Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2017 Supreme(SC) 696

SUPREME COURT OF INDIA
Madan B. Lokur, Deepak Gupta, JJ.
Mumbai Port Trust – Appellant
Versus
M/s. Shri Lakshmi Steels and Ors. etc. – Respondents
Civil Appeal Nos. 9831-32 of 2017 (Arising out of SLP (C) Nos. 771-772 of 2017) With Civil Appeal Nos. 9833-34 of 2017 (Arising out of SLP (C) Nos. 3418-3419 of 2017)
Decided On : 27-07-2017

Advocates Appeared:
For the Appellant :- Buddy A. Ranganadhan, A.V. Rangam, Maninder Singh, ASG, Tara Chandra Sharma, R. Bala, B. Krishna Prasad, Advs.
For the Respondents:- Sunil Kumar Jain, Shree Pal Singh, Kapil Arora, Karan Khanna, Sumit Attri, M/s. Cyril Amarchand Mangaldas Aor, B. Krishna Prasad, Ms. Nidhi Agrawal, Ashok Mathur, Advs.

IMPORTANT POINTS
Scale of rates work both as an incentive to the importers to remove the goods as expeditiously as possible from the transit areas, and also acted as a disincentive to keep the goods in the premises of the Board for a long time – Therefore demurrage charges increase substantially with passage of time – Board's power to charge demurrage is not limited to cases where the goods were not removed from its premises due to some fault or negligence on the part of the importer.
Legality of the rates fixed by Board cannot be questioned.
Importer is liable to pay demurrage charges even if he is not responsible for any delay, nor at fault anyway.
Regulations 2009 have no application to Major Ports.
Liability for demurrage charges lies on the importer alone.
DRI/Customs Authorities can be directed to pay detention charges only in case of mala fide or gross abuse of power.
Detention charges is matter of contract between importer and Shipping line.

Headnote:(a) Major Port Trusts Act, 1963 – Section 48 – Rates of demurrage charges – Scale of rates work both as an incentive to the importers to remove the goods as expeditiously as possible from the transit areas, and also acted as a disincentive to keep the goods in the premises of the Board for a long time – Therefore demurrage charges increase substantially with passage of time – Board's power to charge demurrage is not limited to cases where the goods were not removed from its premises due to some fault or negligence on the part of the importer. (Para 20)
       (1976) 3 SCC 167; (1987) 1 SCC 648 – Relied upon
       (b) Major Port Trusts Act, 1963 – Section 58 and 59 – Board has a lien on the goods and has right to seize and detain the goods until the rates are fully paid – It can sell the goods if the rates are not paid and recover the same – Legality of the rates cannot be questioned – Importer is liable to pay demurrage charges even if he is not responsible for any delay, nor at fault anyway. (Para 21)
       (1977) 2 SCC 649; (1995) 3 SCC 151; (2002) 1 SCC 71; (2002) 3 SCC 168 – Relied upon
       (c) Customs Act, 1962 – Section 160(9) – Nothing in the Act affects power of Major Port like Mumbai – Hence Handling of Cargo in Customs Areas Regulations, 2009 framed u/s 157 will have no application. (Para 29, 30)
       (d) Interpretation of statute – Regulations 2009 – Subordinate legislation framed by a Board under Customs Act, 1962 – Cannot in any manner affect power and authority of Major Port Trust, statutorily vested in it. (Para 31, 32)
       (e) Demurrage charges – Liability lies on the importer alone. (Para 34)
       (f) Detention charges – DRI/Customs Authorities can be directed to pay only in case of mala fide or gross abuse of power – Importer has to clear the dues and then claim reimbursement. (Para 34)
       (g) Detention charges – Matter of contract between importer and Shipping line – High Court ought not directed DRI/Customs to pay the same. (Para 47)
       Facts of the case:
       The High Court has held that the detention of the goods imported by the writ petitioners/importers (respondent-importers herein) by the Customs, at the instance of the Directorate of Revenue Intelligence (`DRI'), was totally illegal. The High Court directed that the goods imported by the respondent-importers be released to them on payment of custom duty. It further directed that the Port Trust was not entitled to charge any demurrage in view of Regulation 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009 since the Customs had issued detention certificate. The detention charges demanded by the Shipping Line were ordered to be borne by the DRI and/or the Customs. The writ petitioners/importers were also held entitled to costs of Rs. 50,000/- each to be paid by the Department.
       Finding of the Court:
       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.
       Result: Appeals allowed.

