M/S Summit Enterprise vs. Principal Commissioner/ Commissioner Of Customs
Original PDF →Facts
The petitioner, M/s. Summit Enterprise, imported two consignments of "Dry Dates" vide Bills of Entry Nos. 7520217 and 7555484, filed on February 16, 2022, and February 18, 2022, respectively, at Mundra SEZ, Gujarat. The goods were detained by Customs authorities without a detention memo. The petitioner claims the goods were cleared for import, and Customs duty was self-assessed and paid. However, the goods remained detained, leading to substantial container detention charges demanded by the shipping lines (Respondents 3 and 4). The petitioner sought a waiver of these charges and release of the goods, which are perishable. The Customs authorities had issued a No Objection for clearance and directed the shipping lines not to charge detention for the period of investigation, but the shipping lines refused to waive the charges.
Held
The Court held that the order passed by the Customs Authority dated March 25, 2022, directing the waiver of detention/demurrage charges under Regulation 10(1)(l) of the SCMTR, is binding upon the shipping lines (Respondents 3 to 6). The Court noted that Respondent No. 3 had not challenged this order before any forum. Therefore, the Court directed Respondents 3 to 6 to release the goods under their custody, which are not under Customs detention, by implementing the order dated March 25, 2022, for the waiver of demurrage charges. This exercise was to be completed within two weeks of receiving the order. The Court clarified that if Respondent No. 3 wished to challenge the Customs Authority's waiver order, this order would not impede them, but the Court expressed no opinion on any such future proceedings. The Court did not delve into the merits of the initial detention of the goods.
Key Issues
1. Whether the detention of the imported goods by the Customs authorities was legal and justified under the Customs Act, 1962, and relevant regulations, particularly concerning the absence of a formal detention memo and the subsequent issuance of a No Objection for clearance? 2. Whether the shipping lines (Respondents 3 and 4) are bound by the Customs Authority's order dated March 25, 2022, directing the waiver of container detention charges, as per Regulation 10(1)(l) of the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMTR)? Petitioner's Arguments: The petitioner argued that the goods were illegally detained without proper procedure. They contended that the Customs authorities had directed the shipping lines to waive detention charges as per Regulation 10(1)(l) of the SCMTR, yet the shipping lines were demanding substantial charges, preventing the release of perishable goods. They relied on the Customs Authority's order dated March 25, 2022. Revenue/State's Arguments: The Customs Authorities (Respondents 1 and 2) submitted that they had issued the order on March 25, 2022, directing the shipping lines not to charge detention and had summoned the shipping lines for non-compliance. Respondent No. 3's Arguments: Respondent No. 3 argued that the waiver of detention/demurrage charges as per the Customs Authority's order dated March 25, 2022, was contrary to the SCMTR Regulations. However, they admitted that this order had not been challenged.
Sections Cited
Section 110, Regulation 6(1)(l), Regulation 10(1)(l), Sea Cargo Manifest and Transhipment Regulations 2018, Handling of Cargo in Customs Area Regulation 2009
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Cause title — parties, addresses and appearances
ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
Heard learned advocate Mr.Saurabh Kapoor with learned advocate Mr.Prateek S. Bhatia for the petitioner, learned advocate Mr.Nikunt K. Raval for the respondent Nos.1 and 2 and learned advocate Mr.S.K.Mathur with learned advocate Mr.Vicky B. Mehta for the respondent No.3
By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs : “(A) Your Lordships may be pleased to issue a writ of certiorari or Mandamus or writ in the nature of Certiorari or Mandamus or or any other appropriate Writ, Order or Direction, directing the Respondents to clear the goods C/SCA/8499/2022 ORDER DATED: 06/07/2022 comprising of “Dry Dates” imported vide Bills of Entries Nos.7520217 Dated 16.02.2022 and 7555484 Dated 18.02.2022 and hand over the physical possession of the goods to the Petitioner; (B) Your Lordships may be pleased to issue a Writ of Certiorari or Writ in the nature of Certiorari or any other appropriate Writ, order or direction to the Respondent no.1 to initiate action against Respondent No.3&4 Int ms of Sea Cargo Manifest Regulation 2018; (C) Your Lordships may be pleased to Issue a writ of mandamus or writ in the nature of Mandamus or any other appropriate Writ, Order or Direction to the Respondent no.1 to issue Detention Memos in terms of Regulation 6 (1) (I) of the Handling of Cargo in Customs Area Regulation 2009 directing the Respondent No.5 to grant waiver of the Ground Rent to the Petitioner. (D)Pending admission, hearing and final disposal of this petition, Your Lordships may be pleased to stay the auction of imported goods belonging to the Petitioner and direct the Respondents to effect physical delivery of the goods upon furnishing of Bond or any other condition, since the imported goods are subject to limited shelf life and deteriorating for each day passing; (E) An ex-parte ad interim relief in terms of prayer (B) above may be granted; and (F) Grant such other and further relief(s) as may be deemed fit in the interest of justice and equity.”
