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Judgments of Supreme Court of India and High Courts

Shree Shyam Enterprises vs Union Of India & Ors on 20 December, 2019

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 28th November, 2019
Pronounced on: 20th December, 2019

+ W.P.(C) 7577/2019 C.M. No.47877/2019

M/S GLOBAL IMPEX THROUGH ITS PARTNER
….. Petitioner
Through: Mr. Priydarshi Manish, Ms. Anjali Jha
Manish, Ms. Astha Chetan
Ms. Jasmeet Kaur, Advocates.

Versus

MANAGER, CELEBI IMPORT SHED AND ANR.
….. Respondents
Through: Mr. Rakesh Tiku, Sr. Advocate with
Ms. Sarul Jain, Advocate for R-1.
Mr. Amit Bansal, SSC with Mr. Aman
Rewaria, Advocate for R-2/Customs.

+ W.P.(C) 11264/2019 C.M. No.46424/2019
SHREE SHYAM ENTERPRISES ….. Petitioner
Through: Ms. Anjali Jha Manish,
Mr. Priyadarshi Manish Ms. Astha
Chetan, Advocates.

Versus

UNION OF INDIA ORS ….. Respondents
Through: Thakur Virender Pratap Singh Charak,
Ms. Shubhra Parashar, Mr.Pushpender
Singh Charak, Mr. Shreyans Jain
Mr. Satender Tiwari, Advocates for
R-1/UOI.
Ms. Sonu Bhatnagar, Sr. SC with
Mr. Vaibhav Joshi Ms. Anushree

WP (C) 7577/2019 other connected matters Page 1 of 88
Narain, Advoctes for R-2, 3 4.
Mr. Rakesh Tiku, Sr. Advocate with
Ms. Sarul Jain, Advocate for R-5.

+ W.P.(C) 8659/2017
SURENDER KUMAR JAIN THROUGH ITS
PROPRIETOR ….. Petitioner
Through: Ms. Anjali Gupta, Advocate.

Versus

THE MANAGER, CELEBI, IMPORT SHED,
AIR CARGO COMPLEX, NEW DELHI ANR. … Respondents
Through: Mr. Rakesh Tiku, Sr. Advocate with
Ms. Sarul Jain, Advocate for R-1.

+ W.P.(C) 8668/2017
BISHT INTERNATIONAL THROUGH ITS PROPRIETOR
….. Petitioner
Through: Ms. Anjali Gupta, Advocate.

Versus

THE MANAGER, CELEBI, IMPORT SHED, AIR CARGO
COMPLEX, NEW DELHI ANR. ….. Respondents
Through: Mr. Rakesh Tiku, Sr. Advocate with
Ms. Sarul Jain, Advocate for R-1.

+ W.P.(C) 8734/2017
ROOP SINGH ENTERPRISES THROUGH
ITS PROPRIETOR ….. Petitioner
Through: Ms. Anjali Gupta, Advocate.

Versus

WP (C) 7577/2019 other connected matters Page 2 of 88
THE MANAGER, CELEBI, IMPORT SHED, AIR CARGO
COMPLEX, NEW DELHI ANR. ….. Respondents
Through: Mr. Rakesh Tiku, Sr. Advocate
with Ms. Sarul Jain, Advocate for
R-1.

CORAM:
HON’BLE THE CHIEF JUSTICE
HON’BLE MR. JUSTICE C.HARI SHANKAR

% JUDGMENT

C.HARI SHANKAR, J.

1. We are, in these writ petitions, required to decide whether
Respondent No.1 (hereinafter referred to as ―CELEBI‖) could charge
demurrage, on the goods imported by the petitioners, which have been
stored in the premises of CELEBI. The petitioners assert that no
demurrage could have been charged by CELEBI and rely, for the
purpose, on Regulation 6(1)(l) of the Handling of Cargo in Customs
Areas Regulations, 2009 (hereinafter referred to as ―the Handling of
Cargo Regulations‖). The dispute pivots, essentially, on the interpretation
of the said clause.

Applicable legal provisions

2. At the very outset, therefore, we may set out in clause (l) of
Regulation 6(1) of the 2009 Regulations, thus:

―6. Responsibilities of Customs Cargo Service provider. –

(1) The Customs Cargo Service provider shall –

WP (C) 7577/2019 other connected matters Page 3 of 88
*****

(l) Subject to any other law for the time being

in force, shall not charge any rent or demurrage on
the goods seized or detained or confiscated by the
Superintendent of Customs or Appraiser or
Inspector of Customs or Preventive officer or
examining officer, as the case may be;‖

3. ―Customs Cargo Services provider‖ is defined, in clause (b) of
Regulation 2 of the 2009 Regulations, in the following terms:

―(b) ―Customs Cargo Services provider‖ means any person
responsible for receipt, storage, delivery, dispatch or otherwise
handling of imported goods and export goods and includes a
custodian as referred to in section 45 of the Act and persons as
referred to in sub- section (2) of section 141 of the said Act;‖

4. ―Act‖ is defined, in clause (a) of Regulation 2(1) of the 2009
Regulations, as meaning the Customs Act, 1962 (hereinafter referred to
as ―the Customs Act‖). Section 45 of the Customs Act, which deals with
restrictions on custody and removal of imported goods, reads thus:

45. Restrictions on custody and removal of imported
goods. —

(1) Save as otherwise provided in any law for the time
being in force, all imported goods unloaded in a customs
area shall remain in the custody of such person as may be
approved by the Principal Commissioner of Customs or
Commissioner of Customs until they are cleared for home
consumption or are warehoused or are transhipped in
accordance with the provisions of Chapter VIII.

(2) The person having custody of any imported goods
in a customs area, whether under the provisions of sub-
section (1) or under any law for the time being in force, –

(a) shall keep a record of such goods and send a
copy thereof to the proper officer;

WP (C) 7577/2019 other connected matters Page 4 of 88

(b) shall not permit such goods to be removed
from the customs area or otherwise dealt
with, except under and in accordance with
the permission in writing of the proper
officer or in such manner as may be
prescribed.

