Legal principle

Rent/demurrage on seized imported goods stored in a customs area is waivable for the investigation period under Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009, but thereafter liability follows responsibility for delay — the importer bears storage charges while it does not pursue re-export, and the Customs Department must make good the CFS's losses where its failure to permit re-export prolongs storage.

Court decision

The Court upheld the impugned communication dated 23.12.2016, sustaining the partial waiver up to 19.10.2015, and held that demurrage for the period 19.10.2015 to 19.04.2016 (date of Order-in-Appeal C.Cus II No.373 & 374/2016) must be borne by the petitioner, which showed no inclination to re-export; losses of respondents 4 and 5 for the period thereafter must be borne by the Customs Department. It directed the official respondents and respondents 4 and 5 to permit re-export to the Chinese exporter, provided the gas remained in the containers and had not evaporated, subject to the petitioner paying demurrage for 19.10.2015 to 19.04.2016 with applicable interest, the amount to be calculated within thirty days and re-export to follow within fifteen days of payment; the partial waiver was conditional and would automatically stand vacated on non-compliance. The writ petitions were partly allowed / disposed with directions, with no costs.

Facts

M/s.Sherisha Technologies imported R22 Refrigerant Gas in four tanker containers under four Bills of Entry but declared it as Refrigerant Gas R410A; clearance was refused as the goods were restricted items imported without a valid licence. The goods, stored at the Container Freight Stations of respondents 4 and 5 (M/s.CWC and M/s.Sanco Trans), were seized by DRI and, by Order-in-Original No.43805/2016 dated 05.01.2016, held liable to confiscation under Sections 111(d), 111(l) and 111(m), with a Rs.10,00,000 redemption fine under Section 125 and penalties under Sections 112(a) and 114AA on the petitioner and its Managing Director; these were paid on 22.01.2016 and the appeal was dismissed on 19.04.2016. By communication dated 23.12.2016, the Deputy Commissioner granted waiver of rent/demurrage only for the investigation period 27.01.2015 to 19.10.2015 in pursuance of Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009. The petitioner filed writ petitions challenging the partial waiver and seeking a Detention Certificate and directions to enable re-export of the consignment to its originating country.

Key provisions

• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 45, Customs Act, 1962 — Restrictions on custody and removal of imported goods
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 157, Customs Act, 1962 — General power to make regulations
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 114(aa), Customs Act, 1962 — Penalty for attempt to export goods improperly etc
• Section 160(9), Customs Act, 1962 — Repeal and savings
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Regulation 6(1)(l), Handling of Cargo in Customs Areas Regulations, 2009 — Responsibilities of Customs Cargo Service provider
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 110(2), Customs Act, 1962 — Seizure of goods, documents and things
• Section 141(2), Customs Act, 1962 — Conveyances and goods in a customs area subject to control of officers of customs