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Judgment
Harsha Devani, J.—By this petition under Article 226 of the Constitution of India, the petitioners had prayed for the following substantive reliefs :-
In the above premises, the petitioners most respectfully pray as under :-
That Your Lordships may be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus or any other appropriate writ, direction or order, directing the third respondent herein to forthwith assess the Bill of Entry No. 600739/00 dated 23-10-2000 in accordance with the Final Order No. C-1/1750-51/WZB/2001 dated 13-7-2001 (Annexure-''D'' hereto) and be further pleased to direct the respondents, their employees, servants and agents to immediately allow the petitioners to clear the goods covered under Bill of Entry No. 600739/00 dated 23-10-2000;
That Your Lordships may be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus or any other appropriate writ, direction or order, directing the respondents herein to issue a Detention Certificate in favour of the petitioners for the goods imported vide Bill of Entry No. 600739/00 dated 23-10-2000 for the period covering the date on which the Bill of Entry was filed, till the legal and valid assessment of the Bill of Entry, in accordance with law.
The petitioner No. 1 is a private limited company, and is an SSI unit, inter alia engaged in the manufacture of Bobbins for textile mills from imported raw material like regrind polycarbonate and was importing such goods regularly. According to the petitioners, several earlier consignments of the same goods had already been allowed clearance by the customs authorities without insisting on any licence, as the goods were freely importable under the relevant Exim Policy. On 23rd October, 2000, upon landing of the consignment which was covered by an invoice dated 26th August, 2000, the petitioners filed a Bill of Entry bearing No. 600739/00. The goods had been imported from M/s. Malin & Associates, USA. The petitioners sought classification of the said goods under CTH 3907.40. Vide show-cause notice dated 4th January, 2001, the petitioners were called upon to show cause as to why
(i) the goods viz. Polycarbonate Regrind clear for colour valued at Rs. 15,93,943/- CIF submitted for clearance vide Bill of Entry No. 600739 dated 23rd October, 2000 should not be confiscated u/s 111(d) of the Customs Act, 1962 read with Foreign Trade (Development & Regulation) Act, 1992;
(ii) penalty should not be imposed on Messrs Ideal Sheet Metal Stampings Pvt. Ltd. u/s 112(a) of the Customs Act, 1962.
In response to the show-cause notice, the petitioner company filed its reply dated 24th March, 2001 stating that the issue of classification had already been decided in appeals filed and referred to in the final order of the Tribunal dated 22nd March, 2001. Vide the order dated 22nd March, 2001, the Tribunal, after considering all the aspects came to the conclusion that regrind polycarbonate imported by the petitioner company was correctly classified under CTH 3907.40 and quashed and set aside the adjudication order passed by the Commissioner of Customs, Mumbai imposing fine and penalty on the petitioners.
The aforesaid show cause notice culminated into an Order-in-Original dated 30th April, 2001, passed by the Commissioner of Customs, Ahmedabad imposing fine and penalty on the petitioners. Being aggrieved, the petitioners went in appeal to the 2001 (98) ECR 556 set aside the order passed by the Commissioner of Customs and also observed that the approach of the Commissioner in the present case was not proper. Upon receipt of the final order of the Tribunal on 16th July, 2001, the petitioner company addressed a letter dated 19th July, 2001 to the third respondent to instruct the Assistant Commissioner of Customs, ICD, Sabarmati, to finally assess the Bill of Entry for the goods in question in accordance with the order of the Tribunal. Despite the aforesaid, no action was taken by the third respondent or his subordinate officers. The representative of the petitioner company, therefore, personally met the third respondent and requested him to allow clearance of the goods imported by the petitioner company since no dispute survived. However, no satisfactory reply was received by the petitioners.
On 25th July, 2001, the petitioner company made a representation to the Chief Commissioner of Customs, the second respondent herein and brought the aforesaid facts to his notice and requested him to intervene in the matter. However, no action was taken by the officers in the matter. Since the goods had been imported by the petitioner company in October, 2000, and the Bill of Entry dated 23rd October, 2000 filed in respect thereof was still lying with the Customs department, and despite the fact that the action of the customs authorities in confiscating the goods had already been set aside by the Tribunal, the goods were not being cleared by the customs authorities, the petitioners have approached this Court seeking the reliefs noted hereinabove.
On 5th September, 2001, this Court had passed an order in the following terms :-
After arguing the matter at some length by the learned counsel for the parties, a request has been made on behalf of the Department to file a detailed reply affidavit. Two weeks time is granted for filing the reply affidavit. Put up on 19th September 2001.
Learned counsel for the petitioner makes a prayer that in the meanwhile as pursuant to the communication dated 4-9-2001 reassessment has been made in compliance of the order of the CEGAT the petitioner be allowed to clear the goods under protest. The prayer appears to be reasonable and the same is allowed. Put up on 19-9-2001.
Pursuant to the aforesaid direction issued by this Court, the petitioners have been permitted to clear the goods. However, according to the petitioners while clearing the goods, the petitioner company was required to pay demurrage and godown charges to the Central Warehousing Corporation.