Brief facts of the case are as under :
The petitioner is a proprietory Firm of M/s. Summit Kumar and engaged in the business of import and trading of food items, having its office and Godown at Mumbai. The petitioner is engaged in the import and trading of “Dry Dates” falling under the chapter heading 08041030 of Custom Tariff Act, 1975 attracting Customs Duty/IGST @20% approx. and IGST of 12% respectively. The aforesaid goods are freely importable as per the Indian Tariff Code (ITC) HS. C/SCA/8499/2022 ORDER DATED: 06/07/2022
It is the case of the petitioner that during the course of business it imported two consignment of “Dry Dates” from UAE and filed the Bills of Entry Nos.7520217 dated 16.02.2022 and 7555484 dated 18.02.2022 at the port of Mundra SEZ, Mundra, Gujarat. The said goods were detained by the respondent No.2 without executing any detention memo, which are still lying uncleared as the same has been illegally detained by the respondents.
For the purpose of import of Dry Dates, the same were accompanied with the important Documents namely Invoice, Packing List and Bill of Lading issued by the Foreign Supplier wherein, the description, quantity and value of the goods are being mentioned.
It is the case of the petitioner that for the purpose of clearance of “Food Items”, whenever any goods namely Food Items are being imported, the same are required to be accompanied with the Phytosanitary Certificate and Fumigation issued by the Exporting Country, certifying the imported food items have been fumigated.
The petitioner filed the Bills of Entries on the basis of the documents supplied by the foreign supplier and the Customs duty payable was self assessed by the petitioner. It is the case of the petitioner that the petitioner, at the time of filing of the Bill of Entry it could not pay the Customs Duty since the goods were detained by the Customs. C/SCA/8499/2022 ORDER DATED: 06/07/2022 However, the Custom Duty as self assessed was levied and assessment was completed by the Respondents.
Despite the fact that the goods were examined by the Customs Officers, the same were ordered to be detained for further investigation. It is the case of the petitioner that the imported goods were detained without passing any order of detention or without issuance of any seizure memo in terms of Section 110 of the Customs Act, 1962, which is the only enabling Section to detain the goods imported by the petitioner.
Upon detention of goods by the Respondent Nos.1 and 2, the said respondents vide letter dated 08.03.2022 directed the Respondent Nos.3 and 4 to submit the copies of the Container Movement, details of the Shipper as well as the load port documents.
It is the case of the petitioner that on 21.03.2022, the respondent No.2, vide letter issued No Objection for the purpose of clearance of goods, since nothing amiss was found against the petitioner and thereafter, vide letter addressed to the Custodian i.e. Manager Saurashtra CFS, Mundra directed the said Custodian not to charge Ground Rent Charges for the period of detention.
Since the goods were subject to demurrage Container charges, the petitioner requested for issuance of waiver certificate in terms of Regulation 6(1)(l) of the Handling of Cargo in Customs Area C/SCA/8499/2022 ORDER DATED: 06/07/2022 Regulation, 2009 as well as Sea Cargo Manifest Regulation, 2018 vide letters dated 26.03.2022 and 01.04.2022.
It is the case of the petitioner that despite the fact that the goods were illegally detained by the respondent No.1, and there being nothing amiss the respondent after lapse of more than one month had issued No Objection for clearance of goods. It is the case of the petitioner that further no intimation for de stuffing was issued by the Respondent Nos.1 and 2 to the petitioner and now the Respondent Nos.3 and 4, who are the Shipping Lines, are demanding Container Detention Charges amounting to Rs.19,21,795/- as on 23.03.2022 and Rs.16,52,744 as on 23.03.2022 respectively.