(3) Notwithstanding anything contained in any law for
the time being in force, if any imported goods are pilferred
after unloading thereof in a customs area while in the
custody of a person referred to in sub-section (1), that
person shall be liable to pay duty on such goods at the rate
prevailing on the date of delivery of an arrival manifest or
import manifest or, as the case may be, an import report to
the proper officer under section 30 for the arrival of the
conveyance in which the said goods were carried.‖

5. Section 141(2) of the Customs Act reads thus:

―141. Conveyances and goods in a Customs areas subject to
control of officers of Customs. –

*****

(2) The imported or export goods may be received,
stored, delivered, dispatched or otherwise handled in a
Customs area in such manner as may be prescribed and
the responsibilities of persons engaged in the aforesaid
activities shall be such as may be prescribed.‖

Facts

6. The facts, in all these writ petitions, are similar. For ease of
reference, the facts, in WP (C) 7577/2019 may be cited, by way of
example.

7. The petitioner, Global Impex, filed a Bill of Entry, dated 3 rd May,
2019, for import of unbranded ready-made garments. A request for first

WP (C) 7577/2019 other connected matters Page 5 of 88
check of the consignment was also made. Consequent thereupon, the
consignment was, purportedly, subjected to 100% examination.
However, on 6th May, 2019, the consignment was put on hold, for further
examination, by the Commissioner of Customs (Preventive) (hereinafter
referred to as ―the Commissioner‖).

8. On subsequent examination of the consignment, it was felt that
there had been misdeclaration of quantity. Pursuant thereto, vide
Panchnama dated 9th May, 2019, the Commissioner seized the
consignment and handed it over, to CELEBI for safe custody, vide letter
dated 10th May, 2019. The said letter stated, inter alia, thus:

―The said consignment will remain in your custody till the
completion of investigation. As investigation will take some
time, there shall not be any demurrage charges on the above said
consignment is from the date of holding of these Bills of Entry i.e.
06.05.2019 till the finalisation of the investigation as informed by
the competent authority of Customs.‖
(Emphasis supplied)

9. In response, CELEBI wrote, to the Deputy Commissioner of
Customs (Preventive), stating that charging of demurrage was subject to
the Airport Authority of India (Storage and Processing of Cargo, Courier
and Express Goods and Postal Mails) Regulations, 2003, or any other law
for the time being in force. Accordingly, it was opined that, if the
investigation was likely to take time, the petitioner would be well advised
to seek warehousing of the goods, under Section 49 of the Customs Act.
The petitioner, accordingly, represented, to the Commissioner, on 14 th
May, 2019, requesting that the aforesaid goods be permitted to be
warehoused, so that further demurrage charges could be avoided.
Apparently, there is no response, to the said communication.

WP (C) 7577/2019 other connected matters Page 6 of 88

10. In the interregnum, on the request of the petitioner, who waived
issuance of Show Cause Notice, Order-in-Original, dated 17th May, 2019,
was passed by the Joint Commissioner of Customs (Preventive)
(hereinafter referred to as ―the Joint Commissioner‖), holding that the
goods suffered from misdeclaration of description as well as quantity.
The assessable value of ₹ 11,74,219/-, declared by the importer, was
rejected and the value of the goods was redetermined as ₹ 22,49,206/-.
Duty demand of ₹ 4,80,403/-, allegedly evaded, by the petitioner,
thereby, was, accordingly, confirmed, and recovery, thereof, directed,
under Section 28 of the Customs Act. The goods were also confiscated,
under clauses (l) and (m) of Section 111 of the Customs Act, with option,
to the petitioner, to redeem the goods on payment of redemption fine of ₹
50,000/-, under Section 125(1) thereof. Additionally, penalty of ₹
4,80,403/- was imposed, on the petitioner, under Section 114A of the
Customs Act.

11. The writ petition avers that the petitioner is in the process of
appealing against the aforesaid Order-in-Original, dated 17th May, 2019,
passed by the Joint Commissioner, to the Commissioner of Customs
(Appeals).

12. In order to ensure release of the seized goods, the petitioner
deposited the entire amount of duty, penalty and redemption fine, as
confirmed by the aforesaid Order-in-Original of the Joint Commissioner,
on 21st May, 2019. Thereupon, the Deputy Commissioner of Customs
(Preventive) (hereinafter referred to as ―the Deputy Commissioner

WP (C) 7577/2019 other connected matters Page 7 of 88
(Preventive)‖), vide letter of the same date, i.e. 21st May, 2019, wrote to
the Deputy Commissioner of Customs, Import Shed, informing him that
the entire amount of duty, penalty and redemption fine stood deposited
by the petitioner and that, therefore, the Customs was lifting its hold on
the imported goods. Accordingly, it was stated, the Commissioner
(Preventive) had no objection for release of the goods imported by the
petitioner.

13. The petitioner, thereupon, approached CELEBI, seeking release of
the aforesaid goods, imported by it. CELEBI, however, refused to release
the goods, till the petitioner paid the demurrage that had accumulated on
the goods till then.

14. The petitioner assails the said demand, as raised by CELEBI.
Reliance has been placed, by the petitioner, on the letter, dated 10 th May,
2019 supra, from the Deputy Commissioner (Preventive) to CELEBI, as
well as on clause (l) of Regulation 6(1) of the 2009 Regulations. It is
emphasised, in this regard, that clause (q) of Regulation 6(1) obliges the
custodian to abide by all the provisions of the Customs Act, as well as the
Rules, Regulations, notifications and orders issued thereunder. In view of
this mandate, the petitioner seeks to contend that CELEBI could not have
disobeyed the direction, contained in the letter, dated 10 th May, 2019, of
the Deputy Commissioner (Preventive), not to charge demurrage from
the petitioner. The petitioner has also drawn attention to the fact that the
quantum of demurrage is so excessive, as to render the release, of the
goods, practically unviable.

WP (C) 7577/2019 other connected matters Page 8 of 88

Analysis

Trustees of the Port of Madras v. Aminchand Pyarelal1, Indian Goods
Supplying Co.2 and Board of Trustees of the Port of Bombay v. Jai
Hind Oil Mills Co.3

15. Resisting the temptation to commence the narrative with the oft-
cited decision in International Airports Authority v. Grand Slam
International of India4, we deem it appropriate to refer, at the outset, to
the aforesaid three decisions, which are of significance.

