Detention by Customs/DRI - No fault of importer - Demurrage and Shipping Line Charges to be paid by Customs/DRI - Cost Imposed
CUSTOMS Department, prodded by DRI did not allow imported goods to be cleared for nearly a year and the demurrage and shipping line charges ran into huge amounts exceeding not only the value of the imported goods, but the value of the container too. But who will pay these charges? This is not an isolated incidence. With routine regularity, hundreds of such cases occur across the country where hapless importers run from pillar to post to get their goods cleared from Customs and when the goods are finally allowed to be cleared, are stuck with huge demands of demurrage charges. It is not worth clearing the goods if they have to pay the demurrage.
In a landmark decision on Friday the Punjab and Haryana High Court came down heavily on the Customs and DRI and imposed costs recoverable from guilty officers.
The petitioner imported defective/secondary cold rolled steel between 4.12.2015 and 11.12.2015. The DRI thought it was hot rolled and heat was let loose. It was difficult to find somebody who could scientifically certify whether the goods were hot rolled or cold rolled. They finally found a chartered engineer who certified that the goods were cold rolled, but this was not in favour of Customs/DRI; What do they do when they get a report that is not favourable to them? They change the reporter and often without even telling the importer! So, they got it tested by another engineer who certified that the goods were hot rolled and not cold rolled. On the directions of the High Court, fresh samples were sent to Bokaro Steel Plant which certified that the material was cold rolled steel. After eight months, Customs allowed the clearance but then came the bomb of demurrage and Shipping Line charges. The case travelled to several stages - even the Supreme Court, before the Punjab and Haryana High Court gave its judgement last Friday.
The High Court observed:
1. It is clear that stand of the DRI and Customs had never been that the goods being imported by the petitioner were prohibited goods, which could not be imported. The only suspicion DRI had that the consignments contained material, which is hot rolled steel.
2. The net result of the action/in-action of the authorities is that parties have been involved in avoidable litigation resulting in levy of detention and demurrage charges, part of which may go to Shipping Line, which is a foreign company.
3. There is no justification available and could not possibly be as to why the officers of the department sent the samples for testing to a laboratory, which did not have requisite facility. The apparent object may be to harass in the garb of testing of samples.
4. The whole process of testing and examination, which could be over within a week or 10 days of landing of goods at the port, was not completed even in months together. The correspondence between DRI, Ludhiana and Customs went in circles. Even at the time of arguments, blame was sought to be put on each other, but the fact of the matter is that the petitioner cannot be said to be at fault for detention of goods. For that, DRI, Ludhiana and customs are to be blamed.
5. Though there was no good reason for detention of goods for so long, if seen in the light of the instructions issued by the department, but still if required, the petitioners should have been given opportunity to get it de-stuffed immediately, which was not given immediately.
6. It was the illegal action of customs and DRI, Ludhiana on account of which goods remained in their custody. De-stuffing was not offered and allowed immediately, as a result of which detention and demurrage charges have accumulated, which are much more than even the value of the goods.
7. The case in hand is not in isolation, where the conduct of the department in delaying the process of release of goods despite the same being not prohibited has been commented upon.
8. Things could have been taken in right perspective with positive attitude ensuring that neither the revenue suffers any loss nor the importer on account of merely delay of clearance of goods. The instructions issued by the department, time and again, were blatantly violated. The stand taken by the petitioner was vindicated when finally the goods were found to be cold rolled steel.
9. Once it is found that detention of goods was not on account of any fault of the petitioner, rather, found to be illegal action on the part of DRI and customs, the petitioner cannot be burdened for detention and demurrage charges and the liability has to be put on customs department.
The High Court ordered release of the goods, held that the Port Trust cannot charge demurrage and that the charges demanded by the Shipping Line shall be borne by DRI and/or customs and imposed a cost of Rs. 50,000 to be paid by the Department with liberty to recover from the guilty officer/official(s).
What did the Customs and DRI achieve in this case? No revenue! Huge costs. Irreparable damage to credibility and image causing a terrible loss of faith in the system and a possibility (remote, though) of costs being recovered from the officers whom the court has called guilty!
Tailspark: In this case, the Customs argued in the Court, "Customs is not responsible for any delay in the process as the consignments were put on hold on the directions of DRI and all actions were being taken as guided by them." The DRI argued, "DRI being not at fault and acted in discharge of official duty is not responsible for any delay whatsoever. It is a case in which the petitioner is responsible for the entire delay, which he caused for the reasons best known to him."