Caprico International Pte Ltd v. Commissioner of Customs and Anr

judgement is extracted below:

¶67From 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.

¶18In Union of India v. Sanjeev Woolen Mills, 1998 (9) SCC 647, under special circumstances, the High Court's order directing the Appellants to bear detention/demurrage charges was not interfered with by the Supreme Court. Subsequently, in Shipping Corporation of India Ltd. v. C. L. Jain Woolen Mills & Ors. 2001 (5) SCC 345, the Supreme Court clarified that there is no inconsistency between the decisions in Grand Slam (supra), and the Supreme Court clarified as under: "10. We have also examined the decision of this Court in Union of India vs. Sanjeev Woolen Mills 1998(100)ELT323(SC) and we do not find any apparent inconsistency between the decision of this Court in Grand Slam and that of the Sanjeev Woolen Mills. In Sanjeev Woolen Mills, the imported goods were synthetic waste (soft quality), though the customs authorities detained the same, being of the opinion that they were prime fibre of higher value and not soft waste. On account of non-release, the imported goods incurred heavy demurrage charges but the customs authorities themselves gave an undertaking before the High Court

that in the event the goods are found to be synthetic waste, then the Revenue itself would bear the entire demurrage and container charges. Further the Chief Commissioner of Customs, later had ordered unconditional release of goods and yet the goods had not been released. It is under these circumstances and in view of the specific undertaking given by the customs authorities, this Court held that from the date of detention of the goods till the customs authorities intimated the importer, the importer would not be required to pay the demurrage charges. But in that case even subsequent to the orders of the customs authorities on a suit being filed by one of the partners of the importer-firm, an order of injunction was issued and, therefore it was held that for that period, the importer would be liable for paying the demurrage and container charges. The judgment of this Court in Sanjeev Woolen Mills, therefore, was in relation to the peculiar facts and circumstances of the case and the Court had clearly observed that the order in question is meant to do justice to the importer, looking to the totality of the circumstances and the conduct of customs authorities. Thus, we see no inconsistency between the ratio in Sanjeev Wollen Mills and the Judgment of this Court in Grand Slam. That apart, the judgment in Grind Slam was a three judge bench judgment. In the case in hand, as has already been stated earlier, the earlier judgment of Delhi High Court dated 9.9.94 in C.W.P. No. 1604/91, has become final, which entitles the importer to get the goods released without payment of the detention and demurrage charges. In the contextual facts, notwithstanding the judgment of the High Court, the goods not having been released, the impugned order and direction dated 18.1.99, cannot be held to be infirm in any manner. In the absence of any provision in the Customs Act, entitling the customs officer to prohibit the owner of the space, where the imported goods have been stored from levying the demurrage charges, levy of demurrage charges for non-release of the goods is in accordance with the terms and conditions of the contract

and as such would be a valid levy. The conclusion of the High Court 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, the customs authorities would be bound to bear the demurrage charges in the absence of any provision in the Customs Act, absolving the customs authorities from that liability. Section 45(2)(b) of the Customs Act cannot be construed to have clothed the customs authorities with the necessary powers, so as to absolve them of the liability of paying the demurrage charges. In the aforesaid premises, we see no infirmity with the directions given by the Delhi High Court on 18.1.99. The goods in question, having already been directed to be released, without the payment of the demurrage charges, the importer must have got the goods released. Having regard to the fact situation of the present case, it would be meet and paper for us to direct the Shipping Corporation and Container Corporation, if an application is filed by the customs authorities to waive the demurrage charges. The appeal is disposed of accordingly."

¶19In Om Petro Chemicals v. Union of India, 2002(140)ELT353(Del), the ld. Division Bench of this Court held that the demurrage charges would not be liable to be paid if the party is not at fault. The relevant observations of the ld. Division Bench are as under: "23. Would that however mean that the Petitioner must pay demurrage charges even though it is not at fault. Answer to the question must be rendered in negative. The decisions of the Apex Court Therefore are authorities for the proposition in certain situation, the court may direct the customs authorities to bear the demurrage charges. In the instant case the customs authorities still insisted that the goods were illegally imported. It sought to justify its stand even before this Court. This Court is not only a court of law but also a court of equity. In a situation of this nature we are of the opinion that this court may find

that in place of the importer or the consignee, the customs authorities should bear the charges. Once it is held that the Petitioner herein has not committed any illegality in importing the goods in question, in our opinion, it cannot ordinarily be saddled with the liability of payment of demurrage. The Petitioner in the fact situation of this case must be held to have been sinned against than sinning. In U.O.I. v. Sanjeev Woollen Mills, 1998(100)ELT323(SC), the Apex Court in the fact situation obtaining therein held that demurrage may not be paid by the importer."

¶20In the judgment Mumbai Port Trust v. Shri Lakshmi Steels and Ors., (2018) 14 SCC 317, the Supreme Court again reiterated the position that when importers are guilty of delaying the matter, they cannot escape the liability of detention/demurrage charges. The relevant observations are as under: "46. We are, therefore, clearly of the view that even though there may be some delay on the part of the DRI and the customs authorities, the Respondent-importers have also been guilty of delaying the matter and, therefore, they cannot claim that they are not liable to pay demurrage and detention charges. We may, however, clarify that the Respondent-importers are free to approach the Mumbai Port Trust in terms of Section 53 of the Act for exemption and remission of demurrage and other charges and the Board may take a sympathetic view while considering the case of the Respondent-importers Under Section 53."

¶21Thus, the position that emerges is that if the importer is at fault, demurrage would be liable to be paid.

¶22Coming to the facts of the present case, between 28th August, 2022 till 23rd November, 2022, the goods continued to lie with the customs authority under the ownership of the importer, which was the original

beneficiary. The out-of-charge process has also been done on 15th September, 2022 pursuant to the documents submitted by the importer. The original documents were taken back from the bank only on 2nd December, 2022 upon the notice being sent by the Petitioner to the Bank. The entire matter was at large between September 2022 to December, 2022 between the two parties i.e. the Petitioner and the importer and the customs authority were not to blame. The Petitioner sent the first representation to the customs authority only on 3rd December, 2022 - thereafter, the present writ petition has been filed.

¶23The question that now arises is whether the demurrage would be liable to be paid by the Petitioner. Insofar as the customs duty and the interest is concerned, the Petitioner is willing to pay the same. Accordingly, the customs duty and the interest assessed, as recorded above, shall be paid by the Petitioner to the custom authority.

¶24On the question of demurrage, since the Petitioner received the original documents only in the first week of December, 2022, they could not have approached the customs authority prior to that. Between September 2022 to December, 2022 there seems to have been a complete lull between the parties and it is unclear what the importer intended to do with the goods. The goods continued to lie with the customs authority. However, there cannot be any explanation as to why the Petitioner waited so long, leading to incurring of demurrage.

¶25These circumstances would clearly show that until December, 2022, the abandonment could not have been concluded by the Customs authorities, at the importer's instance as the out-of-process charge had already been done. Therefore, the customs authorities could not have presumed change in

ownership till December 2022. If the goods are not released to the Petitioner, the authorities would follow the procedure prescribed in law and recover the demurrage which they are obviously entitled to recover. However, the Petitioner herein is seeking release of goods due to change in ownership of goods on the strength of the original documents having been released in its favour and the Importer having not cleared the goods. The short question that arises is whether, the Petitioner can claim that it is not liable to pay any demurrage.

¶26In view of the two decisions relied upon by ld. Counsel for the Petitioner including the Agrim Sampada (supra) and Om Petro Chemicals (supra), though there maybe no illegality in the release of the goods in the favour of the Petitioner now, the Customs authorities cannot be made to bear the burden of detention/demurrage charges, especially when they proceeded in accordance with the provisions of the Customs Act, 1962. Prior to the ownership being transferred in favour of the Petitioner, the import or release of the goods in favour of the Petitioner, could not have been permitted by the customs authority under Section 2(26) of the Customs Act, 1962 itself. The facts in the said cases would be distinguishable as in the present case, inasmuch as between September, 2022 to December, 2022, the customs authority did not even have notice of the fact that the ownership was claimed to have transferred. Be that as it may, even the importer would be liable to be blamed in the present case, inasmuch as the importer, in effect, has processed the documents but has not cleared the goods after paying the duty.