16. In Trustees of the Port of Madras v. Aminchand Pyarelal1, black
plain sheets were imported, by the respondent Aminchand Pyarelal
(referred to, hereinafter, as ―Aminchand‖) on 10th April, 1963. The goods
were detained, by the Customs authorities, as the specifications, in the
import licence held by Aminchand, whereunder the goods were imported,
did not tally with the description of the imported goods. Consequent to
issuance of a show cause notice, an adjudication order, dated 12th
November, 1963, was passed, confiscating the goods, under Section
111(a) of the Customs Act. Aminchand appealed to the Central Board of
Excise and Customs (being the competent appellate authority, at that
point of time and referred to, hereinafter, as ―the CBEC‖). The appeal
was allowed, by the CBEC, vide order dated 27th July, 1964.

17. Consequent thereupon, Aminchand requested the Customs
authorities to issue a certificate, for revision of the transit dues which had
1
(1976) 3 SCC 167
2
(1977) 2 SCC 649
3
1987 (30) ELT 633 (SC)
4
1995 (77) ELT 753 (SC)

WP (C) 7577/2019 other connected matters Page 9 of 88
accumulated during the period of detention of the goods. A certificate
was, accordingly, issued by the Customs authorities, certifying that the
goods had been detained by them, from 24th April, 1963 till 21st August,
1964, for examination and that the detention was not owing to any fault
or negligence on the part of Aminchand. Acting on the basis of the said
certificate, the Board of Trustees of the Madras Port (the appellant before
the Supreme Court and referred to, hereinafter, as ―the Board of
Trustees‖) waived the demurrage, otherwise payable on the goods, during
the period of the detention. Aminchand, accordingly, cleared the
consignment, on 25th and 27th August, 1964, on payment of harbour dues,
cranage charges and demurrage, for the period not covered by the
certificate.

18. The Board of Trustees, subsequently wrote, on 27th January, 1965,
to the Customs authorities, opining that the detention certificate had been
issued, by the Customs authorities erroneously, and requiring that the
matter be reconsidered.

19. Vide letter dated 12th April, 1965, the Customs authorities admitted
that they had mistakenly issued the detention certificate, as the goods had
been detained to examine the issue of compliance with import trade
control formalities, and not for examination and assessment.

20. In this scenario, the Board of Trustees contended that, owing to the
negligence, on the part of the Customs authorities in issuing the detention
certificate, demurrage, of ₹ 1963.60, alone, had been charged from
Aminchand, whereas it was actually liable to pay demurrage of ₹

WP (C) 7577/2019 other connected matters Page 10 of 88
3,20,951.64. Asserting thus, the Board of Trustees directed the Customs
authorities to remit the balance demurrage, due to it. The Customs
authorities, however, denied any liability, contending that the Union of
India could not be held liable for negligent, or even tortious, acts,
committed by its officers in good faith.

21. The Board of Trustees, thereupon, sued Aminchand, as well as the
Customs authorities, for recovery of the differential amount of
demurrage, stated to be due to it.

22. It is clear, therefore, that, in this case, the Board of Trustees was
not denying its liability to waive demurrage charges, consequent to the
issuance of detention certificate by the Customs authorities. The case, as
set up by the Board of Trustees, was that the detention certificate had
been issued in an erroneous and negligent fashion and that, therefore, it
was entitled to be paid the differential amount of demurrage.

23. Aminchand disputed its liability to pay demurrage, on the ground
that it could not be penalised for the delay, on the part of the Customs
authorities, in clearing its goods, or for the issuance of an erroneous
detention certificate by the said authorities. Similarly, liability was also
denied by the Union of India as well as by the Customs authorities.

24. The High Court held that, as the goods had been detained by the
Customs authorities for no fault of Aminchand, levy of demurrage was
unreasonable. As such, the Board of Trustees was held not to be entitled
to recover any differential demurrage, from any of the respondents.

WP (C) 7577/2019 other connected matters Page 11 of 88

25. Of the issues, framed by the Supreme Court – before whom the
matter was carried in appeal – as arising for its consideration, was the
issue of whether Aminchand was liable to pay differential demurrage, as
claimed by the Board of Trustees. In fact, before the Supreme Court, the
Board of Trustees gave up its claim, against the Union of India, as well as
against the Customs authorities, and asserted its claim, only qua
Aminchand.

26. The affairs of the Madras Port Trust were governed by the Madras
Port Trust Act, 1905. The Supreme Court noted that Section 42 of the
Madras Port Trust Act empowered the Board of Trustees to frame the
scale of rates, and the statement of the conditions under which the
services, stipulated thereunder, would be performed by the Board of
Trustees. Section 50 of the Madras Port Trusts Act required the rates, in
respect of goods to be landed, to be paid immediately on landing of the
goods, and the rates, in respect of goods to be removed from the premises
of the Port Trust, to be paid before the goods were removed. Section 51
conferred a lien, on the Board of Trustees, on the goods, till payment was
made thereon, and empowered the Board of Trustees to seize and detain
the goods, till that time. This lien was, by Section 52 of the Madras Port
Trusts Act, accorded priority over all other liens and claims, except for
general average and the shipowners’ lien for freight and other charges.
Section 56 empowered the Board of Trustees to, in the event of non-
payment of its dues, sell the goods by public auction.

WP (C) 7577/2019 other connected matters Page 12 of 88

27. Section 109 of the Madras Port Trusts Act provided that nothing,
in the said Act, would affect any power vested in the Chief Officer of
Customs under any law for the time being in force. The Supreme Court
observed that Section 49 of the Customs Act provided that, where, in the
case of imported goods, the Assistant Collector of Customs was satisfied
that the goods could not be cleared within a reasonable time, the goods
could, pending clearance, be permitted to be stored in the public
warehouse or in private warehouse, if facilities for depositing public
warehouse were not available.

