The National Industries and B.M. Anand vs The Assistant Collector of Customs, Appraising Department and Another

Ramanujam, J.—The Appellants herein imported steel plates under an import licence, dated 21st June, 1971 from Japan and United Kingdom. On importation of the goods, the necessary bills of entry were filed. But the goods were detained by the customs authorities for customs purposes and after some delay, the goods were allowed to be clearned by the Appellants. For the period during which the goods were detained by the customs authorities, the Petitioners sought the issue of detention certificates so as to enable them to claim the concessional rate of demurrage from the port trust authorities. The customs authorities gave detention certificates in respect of certain period; but refused to give such a detention certificate for other periods on the ground that the detention of the goods during that period was due to the fault of the Appellants'' clearing agent and that therefore the detention certificate could not be issued for that period. The Appellants thereafter moved this Court for the issue of a writ in the nature of mandamus directing the first Respondent, the Assistant Collector of Customs, to issue the detention certificate with respect of the consignment for the period for which the certificate was refused by the customs authorities, on the ground that the detention of the consignment during that period was not due to the default committed by the Appellants or their clearing agent. Though the said writ petition was admitted and rule nisi was issued, Koshal J., before whom the matter came up for final disposal, dismissed the same following a Division Bench decision of this Court in The Collector of Customs Vs. Mehta Paint Works and Another, , which had held that there is no statutory or other public duty cast on the customs authorities to issue a detention certificate. The decision of Koshal J., has been challenged in this writ appeal.

The Appellants even at the admission stage questioner the correctness of the Bench decision above referred to, and contended that the said decision requires a reconsideration. A Division Bench of this Court which admitted the writ appeal was Prima facie inclined to take the view that the Bench decision of this Court in The Collector of Customs Vs. Mehta Paint Works and Another, that there is no public or statutory duty cast on the customs authorities to issue the detention certificate, may require reconsideration. It is in that view that the writ appeal has been posted before us and the order of reference is as follows:

Koshal J., as a single Judge of this Court was naturally bound by a pronouncement made by a Division Bench of this Court consisting of Kailasam O.C.J., and Balasubrahmanyam J., in the case reported in The Collector of Customs Vs. Mehta Paint Works and Another, . We are prima facie of the view that this Division Bench decision requires reconsideration in public interest. Whilst, therefore, admitting this writ appeal we direct that this appeal be posted before a Full Bench.

Thus, the main question to be considered by us in this appeal is whether a mandamus could issue to the customs authorities to issue a detention certificate. When the consignment is detained for customs purposes and whether the customs authorities are under a legal duty to issue the detention certificate which can be enforced by a writ of mandamus.

The Appellants had imported certain consignments of steel plates under a licence granted to them. The consignments were detained for customs purposes for a certain period. For a portion of the period detention certificates were in fact issued and for the rest of the period, the said certificate was refused on the ground that the detention of the consignment during that period was due to the fault of the Appellants and their clearing agent. The claim of the customs authorities that the detention during the relevant period was due to the fault of the Appellants or their clearing agent has not been gone into by the learned single Judge, while dismissing the writ petition since the writ petition came to be dismissed on the short ground that there is no statutory or public duty cast on the customs authorities to issue the detention certificate and as such a writ of mandamus could not issue.

The question before us is whether the decision of the Division Bench stated supra, can be held as good law. In The Collector of Customs Vs. Mehta Paint Works and Another, , there was a licence for the import of pigment dye stuff and on the basis of the import licence, paper bags of powdered whiting were imported and the bill of entry was filed for clearing consignment. When the consignment was examined by the customs authorities, it was found that the goods imported are not the licenced items and therefore a show cause notice was issued to the importer as to why the goods imported should not be confiscated. The importer gave an explanation to the; show cause notice. The customs authorities were not satisfied with the explanation and referred the matter for the opinion of the Chemical Examiner. The examination of the goods involved some delay and ultimately an order of adjudication followed whereunder the import of the goods were held to be unauthorised and against the import trade regulation. However, taking note of certain extinuating circumstances, the goods were allowed to be cleared as a special case. But the port trust authorities called upon the importer to pay demurrage charges for the detention of the goods during the period between 10th January, 1957 and 12th April, 1967. The importer resisted the claim on the ground that the detention during that period was for customs purposes and that, therefore, the customs authorities are bound to issue a certificate which they have not done. But when the port trust authorities refused to allow clearance of the goods unless the demurrage is paid or a detention certificate is produced, the importer approached this Court for the issue of a writ in the nature of mandamus directing the authorities to issue the detention certificate so that he could claim the benefit of the concessional rate of demurrage charges. The question whether the importer was entitled to the issue of a writ in the nature of mandamus directing the customs authorities to issue a detention certificate came up for consideration ultimately before the Division Bench, and the Division Bench, after referring to the various provisions of the Customs Act and the Madras Port Trust Act, as also Chapter IV of the scale of rates framed u/s 42 of that Act and the terms of the public notice jointly published by the Port Trust authorities and the customs authorities, held that the customs authorities are not under any obligation to grant the detention certificate either in discharge of a statutory duty or in discharge of a public duty and that, therefore, no writ of mandamus could issue against the customs authorities for the grant of the detention certificate. It is this judgment of the Division Bench which formed the basis for the dismissal of the writ petition by Koshal J.

