Sonia Overseas (P) Ltd. vs Asst.Commr., Customs
2009 Latest Caselaw 591 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+              W.P.(C) 4029/1997

#       SONIA OVERSEAS (P) LTD. ..... Petitioner through
!                               Mr.Sanjay Singh, Adv.

                    versus

$       ASST.COMMR., CUSTOMS         ....Respondent through
^                                    None

%                         Date of Hearing : January 23, 2009

                          Date of Decision : February 19, 2009

        CORAM:
*       HON'BLE MR. JUSTICE VIKRAMAJIT SEN
        HON'BLE MR. JUSTICE RAJIV SHAKDHER
        1. Whether reporters of local papers may be
           allowed to see the Judgment?                        No
        2. To be referred to the Reporter or not?              Yes
        3. Whether the Judgment should be reported
           in the Digest?                                      Yes

VIKRAMAJIT SEN, J.

1. The present Petition invokes the writ jurisdiction of this

Court to direct the Respondents, viz., the Assistant

Commissioner, Customs and Deputy Director of Income-Tax to

pay compensation to the Petitioner for the cost incurred by it by

way of demurrage due to delay occasioned in the grant of a

Clearance Certificate. It is stated in the Writ Petition that the

Petitioner imported six consignments from Australia between

October, 1995 to January, 1996 on which Petitioner No.1 paid

the Custom Duty. Later, the Petitioners were informed by their

Clearing Agents that clearance of consignments had been

stopped by the Respondents who had referred the case to

Special Investigation Bureau for investigation as a

precautionary measure. The goods were eventually granted

clearance on 30.1.1996 by which time the Petitioner incurred a

total sum of Rupees 7,14,043/- on account of Detention and

Demurrage charges. It is this sum which is claimed by the

Petitioner from the Respondents.

2. The Supreme Court of India in International Airports

Authority of India -vs- Grand Slam International, (1995) 3 SCC

151 held as under:

66. From the above decisions of this Court it becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1961, would be entitled to charge demurrages for the imported goods in its custody and make the importer or consignee liable for the same even for periods during which he/it was unable to clear the goods from the customs area, due to fault on the part of the Customs Authorities or of other authorities who might have issued detention certificates owning such fault.

3. In a later judgment, the Supreme Court has held the

Customs Department liable for the illegal detention of the

imported goods, viz. Union of India -vs- Sanjeev Woolen Mills,

1998 (4) JT 124 where their Lordships appear to have whittled

down the liability of the importer to pay demurrage by holding

the Customs Authorities liable for the demurrage charges, on

the assumption that the goods had been detained illegally. The

Court observed thus:-

18. Looking to the totality of circumstances pertaining to the import of the consignments under the four Bills of Entry and the inordinate delay of about six years for their release, the High Court has passed the impugned orders directing the appellants to issue a detention certificate and bear the demurrage and container detention charges. They are obviously orders passed in the special circumstances of the present case, and particularly the conduct of the Customs authority in not releasing the goods even after the order of unconditional release dated 11-8-1995 passed by their own Chief Commissioner. The conduct of the Customs Officers concerned is also under investigation. We do not think that this is a case where any intervention at our hands is required. The apprehension of the appellants that this will constitute a precedent is not justified because it is clearly an order which is meant to do justice to the respondent looking to the totality of circumstances and the conduct of the appellants. Obviously, for any delay on the part of the respondent in taking delivery of the goods after 5-4-1997, the respondent will have to bear the consequences. For the period prior to 5-4-1997, however, the order of the High Court does not require any intervention from us. The appellants shall file a progress report relating to the departmental inquiry by 30-11-1998.

4. The dichotomy that had arisen because of the two

seemingly irreconcilable opinions has been explained in

Shipping Corporation of India Ltd. -vs- C.L. Jain Woolen Mills,

(2001) 5 SCC 345 where on the analysis of the two previous

judgments, their Lordships concluded thus-

8. ...we do not find any apparent inconsistency between the decisions of this Court in International Airports Authority of India -vs- Grand Slam International, (1995) 3 SCC 151 and that of Union of India -vs- Sanjeev Woolen Mills, 1998 (4) JT 124. In Union of India -vs- Sanjeev Woolen Mills, 1998 (4) JT 124 the imported goods were synthetic waste (soft quality), though the Customs Authorities detained the same, being of the opinion that they were prime fiber of higher value and not soft waste. On account of non- release, the imported goods incurred heavy demurrage charges but the Customs Authorities themselves gave an undertaking before the High Court that in the event the goods are found to be synthetic waste, then the Revenue itself would bear the entire demurrage and container charges. Further the Chief Commissioner of Customs, later had ordered unconditional release of the goods and yet the goods had not been released. It is under these circumstances and in view of the specific undertaking given by the Customs Authorities, this Court held that from the date of detention of the goods till the Customs Authorities intimated the importer, the importer would not be required to pay the demurrage charges. But in that case even subsequent to the orders