28. Having thus adverted to the relevant provisions, the Supreme Court
went on to hold, unequivocally, in para 22 of the report, that services,
provided by the Board of Trustees, were subject to payment, at the rates
stipulated in the Act, and that those who desired to avail of the services
of the Board of Trustees were liable to pay for the said services, at the
prescribed rates, and to comply with the requisite conditions, stipulated in
that regard. It was observed that, ―in such matters, where services are
offered by a public authority on payment of a price, the conditions
governing the offer and acceptance of services are not in the nature of the
by-laws‖, but reflected, or represented ―an agreement between the
parties, one offering its services at prescribed rates and the other
accepting the services at those rates.‖ In the circumstances, it was held
that ―if the services (were) not paid for, the Board (could) exercise its
statutory lien on the goods under Section 55 and enforce that lien under
Section 56 of the Act; or else, the Board may take recourse to the
alternative remedy of the suit provided for by Section 62.‖ It was
observed that the Board was also required, statutorily, to undertake

WP (C) 7577/2019 other connected matters Page 13 of 88
certain obligations, and that ―the rates which the Board levies are a
consolidated charge for the various services it renders and the liability
which it is compelled by statute to undertake.‖

29. Significantly, the Supreme Court also justified the high rates of
demurrage, charged by custodians, to whose custody imported goods
were consigned, as necessary, ―to make it unprofitable for importers to
use the port premises as a warehouse‖, in view of the prevalent situation
of rampant congestion at ports, which affected free movement of ships
and of essential goods. It was observed that ―ships, like wagons, had to
be kept moving and that can happen only if there is pressure on the
importer to remove the goods from the Board’s premises with the utmost
expedition.‖

30. Though the Board of Trustees had, before the Supreme Court,
given up its claim against the Union of India and the Customs authorities,
the Supreme Court, nevertheless, went on, in para 33 of the report, to
opine, in that regard, thus:

―The appellants’ claim against Respondents 2 and 3 has no
foundation in law and was rightly not pressed by the appellants’
counsel. Respondent 3 is the Collector of Customs who,
obviously, cannot be made personally liable to pay the
demurrage. Respondent 2 is the Union of India against whom
and Respondent 3, the appellant’s claim is said to reside partly in
the region of “contract or quasi-contract”. We are unable to
spell out any such basis on which the claim of the appellants
could rest. The issuance of an incorrect ―detention certificate‖ by
the third respondent cannot also help the appellants to fasten the
liability for demurrage on Respondents 2 and 3 on the ground of
their negligence. As observed by the High Court, all the relevant
facts were before the appellants who could, with reasonable care,
have avoided the consequences flowing from the certificate
issued by the third respondent.‖

WP (C) 7577/2019 other connected matters Page 14 of 88
(Emphasis supplied)

31. Despite thus holding that the Board of Trustees was entitled to the
demurrage claimed by it, the Supreme Court, nevertheless, went on to
discountenance the claim of the Board of Trustees, as against
Aminchand, on the ground that the goods were imported, by Aminchand,
only on behalf of the State Trading Corporation of India (hereinafter
referred to as ―STC‖), in whose name Import Licence had been issued. It
was noted that STC had issued an authorisation in favour of Aminchand,
which was liable to deliver the consignment to the nominees of the STC,
and was only entitled to a commission, for the work done by it in
pursuance of the said authorisation. Aminchand, it was observed, had
neither title nor interest in the goods, and was only concerned with
delivery of the goods in accordance with the instructions of the STC. In
the circumstances it was held that ―if the appellants were to enforce their
statutory lien, the incidence of the demurrage would have fallen on the
Corporation in whom the title to the goods was vested‖. The Supreme
Court further observed that, by allowing the goods to be cleared without
levying demurrage, which the Board of Trustees claimed at a later point
of time, Aminchand was deprived of the opportunity to reject the goods.
In these circumstances, the Supreme Court held that it was impossible to
accept the claim of the Board of Trustees against Aminchand.
Resultantly, the decision of the High Court was upheld, albeit for
different reasons.

32. In this decision, therefore, the Supreme Court upheld,
unequivocally, the right of the Board of Trustees of the Madras Port

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Trust to recover demurrage, irrespective of whether the importer was, or
was not, at fault. If the claim, as against Aminchand, was rejected, that
was only because Aminchand was merely working for commission, and
was not the de facto importer, which was STC.

33. The facts, in Board of Trustees of the Port of Bombay v. Indian
Goods Supplying Co.2 were, to a large extent, similar to those in
Aminchand Pyarelal1. Three consignments of Chinese newsprint were
imported, by the respondent Indian Goods Supplying Co. (hereinafter
referred to as ―IGSC‖). The goods were detained, by the Customs
authorities, for the purposes of analytical testing, as well as completion of
Import Trade Control formalities. The Board of Trustees claimed
demurrage, for the period during which the goods were so detained.
However, it was conceded, by the Board of Trustees, that no demurrage
could be charged for the period of detention, which was attributable to
analytical testing. The Board of Trustees, nevertheless, pressed its claim
for demurrage, for the period of detention, attributable to completion of
Import Trade Control formalities.

34. Demurrage, as claimed, was paid by IGSC which, subsequently,
sued for return of the said amount, on the ground that it was not liable to
pay the same. The City Civil Court decreed the suit. The appeal,
preferred thereagainst to the High Court, by the Board of Trustees, was
also dismissed, thereby confirming the decree passed by the City Civil
Court. The matter was carried, by the Board of Trustees, to the Supreme
Court.

WP (C) 7577/2019 other connected matters Page 16 of 88

35. During the pendency of proceedings before the High Court, the
differential amount was deposited by the Board of Trustees. Before the
Supreme Court, the Board of Trustees submitted that it was not seeking
repayment of the said amount, but was concerned with a proper
determination of the question of law, relating to its entitlement to claim
demurrage. The question arising before it for consideration was framed
by the Supreme Court as ―whether the claim of demurrage by the Port
Trust for the period during which the goods were detained with the Port
Trust in respect of Import Trade Control formalities is maintainable‖.

36. As in the case of Aminchand Pyarelal1, the Supreme Court
referred to the various provisions of the Bombay Port Trust Act, 1879,
which governed the appellant before it, and which were largely in pari
materia to the provisions of the Madras Port Trust Act. It was noted that
Section 43B(1) of the Bombay Port Trusts Act required that every scale
of rates, framed by the Board of Trustees, was required to be sanctioned
and gazetted by the Central Government, whereupon it would acquire the
force of law. The scale of rates, on the basis of which demurrage was
being claimed, by the Board of Trustees, it was observed, had been so
sanctioned and gazetted, as a result whereof the said scale of rates had
acquired the force of law.

