Case Law Details

Case Name : Green Gold Timbers Pvt. Ltd. Vs Commissioner of Customs (Gujarat High Court)
Appeal Number : Special Civil Application No. 10082 of 2020
Date of Judgement/Order : 12/01/2022
Related Assessment Year :

Green Gold Timbers Pvt. Ltd. Vs Commissioner of Customs (Gujarat High Court)

The short point that falls for our consideration is, whether the customs cargo service provider (respondent no.3 herein) is entitled to charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive Officer or Examining Officer, as the case may be.

The aforesaid issue is no longer res integra in view of a recent decision of the Bombay High Court in the case of Sahaj Impex vs. Balmer Lawrie & Co. Ltd. and another (Writ Petition No. 10492 of 2019 decided on 18th January 2021), wherein the Bombay High Court observed that customs cargo service provider as defined in regulation No. 2(1)(b) of the Regulations, is not entitled in law to charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or any other authority as referred to above.

This position seems to have been further clarified by the Commissioner of Customs (Export) by way of a public notice No. 26/2010 with the further clarification that the customs cargo service providers shall allow the goods on production of a certificate issued from the proper officer certifying such period of seizure or detention or confiscation without charging and collecting any rent or demurrage for such period.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs :

“(A) Your Lordships may be pleased to admit and allow this petition.

(B) Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction, by declaring that, the detention charges of Rs.17,51,964/- imposed by respondent no.2 and ground rent charges of Rs.7,64,934/-imposed by respondent no.3 are unjust and illegal in terms of Regulations, 2009;

(c) Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction, directing respondent Nos.2 and 3 to refund the amount of Rs.25,16,898/- (Rs.17,51,964/- to be refunded by respondent no.2 and Rs.7,64,934/- to be refunded by respondent no.3) along with interest as may be deemed fit by this Hon’ble Court to the petitioner in the interest of justice;

(D) Your Lordships may be pleased to grant such other and further relief as may be deemed fit and proper in the facts and circumstances of the case.”

2. We have heard Mr.Jigar Patel, the learned counsel appearing for the writ-applicant, Mr.Hardik Modh, the learned counsel appearing for the respondent no.3 and Mr.Priyank Lodha, the learned standing counsel appearing for the respondent no.1.

3. The short point that falls for our consideration is, whether the customs cargo service provider (respondent no.3 herein) is entitled to charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive Officer or Examining Officer, as the case may be.

4. The aforesaid issue is no longer res integra in view of a recent decision of the Bombay High Court in the case of Sahaj Impex vs. Balmer Lawrie & Co. Ltd. and another (Writ Petition No.10492 of 2019 decided on 18th January 2021), wherein the Bombay High Court, from paragraph-15 onward, has observed as under :

“15. Section 45 of the Customs Act under the heading ‘clearance of imported goods’ deals with restrictions on custody and removal of imported goods. Sub-section (1) says that save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Principal Commissioner of Customs or Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII which deals with goods in transit.

15.1. As per sub-section (2), the person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force, shall keep a record of such goods and send a copy thereof to the proper officer; shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer or in such manner as may be prescribed.

15.2. Sub-section (3) deals with pilferation of imported goods in a customs area with which we are not presently concerned.

16. Section 141 of the Customs Act says that conveyances and goods in a customs area are subject to control of officers of customs. As per sub-section (1), all the conveyances and goods in a customs area shall, for the purpose of enforcing the provisions of the Customs Act, be subject to the control of officers of customs. Sub-section (2) says that the imported or export goods may be received, stored, delivered, despatched or otherwise handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed.

17. Section 157 of the Customs Act provides the general power to make regulations.

18. In exercise of powers conferred by sub-section (2) of section 141 read with section 157 of the Customs Act, the Central Board of Excise and Customs (briefly “the Board” hereinafter) have made a set of regulations called Handling of Cargo in Customs Areas Regulations, 2009 (briefly “the Regulations” hereinafter). Regulation 2(1)(b) defines ‘Customs Cargo Services Provider” to mean any person responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a custodian as referred to in section 45 of the Act and persons as referred to in sub-section (2) of section 141 of the Act.

