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TMI Blog2023 (3) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - R/LETTERS PATENT APPEAL NO. 665 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 19287 of 2006 - - - Dated:- 24-2-2023 - HONOURABLE THE CHIEF JUSTICE MS. JUSTICE SONIA GOKANI AND HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Appearance: Mr Devang Vyas with Kshitij M Amin (7572) for the Appellant(s) No. 1 for the Respondent(s) No. 4,5 Mr Hriday Buch with Darshan M Varandani (7357) for the Respondent(s) No. 1 Mr Ankit Shah (6371) for the Respondent(s) No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntendent (DP) Customs House, Kandla sent a letter and a copy of the notification dated 27.06.2006 issued by the Directorate General of Foreign Trade (DGFT) and requested the respondent no.2 not to allow the shipment of the goods that had already been passed out of the charge by the customs and further requested to furnish the details of such cargo whether stuffed in container or stored in loose, lying in the port area for want of shipment. The respondent no.3 issued a letter dated 29.06.2006 to M/s. Inter Mark Shipping Agencies Private Limited. The respondent no.4 had requested the respondent no.5 not to accept loading of export commodity shown as per the list till further order. 2.5. The respondent no.5 intimated the respondent no. 1 that though they had plan to load the containers on vessel on 28.06.2006 after obtaining the necessary permission but on 29.06.2006, the Assistant Traffic Manager (Container) refused the loading of the said unit and handed over a letter of 29.06.2006 along with the copy of the letter of the Customs Department quoting the reasons of prohibiting certain items in pursuance of notification dated 27.06.2006 by the DGFT and called upon the respondent no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round rent and detention charges by the respondent nos. 4 and 5 for containers lying at the port area and individual break of respondent nos. 4 and 5. 2.9. Aggrieved by the action, the respondent no.1 preferred the Special Civil Application before this Court. In response to the notice of rule issued by the Court, the appellant appeared and by a counter affidavit opposed the reliefs prayed for by the respondent no.1 on merits. The appellant, in addition to the counter affidavit, had submitted the chronological sequence of events. After hearing the submissions made by learned counsels for both the sides, the learned Single Judge passed the judgment and order dated 24.07.2018 allowing the petition and directed the petitioner to pay the demurrages after examining the details supplied by the petitioner within a period of eight weeks from the date of receipt of copy of the order with interest at the rate of 6% per annum from 24.06.2006 till the amount is paid. 2.10. The appellant approached this Court challenging this judgment and order of 24.07.2018 passed by the learned Single Judge in Special Civil Application No. 19287 of 2006. 3. It is the say of the appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing before the High Court or before the Supreme Court about the compensation or damages and which is an afterthought for which it ought to have been relegated to filing of the suit, hence the following prayer:- (A) Your Lordships may be pleased to admit this Letters Patent Appeal; (B) Your Lordships may be pleased to quash and set aside the judgment and order dated 24.07.2016 passed by the learned Judge in Special Civil Application No. 19287 of 2006; (C) Your Lordships may be pleased to grant any other and further relief/s as may be deemed fit in the interest of justice. 4. We have heard extensively learned Additional Solicitor General Mr. Devang Vyas appearing with learned Senior Standing Counsel Mr. Kshitij Amin for the appellant and learned advocate Mr. Hriday Buch assisted by learned advocate Mr. Darshan Varandani for the respondents. 5. As the arguments on the part of both the sides have been along the line of the original memo of petition and the affidavit-in-reply as well as the appeal memo, no repetition is desirable. Both the sides have sought to rely on the hand book of procedure from 01.09.2004 to 31.03.2009 published by the Ministry of Commerce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department and thereafter only the Customs Department granted permission under Section 50 and passed and order under Section 51 of the Customs Act. On 24.06.2006, the Customs Authority do granted the permission, the vessel did not arrived at Kandla Port and the containers continued to lie at the port for the purpose of loading in the vessel of respondent nos. 4 and 5. 