of the Customs Authorities on a suit being filed by one of the partners of the importer firm, an order of injunction was issued and, therefore it was held that for that period, the importer would be liable for paying the demurrage and container charges. The judgment of this Court in Union of India -vs- Sanjeev Woolen Mills, 1998 (4) JT 124 therefore, was in relation to the peculiar facts and circumstances of the case and the Court had clearly observed that the order in question is meant to do justice to the importer, looking to the totality of the circumstances and the conduct of the Customs Authorities. Thus, we see no inconsistency between the ratio in Union of India -vs- Sanjeev Woolen Mills, 1998 (4) JT 124 and the judgment of this Court in International Airports Authority of India -vs- Grand Slam International, (1995) 3 SCC 151. That apart, the judgment in International Airports Authority of India - vs- Grand Slam International, (1995) 3 SCC 151 was a three-Judge Bench judgment. In the case in hand, as has already been stated earlier, the earlier judgment of the Delhi High Court dated 9-9-1994 in CWP No. 1604 of 1991 has become final, which entitles the importer to get the goods released without payment of the detention and demurrage charges. In the contextual facts, notwithstanding the judgment of the High Court, the goods not having been released, the impugned order and direction dated 18-1-1999, cannot be held to be infirm in any manner. In the absence of any provision in the Customs Act, entitling the Customs Officer to prohibit the owner of the space, where the imported goods have been stored from levying the

demurrage charges, levy of demurrage charges for non- release of the goods is in accordance with the terms and conditions of the contract and as such would be a valid levy. The conclusion of the High Court to the effect that the detention of the goods by the Customs Authorities was illegal and such illegal detention prevented the importer from releasing the goods, the Customs Authorities would be bound to bear the demurrage charges in the absence of any provision in the Customs Act, absolving the Customs Authorities from that liability. Section 45(2)(b) of the Customs Act cannot be construed to have clothed the Customs Authorities with the necessary powers, so as to absolve them of the liability of paying the demurrage charges. In the aforesaid premises, we see no infirmity with the directions given by the Delhi High Court on 18-1-1999. The goods in question, having already been directed to be released, without the payment of the demurrage charges, the importer must have got the goods released. Having regard to the fact situation of the present case, it would be meet and proper for us to direct Shipping Corporation and Container Corporation, if an application is filed by the Customs Authorities to waive the demurrage charges. The appeal is disposed of accordingly.

5. Relying on these judgments, this Court in the case of Om

Petro Chemicals -vs- Union of India, 2002 III AD (Delhi) 268

explained the law in the following terms:-

23. Would that however mean that the petitioner must pay demurrage charges even though it is not at fault. Answer to the question must be rendered in negative. The decisions of the Apex Court therefore are authorities for the proposition in certain situation; the court may direct the customs authorities to bear the demurrage charges. In the instant case the customs authorities still insisted that the goods were illegally imported. It sought to justify its stand even before this Court. This Court is not only a court of law but also a court of equity. In a situation of this nature we are of the opinion that this court may find that in place of the importer or the consignee, the customs authorities should bear the charges. Once it is held that the petitioner herein has not committed any illegality in importing the goods in question, in our opinion, it cannot ordinarily be saddled with the liability of payment of demurrage. The petitioner in the fact situation of this case must be held to have been sinned against than sinning. In UOI v. Sanjeev Woollen Mills, 1998 (4) JT 124 the Apex Court in the fact situation obtaining therein held that demurrage may not be paid by the importer.‖

6. A consummate reading of these precedents thus reveals

that the Customs Department is not completely insulated from

any liability in instances of an illegal detention. In a case where

imported goods are detained to the financial detriment of the

importer, liability of the Customs Department will have to be

determined by looking at the facts and circumstances of each

case on merits.

