SHUBHAM ENTERPRISES v. COLLECTOR OF CUSTOMS — 1995 DIGILAW 440 (DEL)

D. P. Wadhwa ( 1 ) THE petitioner, an importer, has filed this petitionunder Article 226 of the Constitution seeking a writ, order or direction requiring therespondents to produce its records relating to order dated 16/06/1994 of theadditional Collector of Customs, New Delhi, whereby he dropped the show causenotice dated 16 February, 1993 issued to the petitioner earlier under the provisionsof the Customs Act, 1962. The show cause notice was issued to the petitionerrequiring him to show cause as to why FOB and CIF value of the goods as declaredin the Bill of Entry No. 240554 dated 7 August, 1992 for components and parts ofphotocopier machines be not enhanced and duty charged accordingly and why thegoods be not confiscated under Section 111 (m) of the Customs Act, 1962. Thepetitioner also seeks a writ of mandamus or any other appropriate writ, order ordirection requiring the respondents to permit the clearance of the aforesaid goodsto the petitioner without payment of any demurrage charges to the third respondent, the International Airport Authority of India (IAAI ). A prayer is also sought,in the alternative, that respondents 1 and 2 be also directed to issue detentioncertificate for the period from 6 August, 1992 till date as adjudication proceedingshad been dropped. ( 2 ) WE issued notice to show cause as to why rule nisi be not issued in thematter and at that time we recorded the submission of the Counsel for the petitionerthat ough the show cause notice had been dropped the department had filed anappeal under the Customs Act which was pending before the Collector of Customs (Appeals), New Delhi, but the Appellate Authority had not granted any stay andthat there was no reason why the goods should not have been released. The basiccontention, however, was that the goods should not only have been released butreleased without payment of any demurrage charges to the third respondent. ( 3 ) IN its answer to show cause notice, the third respondent opposed the prayerthat it should not charge any demurrage charges. The petitioner pleaded that sincethe goods had been detained by the Customs Authorities and after the adjudicationproceedings had been dropped it was apparent that detention was not legal andwould be termed as without any authority . ( 3 ) IN its answer to show cause notice, the third respondent opposed the prayerthat it should not charge any demurrage charges. The petitioner pleaded that sincethe goods had been detained by the Customs Authorities and after the adjudicationproceedings had been dropped it was apparent that detention was not legal andwould be termed as without any authority . ( 4 ) THE claim of the third respondent should, however, not hold us longbecause in the meanwhile in view of the judgment of the Supreme Court ininternational Airports Authority of India, etc. etc. v. Mis. Grand Slam international and Others, etc. etc, JT 1995 (2) S. C. 452=58 (1995) DLT 530 (SC), which hasbeen delivered by majority (2:1), the third respondent would be entitled to claimdemurrage charges as per its regulations [international Airport Authority (Storageand Preservation of Goods) Regulations, 1980, framed under Section 37 of theinternational Airport Authority Act, 1971] irrespective of the fact whether detention of the goods during the pendency of the adjudication proceedings under thecustoms Act was valid or not. In this case the Court examined various judgmentsgiven under the Major Port Trusts Act and observed that the provisions of theseacts were same as that of the International Airports Authority Act for the purposeof claiming demurrage. S. P. Bharucha, J. , who was in majority, said as under:- "the purpose of the Customs Act on the one hand and the Major Port Trustsact and the International Airports Authority Act on the other hand aredifferent. The former deals with the collection of Customs duties on importedgoods. The latter deals with the maintenance of seaports and airports, thefacilities to be provided threat and the charges to be recovered therefor. Animporter must land the imported goods at a sea-port or airport. He can clearthem only after completion of Customs formalities. For this purpose, the seaports and airports are approved and provide storage facilities and Customsofficers are accommodated therein to facilitate clearance. For the occupationby the imported goods of space in the sea-port or airport, the Board or theauthority which is its proprietor is entitled to charge the importer. That untilcustoms clearance the Board or the Authority may not permit the importerto remove his goods from its premises does not imply that it may not chargethe importer for the space his goods have occupied until their clearance. That untilcustoms clearance the Board or the Authority may not permit the importerto remove his goods from its premises does not imply that it may not chargethe importer for the space his goods have occupied until their clearance. "the prayer of the petitioner that the third respondent be directed not to charge anydemurrage charges must, therefore, fail. ( 5 ) THE question that still