6.4. In exercise of the powers conferred under Section 5 of the Foreign Trade Act, a notification of 27.06.2006 was passed whereby amendment had been made in the Import Export Policy prohibiting the export of certain items like tuvar dal, whole gram choli by inserting the entry at Sr. No. 44 in Chapter-VII of Table-B under Schedule-II of the ITC. There was a prohibition of exporting certain items for a period of six months from the date of issuance of notification on 27.06.2006. There was a retrospective effect given to the same by a subsequent notification of 04.07.2006. The copy of this notification was given and issued by the DGFT and requested the respondent no.3 not to allow the shipment of the goods that had already been passed out of charge by the customs and the request was made to furnish the detail of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge therefore had referred to para 15 of the order of the Division Bench in Special Civil Application No. 14646 of 2006 where the Court had held that the authority cannot prevent the respondent no.1 from exporting the consignment which have already been cleared by the Customs Authorities admittedly on 23/24.06.2006. The authorities had directed to permit the respondent no.1 to load the cargo lying at Kandla Port area for export forthwith. The goods had been already cleared under Section 51 of the Customs Act on 23.06.2006 and 24.06.2006. The petition had been accordingly allowed. 6.9. Noticing the fact that despite the specific direction, the appellate authority did not permit the petitioner to export the consignment. The specific request had been made that the petitioner had been incurring huge expenses towards the ground of rent, demurrage on account of the attitude of the officers. The learned Single Judge not only deprecated such actions, but, also categorically held that the same invites the serious consequences. It also had quoted the decision of Shipping Corporation of India Ltd. vs. C.L.Jain Woolen Mills and Others [(2001) 5 SCC 345] that when the confiscation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean that demurrage charges could not be levied on importer for the space his goods have occupied, since the contract between the importer and the proprietor of the space is in no way altered because of the orders issued by the customs authorities. The learned Additional Solicitor General, vehemently argued and pressed sub-section 2(b) of Section 45 in support of his contention that the imported goods have to be dealt with in accordance with the permission in writing of the proper officer of the customs department and in exercise of such power when customs authorities initiate adjudication proceeding and ultimately confiscate and levy penalty, when such order is struck down and a detention certificate is issued, the said issuance of detention certificate would come within the expression otherwise dealt with used in Section 45(2) (b), and therefore, the proprietor of the space would be bound not to charge any demurrage charges. We are unable to accept this contention inasmuch as the expression otherwise dealt with used in Section 45(2) (b), in the context in which it has been used, cannot be construed to mean, it authorises the customs officer to issue a detention certificate in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onferred under the Customs Act, its rules and regulations. The majority had held that the purpose of the Customs Act on one hand and the Major Port Trusts Act and the International Airports Authority Act on the other hand are different. The former deals with the collection of custom duties on imported goods, the later deals with the maintenance of Seaports and Airports, the facility to be provided thereat and the charges to be recovered therefor. An importer must land the imported goods at a Seaport or Airport. He can clear them only after completion of customs formalities. For this purpose, the Seaport and Airport are approved and provide storage facilities and Customs Officers are accommodated therein to facilitate clearance. For the occupation by the imported goods of space in Seaport or Airport, the Board or the Authority which is its proprietor is entitled to charge the importer. That until the customs clearance the Board or the Authority may not permit the importer to remove his goods from its premises, does not imply that it may not charge the importer for the space his goods have occupied until their clearance. None of the provisions of the Customs Act viz. Sections 8, 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted goods in a customs area whether under the provisions of sub-section (1) or under any law for the tam being in force- (a) shall keeps a records of such goods and send a copy thereof to the proper officer. (b) shall not permit such goods to be re- moved form the customs area or otherwise dealt with except under and in accordance with the permission in writing of the proper officer. 41. None of these provisions entitles the Collector of Customs to debar the collections of demurrage for the storage of imported goods. They do not entitle him to impose conditions upon the properties of ports or airports before they can be approved as Customs ports or Customs air- ports. Section 45 provides that all imported goods imported in a Customs area must remain in the custody of the person who has been approved by the Collector of Customs until they are cleared and such person is obliged not to permit them to be removed from the Customs area or otherwise dealt with except under and in accordance with the permission of the Customs Officer. Section 45 does not state that such person not be entitled to recover charges from the importer for such period as the Customs authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Delhi. The Central Warehousing Corporation is established under the provisions of the Warehousing Corporations Act, 1962. The provisions of the Warehousing Corporations Act are substantially similar to those of the International Airports Authority Act, 1971, and the Major Port Trusts Act, 1963. What has been said above in regard to the International Airports Authority applies as well to the Central Warehousing Corporation. 