IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 18-09-2009 CORAM THE HONOURABLE MR.JUSTICE V.DHANAPALAN WRIT PETITION No.39229 OF 2004 M/s.Austin Engineering Co.Ltd., No.101, GIDC Estate, Junagadh, Gujarat-362 002. .. Petitioner -vs- 1. The Commissioner of Customs (Exports), Custom House, Chennai-1. 2. The Assistant Commissioner of Customs (Gr.7), Custom House, Chennai-1. .. Respondents For petitioner : Mr.Hari Radhakrishnan For respondents : Mr.Thirumavalavan Petition under Article 226 of the Constitution of India. O R D E R What is sought for in this Writ Petition is a mandamus, directing the respondents 1 and 2 to pay the demurrage charges till the date of clearance of the goods covered under Bill of Entry No.34129, dated 30.06.1997. 2. The petitioner company imported Bearing Seamless Tubes of SAE 52100 grade from Germany valued at USD 310/MT and filed Bill of Entry No.34129, dated 30.06.1997, before the respondents and sought for clearance of the said goods under Duty Exemption Entitlement Scheme (DEES) with duty benefit and additional duty of 15% as per Customs Notification No.79/95. But, the second respondent rejected the contention of the petitioner company and passed Order-in- Original, dated 27.09.1997, by enhancing the value of the goods to USD 1800/MT. 3. Aggrieved over the said order, the petitioner preferred an appeal on 03.10.1997 before the Commissioner of Customs (Appeals), who, by his Order-in-Appeal, dated 09.10.1997, set aside the order dated 27.09.1997 and held that the value determined by the petitioner under Rule 4 of the Valuation Rules is correct. https://hcservices.ecourts.gov.in/hcservices/ 4. Peeved at that, the Department preferred an appeal vide No.C941 of 97 before the Customs, Excise and Gold (Control) Appellate Tribunal, Madras (in short, "the Tribunal"). As the imported goods were lying idle and the petitioner company was not able to clear the goods in view of the pendency and delay in disposal of the appeal before the Tribunal, the petitioner filed a Writ Petition No.13914 of 1998 before this Court for speedy disposal of the appeal, pursuant to which, this Court, by an order dated 09.09.1998 directed the Tribunal to dispose of the appeal within six weeks from the date of receipt of the order. In compliance of the said order, the Tribunal remanded the matter to the second respondent for de novo consideration. 5. Following the said remand, the second respondent passed the Order-in-Original, dated 10.12.1998, confirming the value of consignment at USD 1800/MT at the merit rate of duty applicable to the imported goods. The petitioner again preferred an appeal to the Commissioner (Appeals), who, by his order dated 04.03.1999, further remanded the matter to the second respondent for fresh consideration in accordance with law, directing the second respondent to specifically examine with reference to the submissions made by the petitioner regarding the quality of the goods and then enter a finding for arriving at the valuation. Thereafter, the second respondent again adjudicated the matter by giving a personal hearing to the petitioner and passed the Order-in-Original No.557/1999, dated 22.08.1999, and accepted the transaction value declared by the petitioner company as per the Bill of Entry dated 30.06.1997, under Rule 4 of the Valuation Rules. 6. In pursuance of the order passed by this Court in W.P.No.19632 of 1999, the first respondent issued a Detention Certificate, dated 13.12.2004, for the period from 30.06.1997 to 27.02.2004 and the validity of the certificate was further extended from 30.06.1997 to 04.08.2004. 7. After obtaining the Detention Certificate from the first respondent, the petitioner approached the Traffic Manager, Chennai Port Trust, to waive the demurrage charges and release the goods. However, the said authority, vide his letter dated 02.11.2004, informed the petitioner, that remission of demurrage under Detention Certificate was available only on slab basis for specific period of maximum of 90 days as per the scale of rates of Chennai Port Trust and, accordingly demanded demurrage charges of Rs.88,98,989.50 till 21.10.2004. Under the said circumstances, the petitioner has filed this Writ Petition. 