No Detention Charges For Importers If DRI And Customs Illegally Detain Goods Says Punjab & Haryana HC [Read Judgment]

The Punjab and Haryana High Court has held that a company that imports goods to the country is not liable to pay detention and demurrage charges at the ports if it is proved that such a detention is no fault of the importer.

In a significant judgement, the division bench of Justices Rajesh Badal and Harinder Singh Sidhu have held that if the Directorate of Revenue Intelligence(DRI) illegally detain certain goods at the ports, they are liable to pay charges for storage at the shipping line. The bench has also imposed costs on the DRI and customs of Rs.50,000 each.

The court was hearing a petition filed by a company that had imported “defective/secondary cold rolled sheets/coils” from South Korea. According to the petitioner company, a Preferential Certificate of origin which entitled them to a duty-free import in terms of Korea-India Comprehensive Partnership agreement was also obtained and annexed with the concerned documents. However, the goods imported were not released.

The DRI wrote to Commissioner of Customs(Import) in Mumbai to detain the import consignment on December 14, 2015. The letter also mentioned that no future consignments of the petitioner company be released without an NOC from DRI.

Observing the discrepancies in the procedures followed by officials the bench said - “Once it is found that detention of goods for inordinate period was not on account of any fault on the part of the petitioner, he is not liable to be burdened with that cost. It is only the DRI and customs, who should bear the cost, demanded by the Shipping Line. It was so opined in Sanjeev Woollen Mills' case (supra). The DRI or customs may get those charges waived off or reduced from the Shipping Line, however, whatever is payable in addition to the freight agreed between the importer and the Shipping Line shall be borne by DRI or customs.”

“The Port Trust cannot charge any demurrage in view of Regulation 6(l) of the 2009 Regulations, customs having issued the detention certificate. The detention charges demanded by the Shipping Line shall be borne by DRI and/or customs. However, they shall be entitled to get the same waived off or reduce from the Shipping Line. The petitioners shall be entitled to cost of 50,000 each to be paid by the department, however, with liberty to recover from the guilty officers.”

Court concluded the order with an observation on the arbitrary delay caused by the custom and DRI officials due to a lack of proper infrastructure - “Our country imports goods worth about $ 33 billion annually and in large number of cases, the issue arises regarding alleged mis-declaration of the goods with reference to the declaration made in the bills of entry, but as is seen, the infrastructure in the form of laboratories or otherwise available with the department is lacking. That needs to be upgraded immediately to avoid any delay in clearance of goods or giving undue benefit to the unscrupulous importers on account of delay in the process.”

Read the Judgment here.