7.2. In yet another decision of Union of India vs. R.C. Fabrics (P) Ltd. and Another [(2002) 1 SCC 718], 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. A writ petition was filed by the importer for the release of goods. In the meantime, a formal order was passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the High Court, by an interim order permitted the appellant to clear the goods on furnishing bank guarantee for payment of the differential amount of duty. At the instance of the Customs Authorities, the High Court modified the said order and directed the goods to be stored in a bonded warehouse of the Customs Authorities. The Board did not allow the appellant to remove the goods to a warehouse without payment of the charges due to it. The appellant then joined the Board as a party and the High Court passed an order in the presence of the respondent Board permitting the appellant to remove the goods to the bonded warehouse without payment of the port charges. It also directed the Board not to raise any objection. The time limit was fixed for completion of the adjudication proceedings by the Customs Authorities. It was held that as the Board had exercised its right of lien by opposing the removal of the goods to the warehouse, it could not claim demurrage charges beyond a particular date. In an appeal preferred by the Board, by an interim order the appellant was permitted to clear the goods on payment of demurrage and on furnishing a bank guarantee. The appellant did not pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be accepted it would lead to catastrophic results. It is well known that in most cities, particularly port cities like Calcutta and Mumbai, storage space is at a premium. If such a proposition were accepted then all that a person need to do is to make a demand for removal of the goods without offering to pay the storage charges. If the bailee were to refuse to allow clearance and exercise his right of lien, as he is bound to do, the bailor's purpose would be served. He would thereafter have rent free storage space. He could then continue to store the goods free of rent. On the other hand, if the bailee were to permit clearance, in almost all cases, his charges would not be subsequently paid and he would have to then pursue the bailor for recovery of his charges. This could never be the law. 19. Faced with this situation, Mr. Nageshwar Rao submits that the 1st Respondent should have exercised their power of sale under Section 62 of the Major Port Trusts Act. He submits that it was the duty of the 1st Respondent to sell off the goods. He submits that the 1st Respondent cannot be permitted to continue to levy demurrage charges when they themselves do not sell off the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f action they should adopt. He submits that as, on 10th January 1992, the Court directed the matter to be listed on 31st January 1992, the 1st Respondent could not have sold the goods. 22. In our view, the 1st Respondent should have sold off the goods at that stage. They are a statutory body. Merely because there is no obligation to sell does not mean that they can allow the goods to lie around. By this time the 1st Respondent well knew that the Appellant was not paying the charges. Now the Court had permitted them to take recourse to such action as was available in law. Sale is contemplated in the Major Port Trusts Act itself. In our view the 1st Respondent should have now sold the goods. Apart from the fact that demurrage charges would have stopped running, valuable godown space would also have become available to them. On facts of this case, we feel that it would be just and proper that the 1st Respondent not be allowed to charge demurrage charges after 10th January, 1992. 7.4. In case of Mumbai Port Trust vs. Shri Lakshmi Steels and Others [(2018) 14 SCC 317], the question was with regard to the demurrage charges for clearance of Port Authority/ container detent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the version of the importer is correct, has been the subject matter of a number of decisions. In the case of Trustees of the Port of Madras v. M/s Aminchand Pyarelal (1976) 3 SCC 167, the Customs Authorities had issued detention certificate of imported goods. There was no fault or negligence on the part of the importer. The Trustees of the Port of Madras waived demurrage charges for the period of detention; the importer paid the balance amount and cleared the goods. Later, the Board wrote to the Customs Authorities that the detention certificate had been wrongly issued. Thereafter, the Board sued the importer for recovery of the balance demurrage