remains to be decided is if at all the petitioner isentitled to grant of detention certificate by the customs authorities for it to claimrebate in demurrage from the third respondent as per its rules. The Supreme Courtin the case of Grand Slam International has said that where the rules of the thirdrespondent provide for grant of relief from demurrage charges in case of detentioncertificate being granted by the customs authorities, the third respondent should beheard. In the present case, the petitioner has made the third respondent a party tothese proceedings for the purpose of claiming relief from demurrage charges, butit has been deprived of the grant of detention certificate by the customs authoritieson the plea that appeal of the department is pending before the Appellate Authorityagainst the order of the Additional Collector of Customs dropping the show causenotice issued to the petitioner. The imported goods have been detained since theday of their import till this date. ( 6 ) IN answer to show cause notice issued, the customs authorities have alsofiled their answer and this is by Mr. N. Venketesh, Assistant Collector of Customs (Imports), Air Cargo Unit, IGI Airport, New Delhi. He gives the grounds forissuing show cause notice and said that the Customs Act, 1962, provides for seizureof the goods under Section 110 and confiscation thereof under Section 11 l (m) of theact. He says that against the order of the Additional Collector of Customs dated 16june 1994 dropping the proceedings against the petitioner an appeal had been filedunder Section 128 of the Act and is pending before the Collector of Customs (Appeals ). He says that against the order of the Additional Collector of Customs dated 16june 1994 dropping the proceedings against the petitioner an appeal had been filedunder Section 128 of the Act and is pending before the Collector of Customs (Appeals ). He further states that question of payment of demurrage charges maybe taken up by the petitioner separately with the third respondent who is legalcutodian of the imported goods and that if the goods are finally allowed to becleared without payment of any penalty or additional duty after the order passedby the Collector of Customs (Appeals), the Collector of Customs, New Delhi, mightissue a detention certificate for the period spent in adjudication proceedings andthat the demurrage charges in that case may be waived by the third respondent. ( 7 ) THE petitioner is certainly aggrieved because it might take long time by thecollector of Customs (Appeals) to decide the matter inasmuch as, as we have seenabove, the Bill of Entry was filed as far back on 7 August 1992. If no relief is grantedthe demurrage charges would be mounting day by day, and it says that a stage willcome where demurrage charges would be much more than even the cost of thegoods. The customs authorities have not sought any stay of the order of theadditionalCollector of Customs dated 16 June, 1994 and, perhaps, there is noprovision for stay of that order. Nevertheless, a question arises, how long thepetitioner should wait particularly when he has succeeded before the first adjudicating authority. Could the customs authorities sit over the order of the firstadjudicating authority till the matter is kept hanging in appeal? We must not forgetthere could be a second appeal as well before the CEGAT if the customs authoritiesfailed before the first Appellate Authority. ( 8 ) WE required the customs authorities to tell us under what rules andregulations detention certificate is issued. Again an affidavit has been filed by Mr. K. L. Meena, Assistant Collector of Customs (Imports ). He said imported goodscould not be released since the customs department had filed an appeal in the officeof the Collector of Customs (Appeals ). He said by way of interim order dated 8march 1995 the Collector of Customs (Appeals) had already ordered that the goodsbe released after drawing of representative samples by the department and that,therefore, the department was ready to release the goods after drawing therepresentative samples. He said by way of interim order dated 8march 1995 the Collector of Customs (Appeals) had already ordered that the goodsbe released after drawing of representative samples by the department and that,therefore, the department was ready to release the goods after drawing therepresentative samples. It is then stated that since the petitioner had not beenexonerated fully by the Appellate Authority it could not claim immunity fromdemurrage charges and other detention charges which are payable to the thirdrespondent. It is submitted that the detention certificate can only be issued by thecollector of Customs if and when the importer is fully exonerated by the Appellateauthority, and that if an order is issued by the Collector of Customs (Appeals) infavour of the petitioner (without any warning or penalty against him) that thecollector of Customs will issue a detention certificate in favour of the petitioner,and that this detention certificate will form the basis of waiving the demurragecharges to the extent permissible by the third respondent as per its