37. The Supreme Court observed (in para 9 of the report), thus:

―It is the duty of the Board to recover the rates, to have a lien on
the goods and seize and detain the goods until such rates are fully
paid … The Port clearance shall not be granted in the rates are
paid. It is thus a statutory duty of the Board to collect the rates
prescribed.‖

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While the observation, of the Supreme Court, that the Port Trust could
―seize and detain‖ the goods, may not constitute a binding enunciation of
the law, the Supreme Court has held, in the afore-extracted passage, that
the responsibility, of the Board of Trustees, to collect demurrage, at the
prescribed rates, and to retain hold of the goods till then, was in the
nature of a statutory duty. The Supreme Court went on to observe, in para
10 of the report, that the scale of rates was graded, with a view to
mitigate the hardship that could result, were the goods unjustifiably
detained by the Customs authorities, or where there was unconscionable
delay in the assessment thereof.

38. In law, the Supreme Court went on to hold that the issue before it
stood concluded by the earlier decision in Aminchand Pyarelal1. The
position, in law, was enunciated, thus, in para 14 of the report:

―The position therefore is that even though the delay in clearing
the goods was not due to the negligence of the importer for which
he could be held responsible yet he cannot avoid the payment of
demurrage as the rates imposed are under the authority of law
the validity of which cannot be questioned. The claim cannot be
resisted as there is no evidence that the delay was due to any act
of the Port Trust or persons for whom the Port Trust is
responsible.‖
(Emphasis supplied)

39. The Supreme Court, therefore, reiterated the legal position,
enunciated earlier in Aminchand Pyarelal1, that, save and except for
cases in which the delay was attributable to the Board of Trustees, the
liability, of the importer, to pay demurrage, to the Board of Trustees, as
per the prescribed scale of rates, for the period during which the goods,
imported by it, were consigned to the custody of the Port Trust, could not

WP (C) 7577/2019 other connected matters Page 18 of 88
be gainsaid. The decision, of the High Court, that the importer could not
be held responsible for the delay not attributable to its own default, and
that demurrage could not be imposed for the period during which the
goods were detained for operation of the Import Trade Control
Regulations was, therefore, held to be erroneous. Owing to the
concession, made by the Board of Trustees before the Supreme Court,
however, no recovery was directed.

40. The third pre-Grand Slam4 decision, to which reference is required
to be made, is Board of Trustees of the Port of Bombay v. Jai Hind Oil
Mills Company3. The respondent Jai Hind Oil Mills Co. (hereinafter
referred to as ―Jai Hind‖) imported five consignments of propylene in
January, 1986. Disputes arose, between Jai Hind and the Customs
authorities, who alleged undervaluation. Jai Hind directly approached the
High Court of Bombay, by way of WP No. 122 of 1986. The goods,
which were in the custody of the Board of Trustees, were incurring
demurrage. Vide order dated 2nd April, 1986, a learned Single Judge of
the High Court of Bombay allowed Jai Hind to clear the consignments on
furnishing of an Import Trade Control bond for the value of the goods,
along with a Bank guarantee for the differential value, as alleged by the
Customs authorities. As clearance of the goods were delayed, and
demurrage was mounting, Jai Hind wrote to the Collector of Customs,
requesting him to issue a detention certificate, clarifying that the goods
had been detained for bona fide Import Trade Control formalities, so as
to enable Jai Hind to claim remission of the demurrage payable to the
Port Trust. This was followed up, by Jai Hind, by filing another writ
petition, before the Bombay High Court, in which, on 24 th April, 1986,

WP (C) 7577/2019 other connected matters Page 19 of 88
the learned Single Judge passed a final order, directing the Customs
authorities to issue a detention certificate to Jai Hind, subject to an
undertaking, by Jai Hind, to pay the differential duty, in case it ultimately
failed. The Port Trust received two detention certificates, issued by the
Assistant Collector of Customs, covering two of the five detained
consignments, imported vide Bills of Entry No. 3133/219 and 3133/220.
Simultaneously, Jai Hind also addressed a representation, to the Port
Trust, requesting for remission of demurrage, in view of the detention
certificates issued by the Customs authorities.

41. The Port Trust wrote, on 30th May, 1986, to Jai Hind, requiring Jai
Hind to submit a bank guarantee, to the effect that, in the event of Jai
Hind losing before the High Court, it would pay, to the Port Trust, the
entire remitted demurrage along with interest @ 15% per annum. This
letter was challenged, by Jai Hind, before the High Court of Bombay, by
way of a writ petition, i.e. WP 1424 of 1986. In the said writ petition, a
mandamus was sought, to the Port Trust, directing it to honour the
detention certificates issued by the Customs authorities, and to permit
release of the imported goods without payment of demurrage and without
insisting of furnishing of a Bank Guarantee or Demand Draft. An interim
order, in the same terms, was also sought, which was granted, vide order
dated 17th June, 1986.

42. The Port Trust preferred a writ appeal against the order, dated 2nd
April, 1986, passed by the learned Single Judge in WP No. 519 of 1986,
which was dismissed vide order dated 26th June, 1986. Appeal No. 535 of
1986, preferred by the Port Trust against the order, dated 17 th June, 1986

WP (C) 7577/2019 other connected matters Page 20 of 88
supra, in WP No. No 1424 of 1986, was also summarily dismissed on
26th June, 1986.

43. Detention certificates, covering the remaining three consignments
imported by Jai Hind, vide Bills of Entry No 3133/221, 3133/222 and
3133/223, were received by the Port Trust from the customs authorities,
on 3rd July, 1986. As a result, in accordance with the order, dated 17th
June, 1986 supra, passed by the High Court, two of the five
consignments were cleared, by Jai Hind, on 3rd July, 1986 and the
remaining three consignments were cleared on 5th July, 1986, on payment
of an aggregate amount of ₹ 49,510.50, towards demurrage charges
levied by the Port Trust. As against the amount paid by Jai Hind, the
demurrage charges claimed by the Port Trust were to the tune of ₹
3,53,514.75. As such, an amount of ₹ 3,04,004.25, claimed by the Port
Trust towards demurrage, remained to be paid.