The reasoning of the Division Bench for holding that there is no statutory or public duty on the part of the customs authorities to issue a detention certificate is that the public notice jointly issued by the port trust authorities and the customs authorities proceeds on the basis that no statutory or public duty is cast on customs authorities to issue the detention certificate as it expressly says that the refusal to grant a detention certificate is not appealable under the Customs Act. The reasoning of the Division Bench is contained in the following extracts (at page 63):

Further, under Rules 13(a) and (b) the rates that are to be charged are prescribed by the port trust and concession is available on production of detention certificate by the customs authorities. As the public notice makes it clear, no statutory or other public duty is cast on the customs authorities to issue a. detention certificate, a detention certificate is given in order to confer an advantage on the consignee to clear his goods at a reduced rate of deumurrage charges. These rules are not enforceable under any statute and no public duty is cast on the customs authorities. As already pointed out, Rules 13(a) and (b) that are found in the scales of rates chargeable by the Port Trust, are in the nature of contract between the parties and cannot be enforced by the issue of a writ of mandamus. We do not see any basis for the issue of a writ of mandamus directing the customs authorities to issue a detention certificate. Even according to Rule 13(a) and (b), to which the customs authorities are not direct parties, the customs authorities need not issue a certificate unless the delay is not attributable to any fault or negligence on the part of the importer.

The further reasoning given by the Bench in support of its view that no public duty is cast on the customs authorities to issue a detention certificate is that the goods imported in that case are contraband goods and therefore there is no equity or any right on the part of the consignee to obtain a concession in the payment of demurrage charges as he has attempted to import illegally prohibited goods. The above additional reason given by the Division Bench may not apply to the facts of the present case where the goods imported have not been found to be contraband goods. We have to therefore see whether the reasoning given by the Division Bench that the Petitioner can, if at all, claim the right to get a detention certificate only under the provisions of the public notice and that public notice having specifically stated that the refusal to grant a detention certificate cannot be challenged under the provisions of the Customs Act, it should be taken that the customs authorities are not under a duty to issue the detention certificate, could be upheld.