In the light of the aforesaid facts, it is apparent that insofar as the first relief prayed for in the petition is concerned, the same no longer survives.
Mr. Paresh Dave, learned advocate appearing on behalf of the petitioners submitted that the Commissioner had confiscated the goods under the Bill of Entry No. 600739/00 and had levied penalty of Rs. 2 lakhs on the petitioners, however, the petitioners had finally succeeded in the proceedings before the Tribunal and that the Tribunal by its order dated 13th July, 2001 had allowed the appeal and set aside the order of the Commissioner. It was submitted that if the goods are confiscated on a wrong view taken by the Department, the petitioner company should not be saddled with the liability to pay detention charges. It was submitted that in the circumstances, the petitioner company is entitled to the issue of a detention certificate in its favour for the goods imported under the above referred Bill of Entry. In support of his submission, the learned advocate placed reliance upon a decision of the Karnataka High Court in the case of Tirupathi Plastics Vs. Assistant Collector of Customs, for the proposition that when the dispute between the importer and the customs authorities is resolved by a procedure known to law, and the Department succeeds in justifying its retention, then the burden of demurrage will necessarily fall upon the importer. If otherwise, the Department must necessarily take on the liability of meeting the demurrage charges. Reliance was also placed upon a decision of the Delhi High Court in the case of Shubham Enterprises and Another Vs. Collector of Customs and Others, , wherein the Court had held that since the petitioner therein had succeeded before the adjudicating authority and the show-cause notice had been dropped, it would be entitled to detention certificate for the period the adjudicating proceedings had been pending. The decision of the Andhra Pradesh High Court in the case of Sujana Steels Ltd. Vs. Commr. of Cus. and C. Ex. (Appeals), Hyderabad, , was cited for the proposition that when the importer was not to blame for the delay in removal of goods which had been illegally detained by the customs authority, it would be only fair and just that the customs authorities, who were responsible for the situation, to bear the burden for paying port charges.
Reliance was also placed upon a decision of the Madras High Court in the case of R.K. Enterprises v. Board of Trustees, Chennai Port Trust, 2010 (257) E.L.T. 67 (Mad.), wherein the Court, after considering various decisions of the Supreme Court as well as other High Courts, held that demurrage charges in respect of the petitioner''s goods which had been detained in the premises of the Board of Trustees, Chennai Port Trust at the instance of the second respondent -customs authority, the customs alone was liable to pay demurrage charges. It was submitted that in the light of the aforesaid decisions of various High Courts, it is apparent that once the confiscation is held to be illegal, the demurrage charges are to be borne by the Customs Department and as such, the petitioner company is entitled to reimbursement of the godown as well as demurrage charges paid by it on account of wrongful confiscation by the customs authorities.
On the other hand, Mr. A.Y. Kogje, learned standing counsel for the respondents, has opposed the petition by placing reliance on the averments made in the affidavit-in-reply filed on behalf of the respondents No. 2 and 3. It was submitted that there was a genuine doubt about the classification of goods and as such, the concerned Appraising Officer at Mumbai Customs House was contacted on telephone and it was noticed that one case of the same party of identical goods had been adjudicated by the Commissioner of Customs, Mumbai considering the subject goods as plastic scrap classified under Custom Tariff Heading 39.15 and redemption fine and penalty has been imposed. It was submitted that despite this fact the petitioners had at the ICD, Sabarmati classified the subject goods under Custom Tariff Heading 3907.40 and did not reveal the fact that the same goods had been adjudicated at Mumbai Customs House and Commissioner of Customs had ordered to classify the subject goods under Heading 39.15 which are restricted for import and redemption fine and penalty had been imposed by the Commissioner of Customs, Mumbai. It was submitted that in the light of the aforesaid facts it is evident that the action taken by the respondents was bona fide. Attention was invited to the Public Notice No. 38/2001 dated 22nd March, 2001 issued by the Commissioner of Customs (Import), Mumbai, and more particularly to clause (v) of paragraph 5 thereof, to submit that in cases where the parties prefer to go in appeal before the appellate authority on live Bill of Entry without clearing goods on payment of redemption fine, they are required to pay demurrage or detention charges etc. as the liability has arisen due to their preference for filing appeal on live Bill of Entry. It was submitted that in the light of the said circular, the petitioner company is liable to bear the detention charges as it had preferred to go in appeal against a live Bill of Entry and as such, is not entitled to the issue of a detention certificate. It was accordingly submitted that the petition is devoid of any merit and as such the petitioners are not entitled to any of the reliefs claimed in the petition.