44. Against the orders, dated 26th June, 1986, passed in Appeal No 512
of 1986 and Appeal No 535 of 1986, the Port Trust approached the
Supreme Court. The two primary contentions advanced by the appellant-
Port Trust, before the Supreme Court, were that (i) the High Court should
not have directed the Customs authorities to issue detention certificates,
without impleading the Port Trust and, in any event, without securing
payment of the wharfage and demurrage charges due to the Port Trust, in
the event of WP No. 122 of 1986 failing and (ii) the High Court
erred in directing Jai Hind to furnish a bank guarantee only in respect of
the Customs duty payable by it, in the event of dismissal of WP No. 122

WP (C) 7577/2019 other connected matters Page 21 of 88
of 1986, thereby failing to secure the wharfage and demurrage charges
payable to the Port Trust, by way of a similar bank guarantee.

45. The Supreme Court, after referring to the various provisions of the
Major Port Trusts Act, 1963, noted that Section 53 thereof empowered
the Board of Trustees, in special cases, to exempt, either wholly or
partially, any goods or vessels, or class of goods or vessels, from the
payment of any charge leviable in respect thereof, or to remit the whole
or any portion of the charge so levied. It was further observed that a
booklet, containing the rates charged by the Port Trust, had been issued
by it wherein, in consultation with Customs authorities, the Port Trust
had provided for concession, in the matter of payment of demurrage
charges, on the issue of detention certificate by the Customs authorities.
Section III-A(c) of the said booklet dealt with demurrage charges payable
to the Port Trust, and proviso (d), to the said clause provided that goods,
detained by the Customs authorities for special examination ―involving
analytical or technical tests other than the ordinary process of
appraisement‖ would be exempted from demurrage charges during the
period of detention, subject to certification, by the Customs authorities,
that the detention of the goods was not attributable to any fault or
negligence on the part of the importer. The procedure for issue of
detention certificates, by the Customs authorities, on the basis whereof
the Port Trust could exempt the importer from the requirement of paying
demurrage, was contained in Public Notice No 111, dated 29 th July, 1985,
issued by the Bombay Customs House. It was agreed, between the
Customs authorities and the Port Trust, that no detention certificate
would be issued by the Customs Department if there was a default on the

WP (C) 7577/2019 other connected matters Page 22 of 88
part of the importer or exporter. Consequently, a defaulting importer, or
exporter, would stand disentitled to any concession in the matter of
demurrage charges, and would be bound to pay demurrage in accordance
with the scale of rates charged at the docks, as fixed by the Port Trust.

46. Noting that, in its order passed in the writ petition filed by Jai
Hind, the High Court had, while directing the Customs authorities to
issue detention certificates, safeguarded the interests of the Customs
authorities, by directing furnishing of a bank guarantee, by Jai Hind, in
respect of the duty payable by it, the High Court had, insofar as the
demurrage charges payable to the Port Trust were concerned, merely
directed an undertaking to be provided by Jai Hind, in favour of the High
Court. The Supreme Court opined that the High Court ought,
appropriately, to have safeguarded, not only the differential duty
allegedly payable to the Customs authorities, but also the demurrage
charges payable to the Port Trust, in the event of the importer being
found to have been in default.

47. In so observing, the Supreme Court noted the fact that issuance of
the detention certificate by the Customs authorities, vitally affected the
interests of the Port Trust, as, by virtue of the booklet issued by the Port
Trust, the issuance of such a detention certificate, by the Customs
authorities, obliged the Port Trust to allow clearance of the goods without
payment of full demurrage charges. Inasmuch as issuance of the
detention certificate thus affected the interests of the Port Trust, the
Supreme Court held that, before directing the Customs authorities to
issue such detention certificates, the Port Trust was required to have been

WP (C) 7577/2019 other connected matters Page 23 of 88
heard. Else, the order of the High Court would not be binding on the Port
Trust. While safeguarding the interests of the Customs authorities, it was
held that the High Court had erred in failing to safeguard the interests of
the Port Trust.

48. In the circumstances, the Supreme Court disposed of the appeal by
making the interim order, passed by it in the said proceedings, absolute,
whereby and whereunder Jai Hind had been directed to furnish a bank
guarantee, in favour of the Port Trust, for ₹ 3,04,004.25. In default of
furnishing of bank guarantee for the said amount, Jai Hind was directed
to pay the said amount in cash.

49. The entitlement and eligibility, of the Port Trust, to recover
demurrage, on the goods consigned to it, once again stands emphasised
by this decision. It is significant to note, in this context, that the Booklet
issued by the Bombay Port Trust contained a specific covenant,
obligating the Bombay Port Trust to provide concession, in the matter of
demurrage, where detention certificate was issued by the Customs
authorities. No similar convenant, in the present case, has been brought
to our notice, despite repeated queries, by us, in that regard.

Grand Slam4 and its sequelae

50. Grand Slam4, as the decision has popularly come to be known, had
S. P. Bharucha, J. (as he then was) and N. Venkatachala, J. recording
concurring opinions, with R. M. Sahai, J., dissenting.

WP (C) 7577/2019 other connected matters Page 24 of 88

51. Three Civil Appeals were decided, in Grand Slam4. In all the
cases, the goods, imported by the concerned respondent, were consigned
with the appellant-custodian (the International Airports Authority of
India, referred to, hereinafter, as ―the IAAI‖ in two of the appeals and the
Central Warehousing Corporation, referred to, hereinafter, as ―the
CWC‖, in the third), and the orders, passed by the adjudicating
authorities, confiscating the goods, were set aside by the Customs, Excise
and Gold (Control) Appellate Tribunal (hereinafter referred to as ―the
Tribunal‖) in appeal. Detention certificates had been issued, by the
Customs authorities, in these cases, effectively directing the IAAI and the
CWC not to charge demurrage, for the period during which the goods
were in their custody. On the IAAI, and the CWC, refusing to abide by
the said directions, the concerned importers approached the High Court,
by way of writ petitions. The writ petitions were allowed by the High
Court, which held that the IAAI and the CWC, being custodians of the
Customs authorities, could not ignore the detention certificate issued by
the Customs authorities, and were not entitled to recover any demurrage
for the periods covered by the detention certificates.

52. The correctness of the said decisions, of the High Court, were
assailed, by the IAAI and the CWC, by way of Civil Appeals, which
were decided by the Supreme Court vide a common judgement.

