subject to final decision. This determination should be done at the airport. It would obviate the necessity of storing goods , save the IAAI or CWC from unnecessary botheration, protect the Department serve the importer better. 5. The matter was earlier examined and the Board vide circular no. 84/95 dated 25.07.95 opined that if detention is required for investigation, then the goods may be allowed be bonded in warehouses and the containers may be released which would relieve the Party from container detention charges and demurrage in the parts. It has been observed that the above instructions have not resulted in reduction in number of consignment detained during investigation. It has also been observed that in some cases in which the parties have been exonerated fully at adjudication Appeal stage and Department has issued detention certificate for the purpose of waiver of demurrage charges, the custodians are reluctant to remit the demurrage. In order to avoid such situation and to keep a check on unnecessary detention of goods, the issue was examined by the Board at length and the following decision has been taken with a view to avoid undue hardship to trade. i) Import goods shall not be detained by the Department unless prohibited as per Exim Policy either in the Port, airport or other custom areas. If it becomes necessary to detain the goods the importer must be intimated in writing that he may shift the goods to a bonded warehouse under section 49 of C.A. 1962, with clear indication that if the latter does not avail of this facility and the goods incur demurrage etc., the party would have to bear the demurrage charges as levied by the custodian. ii) Wherever importer is willing, he should be allowed to clear the goods by furnishing a bond for full value of the goods supported by a bank guarantee. The value of Bank guarantee shall not exceed twice the amount of duty. The provisional clearance should be allowed as a rule and not as an exception. Wherever the Department is not in a position to release goods on provisional assessment basis, Commissioner Addl. Commissioner shall record in file the reason for not allowing clearance on P. D. assessment. iii) In all cases, where the goods are detained for more than 20 days from its unloading arrival at the Customs areas, the Assistant/Deputy Commissioner and Additional Commissioner shall record detailed reason for its nonclearance and the steps taken by the department to advise the party to clear the goods. Wherever the parties are not in a position to execute bond and bank guarantee and department is of the view that clearance cannot be allowed, the goods would be allowed to be destuffed from the containers and stored in Ports godowns Department warehouses and containers released to shipping Co.s. It would avoid payment of container detention charges which are required to be paid in foreign currency. iv) Where the goods are to be detained and importer is not prepare to warehouse the goods under section 49 or clear them against a bond, the warehousing or demurrage charges shall be payable by him. This liability should be clearly informed in writing to the importer. v) Wherever in adjudication proceeding the parties have been allowed to clear the goods on payment of redemption fine and penalty and they prefer to go in appeal before proper appellate Authority on live Bill of Entry without clearing goods on payment of redemption fine, it is informed that in case they succeed subsequently in appeal they will have to pay demurrage/detention charges etc., as the same liability has arisen due to their preference for filling appeal on live Bill of Entry. vi) It is brought to the notice of all concerned that the above decisions have been taken by the Central Board of Excise Customs to mitigate.