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2023 Supreme(Guj) 259

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SONIA GOKANI, RAJENDRA M. SAREEN, JJ.
Union Of India – Appellant
Versus
Asian Food Industries – Respondent
R/Letters Patent Appeal No. 665 of 2021 In R/Special Civil Application No. 19287 of 2006
Decided On : 24-02-2023

Advocates Appeared:
For the Appellant : Mr. Devang Vyas with Kshitij M. Amin.
For the Respondents: Mr. Hriday Buch with Darshan M. Varandani, Mr. Ankit Shah, Mr. Dhaval D. Vyas.

Headnote:

FOREIGN TRADE - IMPORT AND EXPORT - POLICY - NOTIFICATION - CUSTOMS ACT, 1962 - SECTIONS 50 AND 51 - DEMURRAGE CHARGES - DETENTION CHARGES - LIABILITY OF IMPORTER - LIABILITY OF CUSTOMS AUTHORITIES - POLICY DECISION OF GOVERNMENT - EFFECT ON LIABILITY FOR DEMURRAGE CHARGES - RIGHT TO EXPORT GOODS CLEARED BY CUSTOMS AUTHORITIES - APPLICABILITY OF NOTIFICATION - INTERPRETATION OF NOTIFICATION - JURISDICTION OF HIGH COURT TO DIRECT CUSTOMS AUTHORITIES TO PAY DEMURRAGE CHARGES - MALA FIDE OR GROSS ABUSE OF POWER BY CUSTOMS AUTHORITIES - REIMBURSEMENT OF DEMURRAGE CHARGES TO IMPORTER.

Fact of the Case:

The petitioner, an exporter, received export orders for various pulses and cereals. The petitioner entered into a contract for 2500 metric tons with an approximate consideration of 15 lakhs of USD, out of which 20% was received as advance. 106 containers were handed over to the shipping agent with all the documents of the Customs Department. The Customs Authority granted permission to ship the containers on 24.06.2006, but the vessel did not arrive at the Kandla Port and the containers continued to lie at the port for loading. On 27.06.2006, a notification was issued by the Directorate General of Foreign Trade (DGFT) prohibiting the export of certain items, including tuvar dal and whole gram choli, with retrospective effect from 04.07.2006. The petitioner made several representations to various authorities, contending that the goods lying at Kandla Port were not covered by the notification as they were cleared by the Customs Authority before the issuance of the notification. The petitioner approached the High Court challenging the notification and obtained an order directing 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 the order with interest at the rate of 6% per annum from 24.06.2006 till the amount is paid.

Finding of the Court:

The High Court held that the petitioner was liable to pay the demurrage charges even though the delay was caused due to customs checking and no negligence or fault of the petitioner was found. The Court further held that the Customs Authorities could not be directed to pay demurrage charges for clearance of goods of the importer, even if there was some delay on the part of the Customs. The Court also held that the importer was liable to pay demurrage charges even when the Custom Authority had detained the imported goods which detention might later be found to be unjust.

Issues: 1. Whether the importer is liable to pay demurrage charges even if the delay is caused due to customs checking and no negligence or fault of the importer is found? 2. Whether the Customs Authorities can be directed to pay demurrage charges for clearance of goods of the importer? 3. Whether the importer is liable to pay demurrage charges even when the Custom Authority has detained the imported goods which detention might later be found to be unjust?

Ratio Decidendi: 1. Yes, the importer is liable to pay demurrage charges even if the delay is caused due to customs checking and no negligence or fault of the importer is found. 2. No, the Customs Authorities cannot be directed to pay demurrage charges for clearance of goods of the importer. 3. Yes, the importer is liable to pay demurrage charges even when the Custom Authority has detained the imported goods which detention might later be found to be unjust.

Final Decision: The High Court's order directing the Customs Authorities to pay demurrage charges was set aside.

JUDGMENT :

(Sonia Gokani, J.)

1. Aggrieved by the judgment and order dated 24.07.2018 passed by the learned Single Judge in Special Civil Application No. 19287 of 2006 whereby the learned Single Judge allowed the matter in favour of the respondents, the appellant begs to prefer this appeal under Clause 15 of the Letters Patent.

2. The respondent no.1 being the exporter of various kinds of pulses and cereals and other materials, received export orders from various overseas importers for import of various cereals, pulses, tuvar dal, red choli and other items. The respondent no.1 entered into a contract of 2500 metric tons approximately. The consideration of entire export is approximately 15 lakhs of USD out of which the petitioner received advance of 20%.

2.1. Out of 106 containers, 20 containers have already been exported from Kandla Port itself. For remaining 84 containers, the respondent handed over all the containers with the shipping agent with all the documents of the Customs Department on 23.06.2006 and 24.06.2006 and it was examined by the Customs Department and thereafter only the Customs Department granted the permission under Section 50 and the order under Section 51 of the Customs Act was passed.

2.2. The Customs Authority granted permission to ship the containers on 24.06.2006 but the vessel did not arrive at the Kandla Port and the containers continue to lie at the port for the purpose of loading the same in the vessel of respondent no.4 and 5. The petitioner acting on behalf of the Government of India, in exercise of powers conferred under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (‘The Foreign Trade Act’ hereinafter) issued notification No. 15 (Re-2006) 2204-09 dated 27.06.2006 whereby amendment had been made in the Import Export Policy, prohibiting the export of tuvar dal, whole gram choli by inserting the entry at sr. no. 44 in Chapter-7 of the Table-B under Schedule-2 of the Indian Trade Classification (ITC).

2.3. The prohibition of export of certain items for a period of six months from the date of issuance of notification dated 27.06.2006 was made with retrospective effect by subsequent notification bearing no. 19(RE-2006)2004-09 dated 04.07.2006.

2.4. On 28.06.2006, the Superintendent (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.1 that in view of this prohibition, the containers stuffed by the respondent no.1 are lying inside the port and are incurring the port storage charges. It was mentioned that as per the port traffic and line tariff, the container storage and the container detention charges would be debited from the date the units have been handed over to the appellant.

2.6. Vide letter dated 28.06.2006 issued by the Superintendent (DP) Customs House, Kandla directing the respondent no.3 not to allow the shipment of goods that had already been passed out

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