7. As regards the immunity granted by the statute, it will be

noted that Section 155 of the Customs Act seeks to protect the

actions of the local authority from any legal prosecution or

proceedings in following words:-

155. Protection of action taken under the Act.- (1) No suit, prosecution or other legal proceeding shall lie against the Central Government or any officer of the Government or a local authority for anything which is done, or intended to be done in good faith, in pursuance of this Act or the rules or regulations. (2) No proceeding other than a suit shall be commenced against the Central Government or any officer of the Government or a local authority for anything purporting to be done in pursuance of this Act without giving the Central Government or such officer a month's previous notice in writing of the intended proceedings and of the cause thereof, or after the expiration of three months from the accrual of such cause.

Thus, no liability, civil or criminal, may be attracted so long as

the power that has been exercised by the Customs Authority is

in good faith and not in colourable exercise of power. Explaining

the concept of exercise of power in good faith their Lordships in

Express Newspaper (P) Ltd. -vs- Union of India, (1986) 1 SCC

133 held thus:-

18. The expression ―good faith‖ has not been defined in the Ceiling Act. The expression has several shades of meaning. In the popular sense, the phrase ―in good faith‖ simply means ―honestly, without fraud, collusion, or deceit; really, actually, without pretence and without intent to assist or act in furtherance of a fraudulent or otherwise unlawful scheme‖, (see Words and Phrases, Permanent Edn., Vol. 18-A, p. 91). Although the meaning of ―good faith‖ may vary in the context of different statutes, subjects and situations, honest intent free from taint of fraud or fraudulent design, is a constant element of its connotation. Even so, the quality and quantity of the honesty requisite for constituting ―good faith‖ is conditioned by the context and object of the statute in which this term is employed. It is a cardinal canon of construction that an expression which has no uniform, precisely fixed meaning, takes its colour, light and content from the context.

8. The Supreme Court in Asstt. Commr., Anti-Evasion

Commercial Taxes -vs- Amtek India Ltd., (2007) 11 SCC 407

also observed thus:-

9. Whether an act has been done in good faith would depend upon the factual scenario. In order to establish ―good faith‖, it has to be established that what has been imputed concerning the person claiming it to be so, is true.

10. ―Good faith‖ according to the definition in Section 3(22) of the General Clauses Act, 1897 means a thing,

which is in fact done honestly whether it is done negligently or not.

11. Anything done with due care and attention, which is not mala fide is presumed to have been done in ―good faith‖.

12. ―Good faith‖ is defined under Section 2(h) of the Limitation Act, as ― ‗good faith'--nothing shall be deemed to be done in good faith which is not done with due care and attention‖.

9. Further, in Union of India -vs- Ashutosh Kumar

Srivastava, (2002) 1 SCC 188 the Supreme Court has opined

that there is always a presumption in favour of the

Administration that its exercise of power shall be in good faith

and for public benefit. Therefore, the ―burden is on the

individual to produce sufficient material to suggest of the mala

fides of the authority concerned and it is not easy to discharge

the same‖. There is a presumption of bona fides in favour of the

Authority. The burden of proving mala fides is on the individual

alleging it. Indeed, it is a heavy burden which can be discharged

ordinarily by initiation of civil proceedings. The Petitioner in the

present case has nowhere set-out in his Petition that the

Customs Authority detained his consignment imported from

Australia without authority or in a mala fide manner or by

colourable exercise of its power. Rather, it is his own case that

―clearance of consignment was stopped by the respondents due

to reason that all cases were referred to Special Investigation

Bureau as a precautionary measure‖. It has been further stated

in the Petition that the said consignments were imported from

October, 1995 to January, 1996 and the Petitioners were

allowed to clear the goods on 30th January, 1996 after the

Respondents gave Clearance Certificate. Thus, even

unreasonable delay could not be attributed on the part of the

Customs Authority by the Petitioner.

10. In the light of the above observations, and the decisions of

the Supreme Court and this Court, the Petitioner has failed to

establish a case where this Court would be inclined to grant any

relief under the extraordinary powers vested under Article 226

of the Constitution of India.

11. We find no merit in the Petition and the same is dismissed.

                                           ( VIKRAMAJIT SEN )
                                                 JUDGE



February 19, 2009                          ( RAJIV SHAKDHER )
                                                 JUDGE