Legal principle

Where non-prohibited imported goods are detained inordinately by DRI/Customs and the importer's declaration is ultimately vindicated, the importer cannot be burdened with detention or demurrage charges, which must be borne by DRI/Customs, and no Port Trust demurrage is payable once customs has issued a detention certificate under Regulation 6(l) of the 2009 Regulations.

Court decision

The writ petitions were allowed: since customs duty had already been paid, the respondents were directed to release the goods; the Port Trust cannot charge demurrage in view of Regulation 6(l) of the 2009 Regulations as customs had issued the detention certificate; the detention charges demanded by the Shipping Line are to be borne by DRI and/or customs (who may seek their waiver or reduction), with nothing beyond the agreed freight falling on the importer; and the petitioners were awarded costs of Rs. 50,000 each payable by the department, with liberty to recover from the guilty officer(s). The court also opined the department's action was 'not bonafide, if not strictly mala fide.'

Facts

The petitioner imported defective/secondary cold rolled sheets/coils from South Korea under a preferential certificate of origin entitling duty-free import under the Korea-India Comprehensive Partnership Agreement, declaring them as cold rolled in the bill of entry dated 4.12.2015 filed at Mumbai. On specific intelligence that Ludhiana-based importers were bringing in goods to escape the rigors of notification No. 02/2015 Cus (SG) dated 14.9.2015, DRI asked Customs to hold the consignments, examine them 100% with a Chartered Engineer and, if they offended the notification, deal with them under Section 110 of the Customs Act, 1962. The goods were never alleged to be prohibited, yet they were not released despite repeated requests for provisional release. Testing by the customs-appointed Chartered Engineer (Rajendra S. Tambi) via Perfect Laboratory Services reported the material to be cold rolled steel conforming to IS:513, but further samples were still sent to TCR Engineering Services, which first opined the structure appeared hot rolled before a revised report followed.

Key provisions

• Section 45, Customs Act, 1962 — Restrictions on custody and removal of imported goods
• Section 49, Customs Act, 1962 — Storage of imported goods in warehouse pending clearance or removal
• Section 110, Customs Act, 1962 — Seizure of goods, documents and things
• Section 141, Customs Act, 1962 — Conveyances and goods in a customs area subject to control of officers of customs
• Section 8, Customs Act, 1962 — Power to approve landing places and specify limits of customs area
• Section 2, Customs Act, 1962 — Definitions