regulations. Weare told that there are no rules and regulations under which detention certificate isissued by the customs authorities. However, the fact remains that detentioncertificate is issued when the goods are detained pending adjudication and that thefact of issue of detention certificate is noticed by the Supreme Court in the aforesaidjudgment in Mis. Grand Slam International. We has also been shown the form inwhich the detention certificate is issued. It is, therefore, an administrative orderand has legal sanction behind it. A Single Judge of this Court in B. C. Mody Exportpvt. Ltd. v. Union of India, 1988 (36) E. L. T. 475 (Del), was of the view that detentioncertificate could be issued by the customs authorities if the goods had been wronglyconfiscated and not released to the petitioner on account of import licence formalities. In that case the Court directed issuance of detention certificate to the petitioner. Ltd. v. Union of India, 1988 (36) E. L. T. 475 (Del), was of the view that detentioncertificate could be issued by the customs authorities if the goods had been wronglyconfiscated and not released to the petitioner on account of import licence formalities. In that case the Court directed issuance of detention certificate to the petitioner. A Full Bench of the Madras High Court in National Industries v. Assistantcollector of Customs, Madras, 1980 E. L. T. 128 (Mad), said that the right to detainthe goods under Section 45 of the Customs Act and right to conduct the necessarytest and examination of goods without undue delay under Section 17 imposes acorresponding duty on the customs authorities to issue a detention certificate ifthere is undue delay on behalf of the customs authorities provided the delay is notattributable to any fault or negligence on the part of the importer. It was stated thatthe customs authorities were under a public duty to issue detention certificate inthe circumstances contemplated under Rule 13 (a) and (b) of the Scale of Rates fixedby the Port Trust. A Single Judge of the Kamataka High Court in Equipment Salescorporation v. Asstt. Collector of Customs, 1989 (43) E. L. T. 256 (Kar.), was of theview that where there was a direction issued by the Appellate Tribunal to releasethe goods on executing a personal bond or where the importer had succeededbefore the Appellate Tribunal in relation to the detained goods, it follows as a consequence that the importers were entitled to a detention certificate so that theymight get the goods released without payment of demurrage charges. The Courtalso said that the mere fact that an appeal had been filed against the Tribunal orderand was pending before the Supreme Court was of no consequence. The Courtnoted that there were no rules or regulations under which detention certificatecould be issued by the department and that it was by virtue of the decisions of thecourts that such detention certificates were being issued by the customs and otherauthorities. The Courtnoted that there were no rules or regulations under which detention certificatecould be issued by the department and that it was by virtue of the decisions of thecourts that such detention certificates were being issued by the customs and otherauthorities. We were also referred to a short order of the Supreme Court incollector of Customs v. Krishna Sales Pvt. Ltd. , 1989 (41) E. L. T. 374 (S. C.), whichis as under:- "having heard learned Counsel for the Collector of Customs, Bombay, andm/s. Krishna Sales Pvt. Ltd. , we direct that the application made by the latterfor a detention certificate should not be rejected on the ground that the appealis pending in this Court against order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi. "in the present case before us, since the petitioner has succeeded before theadjudicating authority and the show cause notice has been dropped it wouldbeentitled to detention certificate for the period the adjudication proceedings hadbeen pending. The order of the Additional Collector of Customs is dated 16 June,1994 and there are no interim orders from the Collector of Customs (Appeal)staying the operation of that order. That being the position, the petitioner willnormally be entitled to grant of detention certificate. The fact, however, remainsthat an appeal is pending. If the petitioner is granted detention certificate he willclaim relief in demurrage charges from the third respondent to which he will notbe entitled to in case the appeal filed by the customs authorities is allowed. The brieforder of the Supreme Court reproduced above is not helpful and does not lay anylaw for this Court to follow. In the circumstances of the present case, we direct thathe appeal pending before the Collector of Customs (Appeals) be decided within aperiod of three weeks. In case it is not done or appeal is rejected the petitionerwould be entitled to the grant of detention certificate as per prescribed procedure. ( 9 ) IN the result the writ petition stands partly allowed and we direct therespondents to issue a detention certificate to the petitioner in the prescribed form thin 3 weeks from today. There will, however, be no order as to costs.