Legal principle

Once a Port Trust takes charge of goods and gives a receipt, liability for storage/demurrage falls on the importer, owner, consignee or their agent, and neither the passing of title nor endorsement of the bill of lading is relevant to that liability.

Court decision

The Supreme Court held that the point of time at which title passes to the consignee is irrelevant to liability for Port charges; the steamer agent may be held liable only for Port dues for services up to the point the Port Trust takes charge of the goods and gives a receipt, after which the importer, owner, consignee or their agent is liable for demurrage/storage charges. A container to be returned is a mere receptacle, and the Port Trust must destuff every container entrusted to it and return it within as short a period as feasible, determined on the facts of each case. On the facts the Court declined to interfere with the High Court's result (no refund of ground rent at this late stage), but set aside the impugned judgment on one question of law: 'may' in Sections 61 and 62 of the MPT Act cannot be read as 'shall', subject to the caveat that the Port Trust, as 'State' under Article 12, must act reasonably and attempt to sell goods within a reasonable period of assuming custody. Whether the Port Trust as sub-bailee may recover from the original bailor (consignor) was left open.

Facts

Containers of 'synthetic woollen rags' (and, in one writ petition, VCD players) were imported in FCL containers at Cochin Port between August 1998 and March 1999. On inspection, Customs found that goods declared as old woollen rags were largely brand new clothes attracting heavy duty, penalty and other charges, so consignees stopped coming forward to clear the goods. Containers were destuffed to facilitate Customs examination, but the destuffed cargo occupied far more space, and the Port refused further destuffing citing inadequate storage space. The Port Trust levied 'ground rent' on the steamer agents/owners of the containers, but the Kerala High Court limited the steamer agents' liability to the 75 days fixed by TAMP Orders and directed recomputation and refund of the balance. The Port Trust appealed, and the Supreme Court answered five questions referred by a Division Bench.

Key provisions

• Section 48, Customs Act, 1962 — Procedure in case of goods not cleared, warehoused, or transhipped within thirty days after unloading
• Section 20(2), Customs Act, 1962 — Re-importation of goods
• Section 49, Customs Act, 1962 — Storage of imported goods in warehouse pending clearance or removal
• Section 29, Customs Act, 1962 — Arrival of vessels and aircrafts in India
• Rule 10(1)(a)(ii), Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Cost and services
• Section 18, Customs Act, 1962 — Provisional assessment of duty
• Section 30, Customs Act, 1962 — Delivery of arrival manifest or import manifest or import report
• Section 47, Customs Act, 1962 — Clearance of goods for home consumption
• Section 33, Customs Act, 1962 — Unloading and loading of goods at approved places only
• Section 150, Customs Act, 1962 — Procedure for sale of goods and application of sale proceeds
• Section 3(7), Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges
• Section 45, Customs Act, 1962 — Restrictions on custody and removal of imported goods