8. Respondents have filed a counter, stating the factual position, as stated above, and contending inter alia as follows : 8.1. The petitioner company had imported 82,293 Kgs.of Bearing Seamless Tubes and filed a Bill of Entry No.34129 on https://hcservices.ecourts.gov.in/hcservices/ 30.06.1997 with a declared value of DM 42134 C&F. Originally, the petitioner had claimed assessment under Duty Exemption Entitlement Certificate, which was rejected by the Department on the ground that nexus was not established between export and import products. The petitioner later agreed to clear the goods on merits and on payment of duty. The Bill of Entry was assessed after enhancement of the declared value of USD 310/MT to USD 1800/MT, which was the record value of identical goods imported from Japan and accordingly an order was passed by the second respondent. The goods which arrived by the Vessel M.V.Attica, Rotation No.592/97 Line No.6, are still available in the Port without being cleared by the petitioner. The petitioner, by a letter dated 29.02.2004, has requested the Assistant Commissioner Group 7 to direct the Proper Officer to modify the working sheet and issue the order for the amount of duty together with extension in remission period in demurrage after 27.02.2004 and up to date of communication of order by providing some days for early clearance of long delayed consignment. The petitioner, by his letter dated 15.03.2004, enclosing a letter of representation made to Chairman, Central Board of Excise and Customs, New Delhi, requested to recommend to Board for waiver of interest. Again on 15.05.2004, the petitioner wrote another letter, requesting for reassessment of Bill of Entry per the final de novo order in Original No.557/1999, dated 22.08.1999, and also stated that the original Bill of Entry was not with them since the same was not returned to them after assessment. 8.2 In consideration of the petitioner's request, the second respondent has reconstructed the Bill of Entry and reassessed the same on 14.06.2004, accepting the declared value and finally arrived at the duty at Rs.4,77,264.48 and communicated the same to the petitioner vide letter dated 24.06.2004, requesting them to collect the reassessed Bill of Entry. The petitioner, by letter dated 28.06.2004, has requested for abatement in duty for deterioration of goods in Chennai Port for seen years. The petitioner also stated that there may be a loss of 30% in weight and therefore requested Deputy Commissioner Group 7 to reassess the goods allowing abatement under Section 22 of Customs Act on urgent basis, which was rejected by the Department. The goods are lying from 30.06.1997. The petitioner is liable to pay interest from 24.06.2004 till the payment of duty. The petitioner has paid duty and interest of Rs.4,84,522 on 28.07.2004. The petitioner requested for remission of duty under Section 22 of the Act for less of approximately 30% by weight on the ground that the goods deteriorated after seven years of storage, which was rejected by the department. After issuance of an extended detention certificate by the Assistant Commissioner, Group 7, up to 04.08.2004, the petitioner approached the Traffic Manager, Chennai Port Trust, and requested for waiver of demurrage charges, which was also rejected by the said authority, which resulted in filing of this Writ Petition. https://hcservices.ecourts.gov.in/hcservices/ 8.3. Since the petitioner has challenged the enhancement of value for assessment of customs duty and he did not agree to it, the subject issue was gone through various appellate legal courses, which are available both to the petitioner and to the Department under the provisions of the Customs Act. Therefore, the allegation levelled by the petitioner against the second respondent is not tenable in law. The mater relating to condonation of demurrage charges is purely dealt with by the Chennai Port Trust, with which the respondents have no concern. The allegation that the delay was caused by the second respondent and that led to the liability of the petitioner to pay demurrage charges to Chennai Port Trust is absolutely not tenable. The delay is mainly attributable to the petitioner and also the delays, which are caused at different appellate stages, are inevitable in this case, as the petitioner and the Department had chosen to seek the remedies provided under the Act. Therefore, the Department is not liable for payment of demurrage on behalf of the petitioner, who is primarily responsible for all the delays, on account of which demurrage charges have mounted up to Rs.88,98,989/-. As such, this Writ Petition is liable to be dismissed. 9. Learned counsel for the petitioner would submit that the respondents have caused unreasonable delay in adjudicating the matter and taken about six years to finalise the issue and, therefore, they alone are responsible to bear the demurrage charges. He has cited the following decisions : (i) Shipping Corporation of India Ltd. v. C.L.Jain Woolen Mills, 2001 (129) E.L.T.561 (S.C.) : "2....According to the owner, under the licence, thus issued by the Controller of Imports and Exports, entitling import of raw materials without payment of duty, the Customs Authorities committed error in proceeding with the confiscation proceedings and ordering confiscation as well as levying penalty. The Customs Authorities as well as the Controller of Imports and Exports had been arrayed as party- respondents in the writ petition. Both of them as well as the Union of India resisted the claim of the owner, who