Without Seizure or Detention Orders by Customs, Demurrage Waiver Claim Cannot Be Entertained : Madras HC [Read Order]

The Madras High Court dismissed a petition seeking a waiver of demurrage and detention charges on imported goods that remained uncleared at the port observing that the same cannot be entertained when there are no orders on seizure or detention that were not issued by the customs department.

The petitioner had sought a direction to the Customs Department to issue a detention certificate, enabling the waiver of such charges levied by private terminal operators and the shipping line.

A consignment imported under a Bill of Lading dated January 27, 2023, was the subject of the case. Due to the cancellation of a connected project, the original importer was unable to accept delivery of the items. Modern Line-Export, the petitioner who stepped in, asked for authorization to re-export the shipment.

This request was initially rejected by the Customs Department, allegedly based on an inapplicable circular. The petitioner claimed that the delay and associated demurrage charges were a direct result of this wrongful refusal.

The High Court, in an earlier writ proceeding, had directed the Customs Department to reconsider the re-export request and held that the circular relied upon was not applicable to the petitioner’s case.

However, in the present matter, the Court clarified that the Customs Department had not passed any formal orders of seizure, detention, or confiscation of the goods, which is a necessary condition under law to justify issuance of a waiver certificate for demurrage or detention charges.

Justice Abdul Quddhose noted that without any formal finding of illegal seizure or detention by Customs, the petitioner cannot claim compensation or reimbursement from the department.

It also noted that the private entities (Apm Terminals and Hapag-Lloyd India Pvt. Ltd.), who charged the demurrage and detention fees, were not responsible for the Customs decision to initially reject re-export. Moreover, the party who originally failed to clear the goods the initial importer was not a respondent in the writ petition, weakening the petitioner’s legal footing.

Accordingly, the High Court held that there was no merit in the writ petition and dismissed it. It reiterated that waiver certificates for demurrage and detention can be granted only when a statutory seizure or confiscation order is subsequently found to be illegal or unjustified, a situation not present in this case.

The Court thus declined to intervene. Accordingly the petition was dismissed observing no merits.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates