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2002 Supreme(P&H) 486
PUNJAB & HARYANA HIGH COURT
Jawahar Lal Gupta and N.K.Sud JJ.
Patiala Castings Private Limited
Versus
Union Of India
Civil Writ Petition No. 8807 of 2000,
Decided On : MAY 1, 2002
The court emphasized the importance of complying with instructions for the mutilation and release of goods and held that the petitioner was not liable for demurrage charges.
Headnote:
import - nature of goods - Customs Act, 1962 - Section 110, Customs Tariff Act, 1975 - Clause 8 of Section XV - waste and scrap - old and used pipes - rusted and pitted - seizure of goods - mutilation of goods - demurrage charges
Fact of the Case:
The petitioner imported goods described as scrap for manufacturing mild steel ingots. The customs authorities detained the goods, claiming they were usable pipes. The petitioner sought release of the goods and challenged the levy of duty and demurrage charges.
Finding of the Court:
The court appointed a Local Commissioner to inspect the goods, who found them to be old and used pipes, rusted, pitted, and perforated. The court concluded that the goods were not serviceable pipes but metallic scrap. The court also found that the authorities failed to comply with instructions to mutilate the goods and release them, causing undue harassment to the petitioner.
Issues: Nature of the imported goods - Compliance with instructions for mutilation and release of goods - Liability for demurrage charges
Ratio Decidendi: The goods were determined to be metallic scrap, not serviceable pipes. The authorities failed to comply with instructions to mutilate and release the goods, causing undue harassment to the petitioner. The petitioner was not liable for demurrage charges.
Final Decision: The writ petition was allowed, the impugned orders were set aside, and the bank guarantees furnished by the petitioner were ordered to be released. The respondents were directed to pay demurrage charges to the Punjab State Warehousing Corporation and to fix responsibility for the default.
Jawahar Lal Gupta, J.
1. Did the petitioner import serviceable pipes or scrap? Is the petitioner liable to pay demurrage and charges for containers? These two questions provide the core of the controversy in this case. A few facts as relevant for the decision of the dispute between the parties may be briefly noticed.
2. The petitioner is engaged in the manufacture of mild steel ingots. For this purpose it uses iron scrap. Part of the material is bought locally. The remaining requirements are met with by imports from the Middle East countries. On March 24, 2000 the petitioner filed a Bill of Entry No. 490 in respect of 25 containers. The material was examined by the Custom Authorities. Twenty one containers were released. Four were detained. Subsequently, even the four containers were released. In April 2000 the petitioner received another consignment of 51 containers. These were inspected by the Custom Authorities from April 22, 2000 to April 24, 2000. Initially, these were detained. However, on April 29, 2000 twenty four containers were released. On May 2, 2000 the competent authority passed an order under Section 110 of the Customs Act, 1962. The goods contained in 27 containers were ordered to be seized. The petitioner represented that the pipes were old and used. These were rusted and pitted. These could not be used as pipes. Thus, it prayed that the goods be released. Despite repeated representations, the needful was not done
3. While the matter was pending with the authorities, the Shipping Corporation informed the petitioner that in case the containers were not released, recourse to Section 48 of the Customs Act shall be made and the goods may have to be sold. Despite that, neither the goods nor the containers were released. Ultimately, on July 10, 2000 the petitioner approached this Court with the prayer that the orders regarding levy of duty and payment of demurrage etc. passed by the respondents on June 1, 2000, June 6, 2000 and June 27, 2000, copies of which have been produced as Annexures P-22, P-27 and P-32 respectively, be quashed and the respondents be directed to release the goods on payment of duty leviable on scrap. Various other prayers were also made.
4. Notice of motion was issued. Reply was filed by the respondents. Even a replication was filed by the petitioner.
5. Since the continued detention of goods was resulting in avoidable loss, the petitioner made a prayer to the Bench that the containers may be destuffed and the goods be placed either in the godowns of the Central Warehousing Corporation or in any public bonded warehouse. Vide order dated July 26, 2000 a Bench of this Court (G.S. Singhvi and Nirmal Singh, JJ.) accepted this prayer. However, the petitioner was directed to indicate the space, if any, available with the Central Warehousing Corporation or any of the public bonded warehouse to the Deputy Commissioner of Customs, who shall then fix the time for destuffing of the goods in such warehouse. It was further directed that after destuffing, the goods shall remain under supervision and control of the Deputy Commissioner of Customs, Central Freight Station and charges for the warehouse shall be borne by the petitioner.
6. Thereafter, the petitioners filed Civil Miscellaneous No. 18593 of 2000. It prayed that a Local Commissioner be appointed to visit the Container Freight Station, Ludhiana and to verify the nature of pipes. The Bench (A.S. Gill and Nirmal Singh, JJ.) after examination of the matter felt that "it has become necessary to appoint the Local Commissioner to verify at the spot the nature of the pipes." In the circumstances, the Bench directed "the Principal of the Punjab Engineering College to depute Head of the Metallurgical department to visit the aforesaid site in the presence of the parties and their counsel and to make a report accordingly in respect of the pipes available ....". It was further directed that "the Commissioner shall visit the said station on Saturday i.e.