charges. It was urged that the Board could not charge demurrage for the period during which the goods had been detained for no fault or negligence of the importer or his agent. This Court, after noticing the provisions of the Madras Port Trust Act, especially Sections 42, 43 and 43A thereof, which are similar to the provisions of the Major Port Trusts Act, 1963 referred to above, held that the Board was entitled to claim the rates as framed under the provisions of the said Act. This Court held that the Port Trusts were public representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board of Trustees of the Ports, which are creations of a statute, are entitled to charge demurrage and other charges from the importer even in respect of those periods during which the importer was unable to clear goods from the premises of the Board, for no fault or negligence on the part of the importer. It was further held that the Boards were entitled to charge demurrage from the importer even when the importer was unable the clear the goods because of the detention thereof by the Customs authorities, which detention may later on have been found to be unjustified. 27. The provisions of the International Airport Authority Act, 1971 are similar in nature and these provisions came up for consideration before this Court in International Airports Authority v. Grand Slam International (1995) 3 SCC 151. In that case, this Court took note of Section 45 of the Customs Act and held as follows: 41. None of these provisions entitles the Collector of Customs to debar the collection of demurrage for the storage of imported goods. They do not entitle him to impose conditions upon the proprietors of ports or airports before they can be approved as Customs ports or Customs air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by detention certificates. Justice Venkatachala, in his concurring judgment, after referring to the various judgments of this Court cited hereinabove, held as follows: 66. From the above decisions of this Court it becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1961, would be entitled to charge demurrages for the imported goods in its custody and make the importer or consignee liable for the same even for periods during which he/it was unable to clear the goods from the customs area, due to fault on the part of the Customs Authorities or of other authorities who might have issued detention certificates owning such fault. xxx xxx xxx 69. Therefore, my answer to the question considered by me is in the negative i.e. the Collector of Customs empowered under subsection (1) of Section 45 of the Customs Act, 1962 to approve persons to be custodians of imported goods in customs areas until they are cleared as provided for therein, while approving the International Airports Authority of India to be the custodian of such imported goods in the customs area of Indira Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter alone who is liable to pay the demurrage charges. As far as detention charges are concerned, this is a private contract between the importer and the carrier, i.e. Shipping Line. The DRI/Customs authorities can be directed to pay the demurrage/detention charges only when it has proved that the action of the DRI/Customs Authorities is absolutely mala fide or is such a gross abuse of power that the officials of the DRI/Customs should be asked to compensate the importer for the extra burden which he has to bear. Even if an importer feels that it has been unjustly dealt with, it must clear the goods by paying the charges due and then claim reimbursement from the customs authority. 8. The question therefore would need to be addressed as to 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. 8.1. Here is a case where the importer is of the strong feeling that it had been unjustly dealt with and the goods ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent no.1 to export the goods could not have been curtailed on account any policy decision particularly, when the notification made it quite clear and the Division Bench of this Court while allowing the petition and holding the notification of 27.06.2006 to be applicable from the date of issuance of the notification, those consignments which had already been cleared by the Customs Department could not have been covered, therefore, the authority concerned could not have not paid any heed to the request of the petitioner. The said decision of the Division Bench was challenged by the appellant before the Apex Court. Though there was no order of staying the judgment of the Division Bench, the authority did not permit the respondent no.1 to export the goods and that also had caused huge expenditure towards the ground rent/ demurrage. When it called back all the goods which were meant for the export, they were sold in the local market. The decision of the High Court was challenged before the Apex Court and all such appeals arising out of the Special Leave Petition came to be disposed of on 07.11.2006. 8.5. The decision of this Court in Special Civil Application No. 14642 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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