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DRI not Liable to Pay Demurrage Charges to Compensate Burden of Importers: SC [Read Judgment]

A two-judge bench of the Supreme Court, in Mumbai Port Trust v. M/s Shri Lakshmi Steels and Ors. Etc. quashed the judgment passed by the Punjab and Haryana High Court wherein the High Court allowed the writ petition filed by the respondents-Assessees holding that the detention of the goods imported by the Assessees by the customs department, at the instance of the Directorate of Revenue Intelligence (DRI), was totally illegal.

While directing the department to release the goods on payment of customs duty by the importers, the Court noted that the Port Trust was not entitled to charge any demurrage since the Customs had issued detention certificate. It further directed the DRI to pay detention charges demanded by the shipping Line.

Respondents, Inder International and M/s Shri Lakshmi Steels are sister concerns dealing with import and trade of cold rolled coils and sheets.

A bench of Justices Madan B Lokur and Deepak Gupta was considering the question, “whether importer is liable to pay demurrage charges even when the imported goods have been detained by the Customs Authorities for no fault of importers was questioned.”

Relying on a plethora of decisions, the Top Court held that even if the importer is not at fault, it is the importer alone who is liable to pay the demurrage charges. “As far as detention charges are concerned, this is a private contract between the importer and the carrier, i.e. Shipping Line. The DRI/Customs authorities can be directed to pay the demurrage/detention charges only when it has been proved that its actions are absolutely mala fide that the officials of the DRI should be asked to compensate the importer for the extra burden which he has to bear.

The bench opined that the High Court itself did not go into this aspect in detail and observed “…This Court is not going into much detail on this aspect, but it can safely be opined that the action was not bonafide, if not strictly malafide…..”

The bench agrred with the contentions of the Revenue and noted that the department was justified in apprehending that the imported goods may have been mis-declared and, therefore, they must be thoroughly checked and verified.

Diving deeply into the facts of the case, the bench observed that the respondents refused to take the benefit of provisional assessment offered on two grounds :- (1) that all other importers were only asked to furnish PD Bonds whereas the importers herein were asked to furnish some bank guarantee also. (2) That the demurrage and detention charges had piled up. The stand of the DRI is that all other importers were importing sheets/scrap and not coil.

Importers even at this stage could have got the goods released only by furnishing the bank guarantee for Rs.18.71 lakhs and PD Bonds. All other importers took benefit of this offer and got their goods released but the respondent did not. If they had taken the benefit of this offer there could have a reduction of the demurrage as was done in the case of other importers,” the bench said.

Quashing the order of the High Court, the bench held that even though there may be some delay on the part of the DRI and the customs authorities, the respondent have also been guilty of delaying the matter and, therefore, they cannot claim that they are not liable to pay demurrage and detention charges.

Read the full text of the Judgment below.

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