JUDGMENT

Deepak Gupta, J.

Leave granted.

2. These civil appeals filed by the Union of India and the Mumbai Port Trust are directed against the judgment dated 23.12.2016 passed by the High Court of Punjab & Haryana at Chandigarh in CWP No. 10021 of 2016 and CWP No. 10036 of 2016, whereby the High Court allowed the writ petitions and held that the detention of the goods imported by the writ petitioners/importers (respondent-importers herein) by the Customs, at the instance of the Directorate of Revenue Intelligence (for short `DRI'), was totally illegal. The High Court directed that the goods imported by the respondent-importers be released to them on payment of custom duty. It further directed that the Port Trust was not entitled to charge any demurrage in view of Regulation 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009 (in short `2009 Regulations') since the Customs had issued detention certificate. The detention charges demanded by the Shipping Line were ordered to be borne by the DRI and/or the Customs. The writ petitioners/importers were also held entitled to costs of Rs. 50,000/- each to be paid by the Department.

3. The facts of the case are that the respondent-importers are two sister concerns viz., - (1) Inder International, a partnership firm, and (2) M/s Shri Lakshmi Steels, a proprietorship firm. These firms deal in the import and trading of cold rolled coils and sheets (primary and secondary). Both the importers had imported various consignments of cold rolled coils. We are concerned only with ten consignments imported on three dates. The first batch of consignments of coils was imported vide bills of entry dated 04.12.2015 and the goods imported were declared to be cold rolled sheets/coils. The bills of entry for the second and third consignments were presented on 11.12.2015 and 29.12.2015 respectively.

4. On 14.12.2015, DRI wrote a letter to the Commissioner of Customs (Import), Mumbai to place the consignments of the respondent-importers, as well as some other importers, on hold. The DRI was of the view that these consignments required 100% examination before these could be released. On 28.12.2015, another letter was written by the DRI to the Customs in which it was mentioned that specific intelligence had been received that the firms had been importing consignments in violation of notifications issued by the Customs to evade provisional duty imposed on their imports. By this letter, the Customs Authorities were requested to get the goods examined 100% with the assistance of the Chartered Engineer with regard to the nature of the imported goods, including the description thereof, quality, thickness and width, along with supporting safeguards. In the meanwhile, on 18.12.2015, the respondent-importers in respect of the bills of entry dated 04.12.2015 and 11.12.2015 prayed that the duty be assessed under Section 18 of the Customs Act, 1962 (for short `1962 Act') and the goods be released, so as to avoid payment of demurrage and detention charges. Thereafter, a reminder in this regard was sent by the respondent-importers on 22.12.2015. After the third consignment was received on 29.12.2015, another letter was written by the respondent-importers on 31.12.2015 followed by one more letter dated 01.01.2016, praying that the duty be assessed and the goods be released on payment of duty.

5. Since no action was taken by the Customs Authorities on the letters written by the respondent-importers, they filed writ petitions in the High Court of Punjab & Haryana praying that the goods be released. Thereafter, samples of the goods were drawn between 05.01.2016 and 11.01.2016 and sent to one Shri Rajendra S. Tambi, Chartered Engineer, for inspection. Shri Tambi got these samples tested from a Government approved laboratory M/s Perfect Laboratory Services and, as per the certificates issued by Shri Tambi on 19.01.2016, it was certified that the goods imported appeared to be cold rolled coils. This supported the case of

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2017 Supreme(SC) 696

Cases Referred (6)