¶27Since the Petitioner is now seeking release of the goods, in the facts and circumstances of the present case and the legal position discussed above, the following directions are issued:

a) The Petitioner shall pay the customs duty and interest as quantified above. b) Insofar as the detention/demurrage charges are concerned, since there is no explanation for the delay between September 2022 to December, 2022 and the first representation itself was made on 3rd December, 2022, the Petitioner would be liable to pay 50% of the detention/demurrage charges payable till 3rd December, 2022 as also demurrage charges for the period from 3rd December, 2022 till date. c) In order to quantify the exact amounts payable, the Petitioner is permitted to appear before the customs authority on 9th January, 2023 at 11:30 a.m. The Petitioner's representative shall appear before the customs authorities on the said date and time. d) The remedies of the Petitioner against the importer as also the remedies of the customs authority against the importer, who failed to clear goods M/s.Earth Wire, are left open. e) If the Petitioner wishes to avail of its remedies in accordance with law to challenge the present order, the Petitioner shall be allowed to clear the goods by paying the demurrage charges, as directed above, under protest.

¶28The present petition, along with all pending applications, is disposed of in the above terms. Copy of the order be given dasti under signature of the Court Master.

PRATHIBA M. SINGH JUDGE JANUARY 4, 2023/dk/am [Corrected and released on January 6, 2023]

* IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 4th January, 2023 + W.P.(C) 16915/2022 and CM APPL. 53615/2022 CAPRICO INTERNATIONAL PTE LTD ..... Petitioner Through: Mr. Gaurav Kejriwal, Advocate (M: 9811100909). versus COMMISSIONER OF CUSTOMS AND ANR. ..... Respondents Through: Mr. Ravi Prakash, CGSC with Mr. Farman Ali and Mr. Aman Rewaria, Advocates for R-1 (M: 7838669125). CORAM: JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J. (Oral) 1. This hearing has been done through hybrid mode. 2. This writ petition has been filed by the Petitioner - Caprico International PTE Ltd. seeking the issuance of a direction to Respondent No. 1- Commissioner of Customs for releasing the consignment under Bill of Lading No. HLCUTOR220708684 in favour of the Petitioner. The Petitioner further seeks cancellation of the previous bill of entry filed with the customs in favour of M/s Earth Wire Private Limited, and permit the Petitioner to file a new bill of entry as per new consignee. 3. The petition has been filed by the Petitioner - Caprico International PTE Ltd., a Singapore based company, which had entered into a sales contract on 22nd December, 2021 for Discarded and Non-Serviceable Motor Scrap (92% heavy moulding scrap) (hereinafter referred as the "Goods") with one M/s Earth Wire Private Ltd – the Importer. Pursuant to the said contract, an invoice dated 14th July, 2022 for a CIF sum of $44057.13 was raised by the Petitioner against M/s Earth Wire. The goods were shipped from New York, USA to Delhi, India through Respondent No. 2- Hapag- Lloyd, Toronto. It is the admitted position that the goods were received at Mundra ICD, Sonepat on 27th August, 2022 vide bill of entry number 21481860 dated 25th August, 2022. 4. After receipt of the goods, the importer M/s Earth Wire did not pay the customs duty - hence, the goods were not cleared. Thereafter, some correspondence is stated to have taken place between the Petitioner and the importer, and instead of $44057.13, the Petitioner agreed to give a trade discount of $7000 which reduced the outstanding amount to $37057.13. It is the case of the Petitioner that despite the said discount being given, the importer neither paid the Petitioner for the supply nor cleared the goods from the customs authority by paying the requisite duty. It is not disputed that apart from $7350 being paid in advance, the importer paid no other amount after the goods were shipped. 5. Under such circumstances, the Petitioner took it upon itself to get the goods cleared and hence addressed a notice dated 1st December, 2022 to the importer and sought the payment of $37057.13 and also damages amounting to $10000, to which there was no reply. Thereafter, the Petitioner attempted to obtain all the original documents from the Bank. The Bank which was holding the documents on behalf of the importer returned the original documents to the Petitioner on 2nd December, 2022. 6. In this background, the Petitioner wrote a representation dated 3rd December, 2022 to the Respondent No. 1- The Customs Commissioner, seeking permission to release the goods so that the Petitioner can reduce the losses, which were being caused to it. However, the customs authority did not permit the said release in favour of the Petitioner, hence the present petition has been filed seeking the following reliefs. "(a) issue an appropriate writ, order or direction in the nature of mandamus directing the Respondents to release the consignment under Bill of Lading No. HLCUTOR220708684 in favour of the Petitioner and/or its new buyer without insisting on a no objection from the original consignee and also to cancel the previous bill of entry filed in customs, and permit the Petitioner to file a new bill of entry as per new consignee; (b) issue a writ, order or direction in the nature of mandamus directing the Respondents to waive various charges, interest and penalties etc. levied upon the consignment under Bill of Lading No. HLCUTOR220708684 and for wai