In rejoinder, Mr. Paresh Dave, learned advocate for the petitioners submitted that in the present case, the respondents had ordered confiscation of imported goods and the petitioner Company was given an option to pay redemption fine of rupees sixteen lakhs for the goods valued at Rs. 15,93,943/-and, therefore, the petitioner Company could not have paid such a disproportionate amount as redemption fine in any case, more so when the petitioner Company had succeeded in the previous round of litigation in proving that the goods in question were not plastic scrap requiring any import licence. It was accordingly submitted that the stand of the Department that the petitioner Company has to bear the burden of detention charges, ground rent etc. for the intervening period even if the petitioner Company had succeeded in proving that the action of the respondents was illegal is unjustified. It was further submitted that the public notice dated 22nd March, 20Q1 issued by the Commissioner of Customs (Import), Mumbai insofar as it stipulated therein that the importer has to pay demurrage /detention charges etc. when they have preferred appeal on live Bill of Entry without clearing goods on payment of redemption fine and penalty is illegal and invalid. According to the learned advocate, the statutory right of an importer for filing appeal against an illegal order of any customs authority cannot be whittled down by thus issuing a public notice which is squarely contrary to the settled legal position in this regard. Inviting attention to the aforesaid public notice, it was submitted that paragraph 5 thereof, lays down a procedure which is required to be followed by the Department to keep a check on unnecessary detention of goods. It was further submitted that though the respondents rely upon clause (v) of paragraph 5 of the Public Notice, the procedure as laid down in the preceding clauses, viz., (i) to (iv) have not been followed by the Department. It was submitted that in any case, reliance placed upon clause (v) of paragraph 5 of the said section is misplaced inasmuch as in the light of the law laid down by various High Courts in this regard, the said condition is invalid and illegal.
From the facts and contentions noted hereinabove, it is apparent that the only issue which arises for consideration is as to whether the petitioners are entitled to the relief prayed for vide paragraph 13(B) of the petition. It is an undisputed position that the petitioner company had succeeded before the Tribunal in its challenge to the order made by the Commissioner of Customs whereby he had ordered confiscation of the subject goods and had also imposed penalty. The Tribunal vide its order dated 13th July, 2001, has set aside the order of the Commissioner of Customs, Gujarat, Ahmedabad. It is also an accepted position that the said order of the Tribunal has not been carried any further by the respondents. In the circumstances, the order dated 13th July, 2001 of the Tribunal has attained finality. Thus, vide the order passed by the Tribunal, the order of confiscation of the goods covered under the Bill of Entry No. 600739/00 dated 23rd October, 2000 as well as penalty imposed by the Commissioner has been set aside.
As noted hereinabove, different High Courts, viz., the High Courts of Madras, Karnataka, Delhi and Andhra Pradesh have held that when the dispute between the importer and the customs authority is resolved by a procedure known to law, if the Department succeeds in justifying its relation, then the burden of payment of demurrage will necessarily fall on the importer. If it is otherwise, the Department must necessarily take on the liability of meeting the demurrage charges of the approved custodian. To hold otherwise would be unjust to a person who has met with success In his litigation with the Department. The Andhra Pradesh High Court in the case of Sujana Steels Ltd. v. Commissioner of Customs and Central Excise (Appeals), Hyderabad (supra) has placed reliance upon the decision of the Supreme Court in the case of Padam Kumar Agarwalla v. The Additional Collector of Customs, Calcutta, AIR 1972 S.C. 542 = 2004 (177) E.L.T. 18 (S.C.), wherein the Court had, while quashing the order of confiscation passed by the Customs authorities opined that there would be no difficulty in directing release of the goods had the same been in 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 had to pay the port charges before the goods could be removed and that 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 of paying port charges. Thus, the view taken by the High Courts in the decisions cited hereinabove are in consonance with the decision of the Supreme Court in the case of Padam Kumar Agarwalla v. The Additional Collector of Customs, Calcutta (supra). This court is in full agreement with the view taken by the High Courts in the decisions cited hereinabove, and is accordingly of the view that since the petitioners have succeeded before the Tribunal and the confiscation as ordered by the Commissioner of Customs has been set aside, the Department must take on the liability of meeting the demurrage charges of the custodian. The petitioner company would, therefore, be entitled to reimbursement of the warehousing charges paid by it on account of wrongful confiscation by the customs authorities. As observed in the aforesaid decisions, to hold otherwise would be unjust to the petitioners who have met with success in their litigations with the Department.
In the light of the aforesaid discussion, the petition must succeed and is accordingly allowed. However, in the light of the fact that under the interim order dated 5th September, 2001, whereby the petitioners have been permitted to clear the goods, the petitioners have accordingly cleared the goods upon payment of warehousing charges to the custodian, that is, the Central Warehousing Corporation as is apparent from the averments made in the affidavit-in-reply filed by the respondents wherein it has been stated that the petitioners had paid warehousing charges amounting to Rs. 93,622/- to the Central Warehousing Corporation before taking delivery of the subject goods on 12th September, 2001. In the circumstances, issue of a detention certificate may not serve any purpose. The relief prayed for in the petition is therefore, required to be moulded accordingly. In the aforesaid premises, instead of issuing a detention certificate, the Department shall be liable to bear the warehousing charges amounting to Rs, 93,622/- which has been paid by the petitioners and as such, the petitioners would be entitled to reimbursement of the same. Accordingly, the respondent No. 3 is directed to reimburse the amount of Rs. 93,622/- paid by the petitioners to the Central Warehousing Corporation as stated by the respondents in paragraph 16 of their affidavit-in-reply dated 22nd September, 2001 within a period of four weeks from the date of receipt of a copy of this order. Rule is made absolute accordingly with no order as to costs.