18.1. Regulation 6 deals with responsibilities of Customs Cargo Service Provider. A large number of responsibilities to be discharged by Customs Cargo Service Provider are mentioned in Regulation 6. Relevant for the present case is the responsibility mentioned in clause (l) which says that the Customs Cargo Service Provider shall subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive Officer or Examining Officer, as the case may be.

19. It is not in dispute that respondent No. 1 is a Customs Cargo Service Provider as defined in Regulation 2(1) (b) of the Regulations. Being so, it is under a legal obligation to discharge the responsibilities as mandated under Regulation 6, more particularly in clause (l) thereof which clearly says that a Customs Cargo Service Provider shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive Officer or Examining Officer as the case may be. This position has been clarified by the Commissioner of Customs (Export) in the public notice dated 26/2010 with the further clarification that Customs Cargo Service Providers shall allow the goods on production of a certificate issued from the proper officer certifying such period of seizure or detention or confiscation without charging and collecting any rent or demurrage for such period.

20. It is also not disputed that the goods imported by the petitioner vide bill of entry No. 7540462 dated 07.08.2018 were detained by the proper officer of the customs department for the period from 14.08.2018 to 06.02.2019 which has been certified by the Superintendent of Customs in the prescribed format further mentioning that the certificate was issued as per public notice No. 26/2010 dated 02.03.2010.

21. Therefore, for the period from 14.08.2018 to 06.02.2019, respondent No. 1 is under a legal obligation not to charge any rent or demurrage on the goods of the petitioner or on the container in which the goods have been stored and kept under its custody. Following the certificate dated 31.01.2019, it was also under a legal obligation to release the goods kept under its custody on or before 06.02.2019 to enable the petitioner to re-export the goods. Failure to do so has not only caused prejudice to the petitioner but would also disentitle respondent No. 1 from claiming any rent and demurrage for the period beyond 06.02.2019 till release of the goods because such retention of goods would be clearly unlawful being in violation of Regulation 6(1)(l) of the Regulations and the public notice dated 02.03.2010.

Customs cargo service provider not entitled to charge any rent or demurrage on goods seized or detained or confiscated by Superintendent of Customs

22. That being the position, we do not agree with the submissions made by Mr. Mishra that the dispute between petitioner and respondent No. 1 being contractual, petitioner should be relegated to the forum of civil court for obtaining relief. That apart, respondent No.1 being a Government of India enterprise has to act in a responsible manner. Moreover, being a Customs Cargo Service Provider, it is subject to the control of the officers of the customs department and cannot act in defiance of the law and of lawful directions of the customs authorities.

23. Thus having regard to the above, we direct respondent No.1 to release the goods imported by the petitioner vide bill of entry No. 7540462 dated 07.08.2018 kept in container No. TTNU9895081 forthwith to enable the petitioner to re­export the same in terms of letter dated 28.11.2018 of the Deputy Commissioner of Customs, Special Investigation and Intelligence Branch.”

5. Thus, the observations made by the Bombay High Court in paragraph-19 clinches the issue. The respondent no.3, as the customs cargo service provider as defined in regulation No.2(1)(b) of the Regulations, is not entitled in law to charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or any other authority as referred to above.

6. This position seems to have been further clarified by the Commissioner of Customs (Export) by way of a public notice No.26/2010 with the further clarification that the customs cargo service providers shall allow the goods on production of a certificate issued from the proper officer certifying such period of seizure or detention or confiscation without charging and collecting any rent or demurrage for such period.

7. On account of the contractual relationship if the respondent no.3 wants to recover any other dues from the writ-applicant, it is open for the respondent no.3 to approach the appropriate forum for obtaining appropriate relief.

8. In view of the aforesaid, this writ-application succeeds and is hereby allowed.

9. The amount of Rs.7,64,934=00 recovered by the respondent no.3 towards the demurrage of the goods of the writ-applicant shall be refunded within a period of four weeks from the date of receipt of the writ of this order.

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