Bombay HC Slams Customs - Port Blame Game, Orders 9% Interest Refund as Importer Never Received Goods [Read Order]
The High Court held that duty cannot be retained when goods are lost, destroyed, short-landed, or not cleared for home consumption. In such cases, the importer’s right to refund becomes absolute
The Bombay High Court noting that ‘Innocent importer has suffered and continues to suffer due to administrative inaction and inter-departmental discord’, has ordered the Customs Department to refund ₹35.37 lakh along with 9% interest, after the importer was denied delivery of its entire PVC resin consignment and left stranded between Customs and Mumbai Port Authority for nearly three years.
The Division Bench of Justices M.S. Sonak and Advait Sethna noted that the importer-petitioner M/s. Ajay Industrial Corporation Ltd had fully paid customs duty on 100 MT of polymer raw material, yet never received a single bag, while both authorities continued to shift blame instead of processing the refund.
The Court found that independent joint surveys conducted in June and August 2022, followed by the Port Authority’s Short Landing Certificate dated 25 April 2023, established that the consignment was never delivered to the importer.
Despite this, Customs refused to refund the duty, insisting on a “closure letter” for the Bill of Entry, ironically, a document that only Customs itself could issue, and one it refused to generate. The Court described this stance as a clear attempt to “take advantage of its own wrong,” leaving the importer with no remedy except litigation.
The Customs argued that the refund could not be granted until the shipping line amended the Import General Manifest (IGM), while the Port Authority maintained that the cargo never arrived at the port.
This “blame game,” the Court observed, showed an unreasonable and unlawful approach, especially when the importer had no role in the dispute. Even the police FIR filed by the importer yielded no clarity on whether the loss was due to pilferage or short landing, yet the Court held that this uncertainty could not prejudice the importer, who had neither received the goods nor secured a refund.
Applying Sections 13, 23, 27, and 27A of the Customs Act, the High Court held that duty cannot be retained when goods are lost, destroyed, short-landed, or not cleared for home consumption. In such cases, the importer’s right to refund becomes absolute.
The judges added that the duty paid was not pursuant to a “valid demand,” but merely in anticipation of clearance, hence it partook the character of a deposit and could not lawfully be withheld.
The Court, therefore directed the Assistant Commissioner of Customs (Refund) to refund the full duty amount with 9% interest from the date of payment, within four weeks, and file a compliance report by 8 January 2026.
It also clarified that Customs and the Port Authority remain free to settle their inter-se liability separately, but the importer cannot be made to suffer due to their administrative discord.
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