had imported the goods in question. The High Court disposed of the writ petition by the judgment dated 9-9-1994, quashing the order of the Additional Collector of Customs dated 10-8-1990 as well as the order of the Customs, Excise and Gold (Control) Appellate Tribunal dated 21-3-1991 and directed the Collector of Customs to release the goods forthwith. The High Court also further held that since the action of the Customs Authorities is illegal, the goods in question will have to be https://hcservices.ecourts.gov.in/hcservices/ released to the owner without payment of any detention or demurrage charges by the owner. Needless to mention, Shipping Corporation of India, the appellant in the present appeal, which was the carrier and which under the Bill of Lading had a lien over the goods, until the dues are paid, had not been made a party to the aforesaid writ petition. At this stage it may also be noticed that during pendency of the writ petition in the High Court, an interim order had been passed, entitling the owner to take release of the goods on payment of Rs.5 lakhs to the Customs Authorities and a bank guarantee of Rs.5 lakhs but the owner had not taken advantage of the said interim order and the goods continued to remain in the custody of the present appellant and demurrage charges went on accruing. The order of the Delhi High Court was assailed in this Court by filing a special leave petition by the Customs Authorities but that special leave petition however stood dismissed on 13-11-1995 in SLP No. 5671 of 1995. The owner of the goods having failed in his attempt to get the goods released, notwithstanding the orders of the High Court in CWP No. 1604 of 1991, filed an application for initiating a contempt proceeding, which was registered as CCP No. 120 of 1995. The High Court however came to hold that the authorities cannot be held to be guilty of disobeying the orders of the Court and accordingly, dismissed the contempt petition. While dismissing the contempt petition, the learned Judge, granted liberty to the owner to move the Division Bench of the High Court for appropriate directions regarding payment of demurrage/detention charges. Pursuant to the aforesaid observations in the contempt proceedings, an application being filed by the owner, the same was registered as CM No. 4829 of 1996. That application was disposed of by the Division Bench of the Delhi High Court by order dated 18-1-1999. The Division Bench, while disposing of the petition, came to hold that the entitlement of the carrier of the goods to charge demurrage charges and if so, whether the Customs Authorities would be liable to pay the same or not is not required to be answered and is a matter which should be sorted out between those two Corporations and the Customs Authorities. But so far as the owner of the goods is concerned, he https://hcservices.ecourts.gov.in/hcservices/ having been absolved of any liability to pay the demurrage charges by virtue of the judgment of the Delhi High Court dated 9-9-1994 in CWP No. 1604 of 1991, he would be entitled to get the goods released without payment of the detention and demurrage charges." "8....On account of non-release, the imported goods incurred heavy demurrage charges but the Customs Authorities themselves gave an undertaking before the High Court that in the event the goods are found to be synthetic waste, then the Revenue itself would bear the entire demurrage and container charges. Further the Chief Commissioner of Customs, later had ordered unconditional release of the goods and yet the goods had not been released. It is under these circumstances and in view of the specific undertaking given by the Customs Authorities, this Court held that from the date of detention of the goods till the Customs Authorities intimated the importer, the importer would not be required to pay the demurrage charges. But in that case even subsequent to the orders of the Customs Authorities on a suit being filed by one of the partners of the importer firm, an order of injunction was issued and, therefore it was held that for that period, the importer would be liable for paying the demurrage and container charges. The judgment of this Court in Sanjeev Woollen Mills1 therefore, was in relation to the peculiar facts and circumstances of the case and the Court had clearly observed that the order in question is meant to do justice to the importer, looking to the totality of the circumstances and the conduct of the Customs Authorities.... In the case in hand, as has already been stated earlier, the earlier judgment of the Delhi High Court dated 9-9-1994 in CWP No. 1604 of 1991 has become final, which entitles the importer to get the goods released without payment of the detention and demurrage charges. In the contextual facts, notwithstanding the judgment of the High Court, the goods not having been released, the