53. Bharucha, J. observes, at the very outset of his opinion, thus:

―The judgments and orders under appeal are contrary to the
judgment of the Delhi High Court in the case of M/s. Trishul
Impex5 (ibid) as also the decisions of this Court in the cases of

5
Trishul Impex v. U.O.I., 1992 (58) ELT 192 (Del)

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Trustees of the Port of Madras v. M/s. Aminchand Pyarelal
Ors.1, Board of Trustee of the Port of Bombay v. Indian Goods
Supplying Co.2 and Board of Trustees of the Port of Bombay v.
Jai Hind Oil Mills Company Ors.3‖

54. Bharucha, J. proceeds, thereafter, in his opinion, to distil, in précis,
as it were, the decisions in Aminchand Pyarelal1, Indian Goods
Supplying Co.2 and Jai Hind Oil Mills3, and observe, in respect of the
law laid down in the said decisions, thus (in para 31 of the report in
ELT):

―This Court in the cases aforementioned, therefore, held that the
Board of Trustees of a port was, under the statute that created it,
entitled to charge demurrage even in respect of periods during
which the importer was unable to clear goods from its premises
for no fault or negligence on his part. It was held that the Boards
were entitled to charge demurrage even in respect of periods
during which the importer was unable to clear goods because of
the detention thereof by the Customs Authorities or the
Authorities under the Import Trade Control Regulations, which
detentions were thereafter found to be unjustified. This Court
also recognised that the Boards were entities in their own right so
that the courts could not direct the Customs Authorities to issue a
detention certificate without hearing the Board concerned. This
was because the issuance of a detention certificate had the effect
of reducing the amount of demurrage that the Board would
otherwise have charged.‖
(Emphasis supplied)

55. Adverting, thereafter, to the statutory provisions governing the
IAAI, Bharucha, J. noted that Section 17 of the International Airports
Authority Act, 1971 (hereinafter referred to as ―the IAA Act‖)
empowered the IAAI to charge, with the previous approval of the Central
Government, fees or rent for the use and enjoyment, by persons, of its
facilities and other services at any airport. Section 37 of the said Act
empowered the IAAI to make regulations, to give effect to the provisions
WP (C) 7577/2019 other connected matters Page 26 of 88
of the Act, and sub-section (2)(d), thereof, specifically empowered the
IAAI to make regulations for the storage of processing of goods in any
warehouse established by it, and to charge fees for such storage or
processing.

56. In exercise of the powers conferred by Section 37, the IAAI
framed the International Airports Authority (Storage and Processing of
Goods) Regulations, 1980 (hereinafter referred to as ―the IAA
Regulations‖). Regulation 4 of the IAA Regulations empowered the IAAI
to levy charges, including storage charges and demurrage, whereas
Regulation 6 empowered the Chairman of the IAAI to, in his discretion,
and for reasons to be recorded, waive demurrage in deserving cases. A
separate policy, governing waiver of demurrage, had been framed by the
IAAI. Inasmuch as the provisions of the IAA Act were similar to the
provisions of the Major Port Trusts Act, 1963, as well as other Port
Trusts Acts, Bharucha, J. observed, in para 34 of the report, that the ratio
of the decisions in Aminchand Pyarelal1, Indian Goods Supplying Co.2
and Jai Hind Oil Mills3 would apply, mutatis mutandis, to the IAAI.

57. The various respondents, before the Supreme Court, sought to
distinguish the decisions in Aminchand Pyarelal1, Indian Goods
Supplying Co.2 and Jai Hind Oil Mills3 by contending that these
decisions only held that an importer had to pay demurrage even if the
delay, in clearing its goods, was not due to his default or negligence,
whereas the contention of the respondents, before the Supreme Court,
was different, i.e., that the IAAI was the custodian of the Customs
authorities and was obligated, therefore, to abide by the directions

WP (C) 7577/2019 other connected matters Page 27 of 88
contained in the detention certificates, and not to charge demurrage for
the periods covered thereby. This contention was negatived, by
Bharucha, J., in the following terms (from para 35 of the ELT report):

―The judgments aforementioned do not only hold that an
importer is liable to pay demurrage though he is not responsible
for the delay in clearing his goods. The judgments deal with
detention certificates issued by the Customs Authorities and hold
that the importer is liable to pay demurrage at the reduced rate
prescribed by the policy framed in that behalf by the Boards even
for the period for which a detention certificate has been issued.
The judgments recognise that the Boards are entities in their own
right and that even the courts cannot compel the Customs
Authorities to issue detention certificates without first hearing
the Board concerned, because detention certificates have the
effect of reducing the revenues of the Boards. The Boards and the
Authority being similarly placed, the judgments determine the
questions raised in these appeals.‖
(Emphasis supplied)

58. Reliance was also placed, by the respondents before the Supreme
Court, on Customs Public Notice No 30/86, dated 30th April, 1986, clause

(vii) whereof read thus:

―In case of goods detained/seized etc. by Customs, the
warehousing/storage charges shall be calculated by IAAI for the
period due minus the charge for the period of detention at the
instance of Customs as certified by the Assistant Collector of
Customs.‖
(Emphasis supplied)

59. Bharucha, J. rejected the aforesaid reliance, by the respondents
before him, on the above-extracted clause in the Public Notice, dated 30th
April, 1986, by holding, unequivocally, that the provisions, whereunder
the Public Notice purported to have been issued, i.e. sections 8, 33, 34
and 45 of the Customs Act, did not empower the Collector of Customs to
issue such a Public Notice. It was held that these provisions did not
WP (C) 7577/2019 other connected matters Page 28 of 88
entitle the Collector of Customs ―to debar the collection of demurrage for
the storage of imported goods‖; neither did they ―entitle him to impose
conditions upon the proprietors of ports or airports before they can be
approved as Customs ports or Customs airports‖. It was noted that
Section 45 of the Customs Act, too, did not state that the person, to
whose custody the imported goods were consigned, would not be entitled
to recover charges from the importer, for such period as the Customs
authorities directed. Paras 41 and 42 of the opinion of Bharucha, J, went
on to hold thus:

―41. The purpose of the Customs Act on the one hand and the
Major Port Trusts Act and the International Airports Authority
Act on the other hand are different. The former deals with the
collection of Customs duties on imported goods. The latter deals
with the maintenance of sea-ports and airports, the facilities to
be provided thereat and the charges to be recovered therefor. An
importer must land the imported goods at a sea-port or airport.
He can clear them only after completion of Customs formalities.
For this purpose, the sea-ports and airports are approved and
provide storage facilities and Customs Officers are
accommodated therein to facilitate clearance. For the occupation
by the imported goods of space in the sea-port or airport, the
Board or the Authority which is its proprietor is entitled to
charge the importer. That until Customs clearance, the Board or
the Authority may not permit the importer to remove his goods
from its premises does not imply that it may not charge the
importer for the space his goods have occupied until their
clearance.

