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High Court of Calcutta
Ruma Pal, J.
Om Shankar Biyani : Appellant
Versus
Collector Of Customs : Respondent
Matter 3274 Of 1989
Decided On : Sep 16, 1991
CUSTOMS - Provisional Assessment - Release of Goods - Seizure of Goods - Show Cause Notice - Adjudication Proceedings - Demurrage - Lien - Port Charges.
Fact of the Case:
Petitioner imported goods from Singapore and paid Customs duty based on the provisional assessment. However, the Customs Authorities seized the goods and issued a show cause notice under Section 124 of the Customs Act, 1962. The petitioner challenged the refusal of the Customs Authority to release the goods and sought a direction for payment of demurrage.
Finding of the Court:
1. The seizure of goods under Section 110 of the Customs Act, 1962, must be followed by a show cause notice under Section 124 within six months, failing which the seized goods are required to be released. 2. The petitioner failed to reply to the show cause notice issued by the Customs Authorities, hence the stage of establishment of a charge of misdeclaration had not yet arisen. 3. The Customs Authorities agreed to conclude the adjudication proceedings expeditiously but argued that the goods should not be released pending the proceedings. 4. The Port Authorities claimed a lien over the goods and opposed their release from the Customs warehouse under Section 49 of the Customs Act, 1962. 5. The petitioner was directed to furnish a bank guarantee and a personal bond to obtain the release of the goods, subject to payment of port charges up to a certain date. 6. If the adjudication proceedings were decided against the petitioner, the Customs Authorities could enforce the bond and bank guarantee, subject to any higher appellate authority orders. 7. If the adjudication proceedings were decided in favor of the petitioner, the Customs Authority would pay the demurrage to the Port Authorities and reimburse the petitioner for any demurrage charges paid up to a certain date.
Issues: 1. Whether the Customs Authorities could withhold the release of goods after provisional assessment and payment of duty. 2. Whether the petitioner was entitled to the release of goods despite the seizure under Section 110 and the issuance of a show cause notice. 3. Whether the Customs Authorities could claim demurrage for the period of detention of the goods. 4. Whether the Port Authorities could charge demurrage for the period the goods were detained in exercise of their lien.
Ratio Decidendi: 1. The Customs Authorities cannot withhold the release of goods after provisional assessment and payment of duty, as they have no statutory right to do so. 2. The petitioner was entitled to the release of goods despite the seizure under Section 110 and the issuance of a show cause notice, as the Customs Authorities had agreed to conclude the adjudication proceedings expeditiously and there was no evidence of misdeclaration. 3. The Customs Authorities could not claim demurrage for the period of detention of the goods, as the delay in release was attributable to their own actions and not to any fault or negligence on the part of the petitioner. 4. The Port Authorities could not charge demurrage for the period the goods were detained in exercise of their lien, as it is a general principle of law that a lien-holder cannot claim rent for the period that the goods are detained.
Final Decision: The writ petition was disposed of by directing the petitioner to submit a reply to the show cause notice within a specified time, and the Customs Authority to complete the adjudication proceedings by a certain date. The petitioner was allowed to obtain the release of the goods upon furnishing a bank guarantee and a personal bond, and making payment of port charges up to a certain date. If the adjudication proceedings were decided against the petitioner, the Customs Authorities could enforce the bond and bank guarantee. If the proceedings were decided in favor of the petitioner, the Customs Authority would pay the demurrage to the Port Authorities and reimburse the petitioner for any demurrage charges paid up to a certain date.
Ruma Pal, J.
1. TWO questions are involved in this Writ Application. The first relates to the rate of Customs duty and the second to the question of demurrage. The facts giving rise to these questions are:
2. ON 30th July 1989, the petitioner imported consignments of pillow block bearings of NBR, Asahi and NSK brands (referred to as the goods) from Singapore.
On 25th July 1989, the Assistant Collector of Customs assessed the goods and allowed clearance upon payment of Customs Duty on the invoice value and subject to the petitioner furnishing a PD bond for hundred per cent of the invoice value. On the same day the petitioner furnished the PD bond for Rs. 63,637/- which was the invoice value of the goods and three days later paid the customs duty amounting to Rs. 1,24,691/- as assessed by the Assistant Collector of Customs. As the respondents were not permitting clearance of the goods despite compliance with the order dated 25th July 1989, the petitioner filed this writ application challenging the refusal of the Customs Authority to release the goods and for a direction of the Customs Authority to pay the demurrage which had accrued by reason of the non-release of the goods.
3. SEVERAL interim orders have been passed in this proceeding which are noted in greater detail later in this judgment. Briefly stated these orders initially directed the release of the goods subject to the fulfilment of conditions by the petitioner and subsequently the removal of the goods to a customs warehouse under Section 49 of the Customs Act, 1962 (referred to as the Act). The goods were neither released nor kept in a warehouse under Section 49.
4. IN the meanwhile, on 24th January 1990 the Customs Authorities issued a notice under Section 124 of the Act to the petitioner. This show cause notice has not been challenged by the petitioner nor has the petitioner replied thereto.
On 2-2-1990 the Port Trust Authorities appeared and submitted that the goods could not be removed without meeting the port charges. It was claimed that the Port Trust Authorities had a lien over the goods under the provisions of the Major Port Trust Act. By an order dated 2-2-1990, the Court appointed a special officer under whose supervision the goods were to be immediately stored in the bonded warehouse and the petitioner and/or his clearing Agent were directed to extend all necessary facilities for removing the goods by providing trucks and men for keeping the goods in the bonded warehouse. The Customs Authorities and the Port Trust Authorities were directed not to raise any objection to such storing in the bonded warehouse which was to be without prejudice and subject to the result of the writ petition.
5. ON the 9th February, 1990 the petitioner paid the remuneration of the special officer and made all arrangements as directed. The Port Authorities however, filed an appeal from the order dated 2-2-1990 and obtained a stay of the operation of the order. This ad interim order of stay was confirmed on 11-5-1990.
6. THIS matter was heard on several days. Hearing was concluded on 28th June 1991. It is not disputed that the goods have not been removed to the bonded warehouse till today.
As far as the rate of Customs Duty is concerned it has been contended by the petitioner :-
(1) After provisional assessment is made and duty paid on that basis the Customs Authorities were obliged to release the goods and have no statutory right to withhold the same.
(2) The Assistant Collector of Customs, Group-V who assessed the goods had passed an order. The said order is still valid and not set aside. The Collector of Customs have not taken recourse to Section 129D (2). Therefore, the Customs Authorities are bound by the said order.
(3) If the initial assessment is a provisional assessment, it is the duty of the Customs Authorities to make the final assessment within a reasonable time. In the instant case no such final assessment has yet been made and therefore, the Customs Authorities have
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