impugned order and direction dated 18-1-1999, cannot be held to be infirm in any manner. In the absence of any provision in the Customs Act, entitling the Customs Officer to prohibit the owner of the space, where the imported goods have been stored from levying the https://hcservices.ecourts.gov.in/hcservices/ demurrage charges, levy of demurrage charges for non-release of the goods is in accordance with the terms and conditions of the contract and as such would be a valid levy. The conclusion of the High Court to the effect that the detention of the goods by the Customs Authorities was illegal and such illegal detention prevented the importer from releasing the goods, the Customs Authorities would be bound to bear the demurrage charges in the absence of any provision in the Customs Act, absolving the Customs Authorities from that liability. Section 45(2)(b) of the Customs Act cannot be construed to have clothed the Customs Authorities with the necessary powers, so as to absolve them of the liability of paying the demurrage charges. In the aforesaid premises, we see no infirmity with the directions given by the Delhi High Court on 18-1-1999. The goods in question, having already been directed to be released, without the payment of the demurrage charges, the importer must have got the goods released. Having regard to the fact situation of the present case, it would be meet and proper for us to direct Shipping Corporation and Container Corporation, if an application is filed by the Customs Authorities to waive the demurrage charges. The appeal is disposed of accordingly." (ii) Donald & Macarthy (P) Ltd. v. Union of India, 1997 (89) E.L.T.53 (Cal.) : "63. Keeping in mind the various decisions cited on behalf of the parties, particularly the decision in the International Airports Authority Case and in the case of Padam Kumar Agarwalla (supra) and the guidelines issued by the Central Government under Section 111 of the Major Port Trust Act,1963, I am of the view that, although, the importer/consignee cannot be absolved of his liability to pay the demurrage and port charges, actual burden of payment of such dues should be shifted to the person or authority responsible for the delay in lifting of the goods." (iii) Sujana Steels Ltd. v. Commissioner of Customs & C.Ex. (Appeals), Hyderabad, 2002 (141) E.L.T.343 (A.P.) : "13. In other words, the Central Warehousing Corporation authorities cannot be denied their statutory duties on account of demurrage and https://hcservices.ecourts.gov.in/hcservices/ other charges. What has to be seen in the facts and circumstances of this particular case is whether the liability of the importer/petitioner company to pay such duties is to be shifted to the Customs authorities as argued by the learned counsel for the petitioner, since the petitioner company was not responsible for detention of the goods in question as held by the CEGAT in its order dated 29-6-1999 and as reflected in the Detention Certificate issued by the third respondent dated 5-10-1999. The Supreme Court in Padam Kumar Agarwalla v. The Additional Collector of Customs, Calcutta – AIR 1972 S.C.542 while quashing the order of confiscation passed by the Customs authorities opined that there would have been no difficulty in directing release of the goods had the same been in the custody of the Customs authorities. Since the goods were in the possession of the Port Commissioners who had a lien over the goods for rent and other charges, the Supreme Court was pleased to observe that someone would have to pay the port charges before the goods could be removed and since the importer was not to blame for the delay in removal of the goods which had been illegally detained by the Customs authorities, it would be only fair and just for the Customs authorities, who were responsible for the situation, to bear the burden for paying port charges. The Customs authorities having accepted the order of the CEGAT dated 29- 6-1999 and having issued Certificate for clearance of the goods dated 5-10-1999 should own the responsibility of paying detention and storage charges for the goods from 16-10-1996. It will be totally unjust and unreasonable on the part of the Customs authorities to contend : "Let the petitioner Company pay storage and demurrage charges first and then they may initiate legal action against the Customs authorities seeking reimbursement of those charges, if they are so entitled and advised." Customs authorities are statutory/public authorities and the reasonableness of their actions is required to be tested on the touchstone of postulates of reasonableness and non-arbitrariness flowing from Article 14 of the Constitution of India. Therefore, the stand taken by the learned Senior Standing Counsel for the Central Government appearing for the respondents 1 to 3 Customs authorities in that regard is not tenable." https://hcservices.ecourts.gov.in/hcservices/ "15.Keepig in mind the various decisions of the Supreme Court referred to above, particularly the decisions of the Supreme Court in the case of International Airports Authority (supra) and in the case of Padam Kumar Agarwalla (supra) we are of the considered opinion that though the petitioner company being the importer cannot be absolved of its liability to pay the storage and demurrage charges, the burden of paying such dues should be shifted to the Customs authorities who are found to be responsible for the delay in lifting of the goods. Such a course of action is appropriate and necessary in order to respect the postulates of reasonableness and non- arbitrariness flowing from Article 14 of the Constitution." "16. We, accordingly, allow the writ petition. A direction shall issue to the respondents 1 to 3 Customs authorities to pay the demurrage and other dues to the fourth respondent in respect of the goods in question within 15 days from the date of receipt of a copy of this order, and, therefore, permit the petitioner Company to lift the goods subject to it performing other formalities, if any. The fourth respondent is directed to make over the possession of the goods to the petitioner Company immediately upon receipt of payment of dues from the Customs authorities..." (iv) Agrim Sampada Ltd. v. Union of India,2004 (168) E.L.T.15 (Del.) : "The goods were originally imported by Shiv Ganga Organic Chemicals Ltd. on cash against delivery basis. These goods landed in India in February,2001. The import of these goods was not contrary to law. However, Shiv Ganga Organic Chemicals Ltd. abandoned the goods and did not make any payment for the same. Clearly, the title in the goods in such a situation remained with the foreign supplier i.e. Allied Deals, Singapore, and it was well within its rights to enter into the transaction with the petitioner. Since the goods were transferred to the petitioner and the petitioner held the document of title in respect thereof the petitioner was clearly within the definition of 'importer' as provided under Section 2 (26) and was, therefore, https://hcservices.ecourts.gov.in/hcservices/ entitled to present the Bill of Entry and to have the goods cleared for home consumption." (v) Union of India v. Kamlakshi Finance Corporation Ltd., 1991 (55) E.L.T.433 (S.C.) : "8....utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." (vi) Nanavati Speciality Chemicals Pvt.Ltd. v. Union of India& Ors., 2008 (11) BOMLR 2831 : "Once the matter is admitted under Article 226 in support of contractual obligations and pending for long period in High Court, the Court can consider undisputed portion of facts under Article 226." 10. On the other hand, learned counsel for the Department would submit that the decision cited by the learned counsel for the petitioner in Shipping Corporation of India's case is applicable to the goods, which are wrongly detained by the customs authorities, which is not the case here, and hence the said decision is not applicable to the case on hand. He relied upon the following decisions : (i) Vidyt Metallics Ltd. v. Board of Trustees of the Port of Mumbai, 2006 (206) E.L.T. 131 (Bom.) : "15...There is no case of mala fide pleaded in the petition nor the same is argued before me. Thus the provisions of Section 155 of the Act will apply with full force. Though the view taken by the various Division Benches is not in conformity with the view taken by this Court, however, in the light of the fact that the judgment of the Division Bench of this Court which is holding the field is relevant and binding upon me, it is not possible for me to accept the contention of the petitioners by relying upon the various judgments of the various High Courts to direct the Customs Authorities to pay demurrage and wharfage charges. The reliance placed on the judgment of the Apex Court in the case of Padam Kumar Agarwalla (supra) is misconceived. In fact the judgment makes it very clear that the demurrage and wharfage charges https://hcservices.ecourts.gov.in/hcservices/ are to be paid before taking delivery of the goods and in fact the Court has held that in a writ petition no such relief can be granted and the same is left to the Customs Authorities for taking appropriate steps or to file further litigation. The judgment is not an authority on the proposition of law that in cases where the goods are detained by the authorities and such detention having been set aside by the Courts or Tribunals then in every such case the Court should grant a relief of making payment of demurrage charges by the Customs Authorities. In fact the judgment holds that the writ jurisdiction is not an appropriate remedy for granting such relief. In the light of the aforesaid position of law, it is also not equally possible to pass any order directing the Authorities to make payment of any demurrage or