1. Import of synthetic waste — Dispute over classification — Unjustified detention of goods — Claim for waiver of demurrage and container charges. (Para 5 , 6 , 9 , 11 )
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1998 Supreme(SC) 622
1998(5) Supreme 23
Supreme Court of India
(From Delhi High Court)
Sujata V. Manohar & B.N. Kirpal, JJ.
Union of India & Ors. -Appellants
versus
M/s. Sanjeev Woollen Mills -Respondent
Civil Appeal No. 2706 of 1998
Decided on 13-5-1998
Counsel for the Parties :
For the Appellants : V.K. Verma, Advocate.
For the Respondent : Mahabir Singh, Advocate.
Important Points
The Supreme Court upheld the High Court's direction for the Customs Department to bear demurrage and container charges due to the unjustified and mala fide delay in releasing goods, emphasizing that such orders are based on the totality of circumstances and the specific conduct of the authorities.
Subject
Customs Law - Importation of Goods
Act Referred
CUSTOMS ACT: S.47, .
Headnote
Customs Act, 1962-Consignment of goods-Release of-Consignment detained by Custom Authorities as goods were undervalued being prime fibre and not synthetic waste as alleged by respondent-Order of Chief Commissioner for unconditional release of goods-Goods not released-Test reports confirming consignment to be synthetic waste-Order of High Court directing Custom Authorities to release goods as detention of consignment was unjustified in view of release order of Chief Commissioner and not to recover demurrage and container charges and to issue detention certificate-Proper not requiring any intervention by Supreme Court.
Held : Looking to the totality of circumstances pertaining to the import of the consignments under the four Bills of Entry and the inordinate delay of about six years for their release, the High Court has passed the impugned orders directing the appellants to issue a detention certificate and bear the demurrage and container detention charges. They are obviously orders passed in the special circumstances of the present case, and particularly the conduct of the Customs authority in not releasing the goods even after the order of unconditional release dated 11.8.1995 passed by their own Chief Commissioner. The conduct of the Customs Officers concerned is also under investigation. We do not think that this is a case were any intervention at our hands is required. The apprehension of the appellants that this will constitute a precedent is not justified because it is clearly an order which is meant to do justice to the respondent looking to the totality of circumstances and the conduct of the appellants. Obviously, for any delay on the part of the respondent in taking delivery of the goods after 5.4.1997, the respondent will have to bear the consequences. For the period prior to 5.4.1997, however, the order of the High Court does not require any intervention from us. The appellants shall file a progress report relating to the departmental inquiry by 30th November, 1998. (Para 18)
Legal Category Hierarchy
Table of Contents
2. Appellants challenge the direction to issue detention certificates and bear demurrage and container charges. (Para 16 )
3. Inordinate delay in releasing goods and the conduct of Customs authorities justify the waiver of demurrage and container charges to ensure justice. (Para 16 , 18 )
4. Waiver of demurrage and container charges may be granted in special circumstances where authority conduct and inordinate delay cause injustice to the importer. (Para 18 )
5. Appeal dismissed; High Court's directions to issue detention certificates and bear demurrage and container charges upheld. (Para 19 )
6. Can the Customs Department be held liable for demurrage and container charges?
Yes, in special circumstances where the conduct of the authorities, such as inordinate delay in releasing goods despite confirmed classification and unconditional release orders, makes such a direction necessary to ensure justice. (Para 18 )
7. Does a detention order for recovery of old dues justify the non-release of current consignments?
Not if the detention order is found to be without justification, such as when it is issued for the same alleged amount that was previously considered resolved or withdrawn. (Para 10 , 11 )
8. What is the effect of an undertaking by Customs to bear charges if goods are found to be of a certain quality?
Such an undertaking can be enforced by the court to direct the release of goods without recovery of demurrage or container charges if the goods are subsequently found to match that quality. (Para 6 , 11 )
Judgment
Mrs. Sujata V. Manohar, J.-Delay condoned.
2. Leave granted.
3. Heard both sides.
4. This is an appeal from the judgment and order of the Delhi High Court dated 15.7.1996 in Civil Writ Petition No. 3469 of 1994, and from an order dated 19.3.1997 in a Contempt Petition filed in connection with the order of 15.7.1996, being Contempt Petition No. 340 of 1996 before the Delhi High Court.
5. The respondent had filed four Bills of Entry bearing (1) No. 102619 dated 29.1.1991; (2) No. 102815 dated 15.2.1991; (3) No. 102878 dated 20.2.1991 and (4) No. 103166 dated 19.3.1991. The Bills of Entry were in respect of Synthetic waste (soft quality) imported by the respondent. The respondent claimed release of the goods free of duty in terms of valid import/export pass-book. The goods were examined and samples were drawn for testing. According to the appellants, the goods imported were prime fibre and not soft waste. The value according the appellants was not commensurate with the quality of goods under import. Hence a show-cause notice was issued to the respondent in each case.
6. In the meanwhile, since the goods were not being released and were incurring heavy demurrage charges as also container charges, the respondent filed a writ petition in the Delhi High Court in respect of two Bills of Entry No. 102815 and No. 102878 being Civil Writ Petition No. 802 of 1991. In the interim application taken out by the respondent in the said petition bearing C.M. No. 1587 of 1991, learned counsel for the appellants asked for further time for testing the samples. He also made a statement which is recorded by the High Court in its order of 3.4.1991, that in case after inspection, the goods are found to be synthetic waste, the entire demurrage and container charges will be borne by the Customs Department and the Customs Department shall issue the requisite certificate.
7. Thereafter by another interim order, the High Court also directed the Principal Collector to adjudicate the issue within a time bound programme. Accordingly the Collector, by his order dated 28.6.1991, decided the issue and imposed a redemption fine of Rs. 11,00,000/- and personal penalty of Rs. 1,32,00,000/- with a direction to clear the goods on payment of duty at enhanced price of Rs. 28.14 per kg. CIF. This was in respect of Bill of Entry No. 102815. A separate order to a similar effect was also passed in respect of Bill of Entry No. 102878 imposing a different redemption fine and penalty. The respondent filed appeals. In the meanwhile, because the Departmental remedies were available to the respondent, the High Court dismissed Civil Writ Petition No. 802 of 1991 by its order dated 24.7.1991. Ultimately the dispute went up to the Customs, Excise and Gold Control Appellate Tribunal, which remanded the matter pertaining to all the four Bills of Entry to the Principal Collector, subsequently designated as Chief Commissioner, for a fresh adjudication. The Chief Commissioner, by his order dated 11.8.1995, ordered the unconditional release of goods under all the four Bills of Entry.
8. In the meanwhile, in August 1994, because of the delay in disposal of Departmental proceedings, the respondent filed a fresh writ petition before the Delhi High Court being Civil Writ Petition No. 3469 of 1994 for release of goods under the four Bills of Entry. In the interim applications being C.M. Nos. 5113 of 1995 and 6401 of 1994, learned counsel for the respondent stated that the demurrage charges were so enormous that they were far in excess of the price of goods by that time. He also drew the attention of the Court to the order of 3rd of April, 1991 in Civil Writ Petition No. 802 of 1991 where, under similar circumstances, the Customs Department had stated that if the goods were found to be synthetic waste, the entire demurrage and container charges would be borne by the Customs Department; and the Customs Department would issue the requisite detention certificate. Counsel for the appe