Since the goods were already detained for more than one month and the free days as provided by the respondent No.4 were restricted to only 14 days from the date of filing of the Bills of Entries, the petitioner having requested the respondent Nos.1 and 2 to issue Detention Memos in terms of Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulation, 2009 as well as Regulation 10 of the Sea Cargo Manifest Regulation, 2018. The respondent No.2 vide letter dated 25.03.2022 have issued Detention Memo under Sea Cargo Manifest Regulations, 2018, wherein it has been directed that the Shipping Lines shall not charge Container Demmurge Charges for the period of Detention. C/SCA/8499/2022 ORDER DATED: 06/07/2022
It is the case of the petitioner that the petitioner through its agent vide Email dated 26.04.2022 requested the Respondent Nos.3 and 4 to grant waiver of Demurrage Charges and issued Delivery Order in order to lift the goods from Customs. However, the respondent No.4 is neither granting any waiver nor issuing necessary delivery charges and vide Email dated 28.03.2022 has declined the request of the petitioner to grant waiver.
The petitioner, vide letter dated 04.04.2022 requested the respondent No.1 to direct the respondent Nos.3 and 4 to grant waiver of demurrage charges and in the alternative, initiate action against the respondent.
On 09.04.2022, despite the fact that full customs duty has already been paid by the petitioner, the goods imported by the petitioner were found to be imported in accordance with law and further, the Detention Memos and Email have issued for auctioning of the Cargo.
It is the case of the petitioner that neither the respondent No.4 has waived the Demmurage Charges nor the respondent No.1 has initiated any action against the respondent No.4 for failure to grant waiver in terms of Detention Memo dated 25.03.2022 and/or initiate action against the respondent Nos.3 and 4 and therefore, being aggrieved, the petitioner has filed this petition with the aforesaid prayers. C/SCA/8499/2022 ORDER DATED: 06/07/2022
Learned advocate for the petitioner submitted that in spite of the fact that the Customs Authorities have directed the respondent Nos.5 and 6 for waiver of the detention/dammurage charges as per the Regulation 10(l) of the Sea Cargo Manifest and Transhipment Regulations, 2018 (for short ‘SCMTR’) for not demanding any detention and dammurage/storage charges for the container laden with the goods which were kept on hold for the purpose of investigation/verification and in spite of such order dated 25th March, 2022, the respondent Nos.3 to 6 are not ready to release the goods which are Dry Dates and perishable commodity.
It was submitted that respondents are demanding the container detention charges in spite of the order passed by the Customs Authorities for waiver of such charges under Regulation 10(1) of the SCMTR.
On the other hand, learned advocate Mr.Nikunt Raval for the Customs Authorities relied upon the affidavit-in-reply filed on behalf of the respondent Nos.1 and 2 and submitted that the Customs Authorities have already issued the order on 25th March, 2022 directing the respondent Nos.5 and 6 not to charge any detention charges under Regulation 10(1)(l) of the SCMTR and Customs Authorities have already summoned the the respondent Nos.3 and 4 for not following the SCMTR Regulations. C/SCA/8499/2022 ORDER DATED: 06/07/2022
Learned advocate Mr.S.K.Mathur for respondent No.3 relied upon the affidavit-in-reply filed on behalf of the respondent No.3 and submitted that the waiver of detention/dammurage charges as per the order dated 25th March, 2022 passed by the Customs Authorities is contrary to the Regulations of the SCMTR.
However, on a query made by the Court to the effect that whether the order dated 25th March, 2022 is challenged by the respondent No.3, it was submitted by the learned counsel for the respondent No.3 that such order is not challenged before any Forum.
In view of the above facts, the order passed by the Customs Authority dated 25th March, 2022 is binding upon the respondent Nos.3 to 6 and therefore, respondent Nos.3 to 6 are required to implement the order dated 25th March, 2022 passed by the Customs Authorities for waiver of the dammurage charges under Regulation 10(1)(l) of the SCMTR .
Hence, without going into further details and merits of the case, the respondent Nos.3 to 6 are hereby directed to release the goods which are under their custody and not under the detention of the Customs Authorities by implementing the order dated 25th March, 2022 for waiver of the dammurage charges under Regulation 10(1)(l) of the SCMTR. Such exercise shall be completed within two weeks from the date of receipt of this order. C/SCA/8499/2022 ORDER DATED: 06/07/2022
It is clarified that if the respondent No.3 is desirous to challenge the order of the Customs Authorities for waiver of the dammurage charges, this order shall not come in their way. However, we have not expressed any opinion in respect of any such proposed proceedings.
The petition is accordingly, disposed of. Notice is discharged. (N.V.ANJARIA, J) (BHARGAV D. KARIA, J) PALAK
Reproduced from the public record of the Gujarat High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.