On a due consideration of the relevant provisions of the Customs Act, and the Madras Port Trust Act as also Chapter IV of the scale of rates dealing with demurrage framed u/s 42 of that Act, we are clearly of the view that the importers'' right to get a detention certificate, if the goods are detained for customs purposes, flows from Section 17(1) of the Customs Act and not from the public notice jointly issued by the Port Trust and the customs authorities as assumed by the Division Bench. Section 45(1) of the Customs Act, 1962 provides that all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption. The customs authorities are enjoined not to permit such goods to be removed from the customs area or otherwise deal with except under and in accordance with the permission in writing of the proper officer. Section 45(1) requires that the importer shall presents bill of entry to the proper officer. Section 17(3) of the Act enables the proper officer to require the importer to produce such documents as are necessary for the due compliance of the import Control order and to assess the duty payable thereon. Section 17(1) requires that the examination and testing by the proper officer will be conducted without undue delay. Section 47 says that where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty that has been assessed thereon, the proper officer may make an order permitting clearance of the goods for home consumption. Thus a duty is cast on the customs authorities to examine and conduct the test required without undue delay. The right to detain the goods u/s 45 and the right to conduct the necessary test and examination of the goods without undue delay u/s 17 imposes a corresponding duty on the customs authorities to issue a detention certificate if there is undue delay on the part of the customs authorities. That the detention certificate has necessarily to be produced before the port trust authorities for grant of concessional rate of demurrage is clear from the rules framed by the port trust authorities u/s 42 of the Port Trust Act. Rules 13(a) and (b) of the rubs dealing with the scale of rates of demurrage charges specifically provides for payment of demurrage at a concessional rate, if the goods are detained by the customs authorities for customs purposes. Rule 13(a) specifically says that periods during which goods are detained by the Collector of Customs for examination under Sections 17(3) and (4) and for chemical test u/s 144 of the Customs Act, 1962 other than the ordinary process of appraisement and certificated by the Collector of Customs to be not attributable to any fault or negligence on the part of the importers, should be treated as a free period. Rule 13(b) says that where goods are detained by the Collector of Customs on account of Import Trade Control formalities, or for compliance of formalities prescribed under the Drugs Act and certified by the Collector of Customs to be not attributable to any fault or negligence on the part of importers, demurrage shall be recovered for that period at the rate of 30 per cent of the normal rates. Thus, Rule 13 provides that the importer need not pay demurrage of pay concessional rate of demurrage if a certificate is issued by the Collector of Customs that the goods were detained by the customs authorities and that the detention is not attributable to any fault or negligence on the part of the importer. The rule specifically contemplates the issuance of a certificate by the Collector of Customs for the purposes of enabling the importer to get the concession in the payment of demurrage. Such a right of the importer to get the concession in the payment of demurrage cannot be taken away by the customs authorities by refusing to give a detention certificate. As already stated, the right to detain the goods involves the corresponding obligation to issue a detention certificate, if the detention of the goods was not attributable to any fault or negligence on the part of the importer, so that the importer could have the benefit of concession and exemption in the payment of demurrage charges in relation to the goods detained. If the customs authorities who have been empowered to detain the goods are not bound to issue a detention certificate in cases where the detention was attributable to any fault or negligence on the part of the importer, it is possible that the power of detention could be used in an arbitrary manner. It is for this reason we are inclined to infer a corresponding duty on the part of the customs authorities to issue a detention certificate, if there is an undue delay in examining the goods and conducting the necessary tests and the delay is not attributable to any fault or negligence on the part of the importer. When a power is given by a statute, the power should be taken to impose a corresponding duty to exercise the power in a reasonable manner.

We are of the view that the terms of the public notice on which reliance has been placed by the Division Bench in The Collector of Customs Vs. Mehta Paint Works and Another, cannot be decisive on the question as to whether the customs authorities are under a duty to issue a detention certificate or not. Even assuming that the public notice is in any way relevant, the terms of the public notice appear to contemplate a duty on the part of the customs authorities to issue a detention certificate. It is true that paragraph 9 of the public notice states that detention certificates are not grantee under any of the provisions of the Customs Act, so that a refusal by an officer of customs for the grant thereof is not appealable under the Customs Act, though it is open to the party to make representation against any decision to the next higher authority. The above paragraph however, indicates that the grant or refusal of a detention certificate by the customs authority is a decision and the party affected can make his representation against such a decision to the next higher authority. It is no doubt true that the issue of a detention certificate is not under any of the provisions of the Customs Act and it is on that basis paragraph 9 say that, it is not a duty contemplated by the Customs Act and no appeal could be preferred against the refusal under the Customs Act. That merely states the obvious. If the issue of a detention certificate is not under the provisions of the Customs Act, then the refusal cannot be challenged by way of an appeal under the Customs Act. Though it is not a duty performed under the provisions of the Customs Act, still it is a duty imposed u/s 17(1) of the Customs Act read with the public notice issued jointly by the port trust and the customs authorities. As already stated, the customs authorities have issued detention certificates for certain periods, and it is not their case that they are not bound to issue detention certificate at all. Therefore, we are not inclined to agree with the view expressed in The Collector of Customs Vs. Mehta Paint Works and Another, that the customs authorities are not under a duty to issue detention certificates as there is no statutory duty cast on them. We are of the considered view that the customs authorities are under a public duty to issue a detention certificate in the circumstances contemplated under Rules 13(a) and (b) of the scale of rates fixed by the Port Trust, and that the above decision holding contra is not good law.

In this case, he customs authorities have refused to issue detention certificate for the reason that the detention of the good; was attributable to the fault of the Appellants and their clearing agent. This assertion has not been gone into by the learned single Judge as the dismissal of the writ petition was on the ground that the customs authorities are under no statutory or public duty to issue the detention certificate. Now that the basis of the dismissal of the writ petition has been found to be not tenable, the writ appeal is allowed and the order of dismissal of the writ petition is set aside and the writ petition is restored to the file. The learned single Judge will dispose of the same on merits. There will be no order as to costs in this appeal.