42. What is stated in the quoted clause of the said Customs
Public Notice would be effective against the Authority only if it
were shown that the Authority had, expressly or impliedly,
consented to such arrangement; that is not even pleaded.‖
(Emphasis supplied)

60. Expressing complete agreement with the views of Bharucha, J.,
Venkatachala, J., in a detailed concurring opinion, echoed the view of

WP (C) 7577/2019 other connected matters Page 29 of 88
Bharucha, J. that Section 45 of the Customs Act did not, in any way,
impose an obligation, on the approved custodian, not to collect charges
statutorily leviable on the consignee, by it, for keeping the imported
goods in its custody. Paras 58 to 60, of the opinion of Venkatachala, J.,
read thus:

―58. Learned counsel appearing for respondents were not able
to invite Court’s attention to any provision either in the Act or
the Rules or the Regulations made thereunder which empowered
the Collector of Customs to impose by issue of Public Notice the
above condition (vii) in clause (d) thereof denying the IAAI
which is approved as the custodian of imported goods in
Customs area, the right to collect the charges from the consignee
for keeping his imported goods detained or seized by the
Customs Authorities nor my effort to find any provision in the Act
or its Rules or its Regulations enabled me to find any provision
which conferred such power of imposing such condition upon the
IAAI merely because it is approved as the custodian of imported
goods on behalf of Customs Department. However, as to whether
the Parliament in enacting the Act intended that custodians to be
approved thereunder to keep the goods coming into customs
areas should relieve the owners (consignees) of such goods of
their liability for payment of charges for such keeping or
otherwise could be gathered from the provision in Section 63 of
the Act, it is excerpted :

―63. Payment of rent and warehouse charges. – (1)
The owner of any warehoused goods shall pay to the
warehouse-keeper rent and warehouse charges at the rates
fixed under any law for the time being in force or where
no rates are so fixed, at such rates as may be fixed by the
Collector of Customs.

(2) If any rent or warehouse charges are not paid within
ten days from the date when they became due, the
warehouse-keeper may, after notice to the owner of the
warehoused goods and with the permission of the proper
officer cause to be sold (any transfer of the warehoused
goods notwithstanding) such sufficient portion of the
goods as the warehouse-keeper may select.”

WP (C) 7577/2019 other connected matters Page 30 of 88

59. When sub-section (1) above, does not relieve the owner of
any warehoused goods to pay to the warehouse-keeper rent and
warehouse charges at the rates fixed under any law for the time
being in force or where no rates are so fixed, at such rates as
may be fixed by the Collector of Customs, although such goods
were kept by the warehouse-keeper for and on behalf of the
Customs Department and again when sub-section (2) enables the
warehouse-keeper even to sell the warehouse goods with the
permission of the proper officer for unpaid rent or warehouse
charges, it is difficult to think that there could be any provision in
the Act or the Rules or the Regulations made thereunder which
confers on the Collector of Customs power to direct the release
of the goods kept in the custody, as custodian of the Customs
Department without demanding payment of keeping charges from
the consignee of goods because of detention certificates issued in
that regard by the Customs authorities, inasmuch as, the said
provision shows the legislative intendment to be to the contrary.

60. In fact, when the IAAI in exercise of its powers conferred
by sub-section (1) of Section 37 of the International Airports
Authority Act, 1971 – “the IAA Act”, and with the prior approval
of the Central Government have made regulations called the
International Airport Authority (Storage and Preservation of
Goods) Regulations, 1980, regulating levy of charges or sur-
charges, scale of charges and waiver of charges payable by the
owner in case of warehoused goods with the IAAI, those
Regulations not only do not come in conflict with the Act or its
Regulations or its Rules but conform to the requirement of the
provision of Section 63 of the Act. When in pursuance of the said
Regulations policy directions are issued by the IAAI in
supersession of earlier instructions on the subject of waiver of
demurrage charges on production of detention certificate issued
by the Customs Authorities showing that detention of goods was
for no fault of consignees it can be safely concluded that any
directions issued by Customs Collector contrary to such
Regulations and the policy directions as those issued without
authority in law are ultra vires his powers. Therefore, I have no
hesitation in holding that the aforesaid condition (vii) in clause

(d) of the Customs Public Notice No. 30/86 directing the IAAI not
to collect the custody charges in respect of the goods for which
detention certificates may be issued by the Collector of Customs
or his delegatee, has to be regarded as a condition imposed by
the Collector of Customs without being conferred any power in
that regard either in the Act or the Rules or the Regulations. If

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condition (vii) of clause (d) of the Customs Public Notice No.
30/86 is regarded as that imposed by the Collector of Customs
without authority of law, it having been imposed ultra vires his
powers under the Act or Rules or Regulations, no Court can
direct the IAAI to release the goods of the consignee without
collecting from him demurrage charges levied according to its
Regulations in respect of the goods, which it had taken care of as
the custodian merely because there was a detention certificate of
the Collector of Customs or his delegatee issued to the IAAI
which had been approved as the custodian of such goods by the
Collector of Customs under sub-section (1) of Section 45 of the
Act.‖

(Emphasis supplied)

61. Venkatachala, J., proceeds to conclude, in para 65, 66 and 68 of his
concurring opinion, thus:

―65. 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, 1962, 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.

66. Thus, the above decisions of this Court which uphold the
power of Ports Trusts created under Ports Act to levy and collect
demurrage charges for goods they keep as Custodians for
Customs Department from the consignees notwithstanding the
detention certificates issued by the Customs Department clearly
support the view I have taken that the IAAI, an authority
constituted under the International Airports Authority Act, 1971,
when is entitled to collect charges for keeping custody of the
imported goods by regulations made thereunder and according to
its policy, the Collector of Customs or his delegatee could not
direct the IAAI by issuance of a detention certificate to release
the goods of the importer without collection of the charges liable
to be paid in respect thereof, inasmuch as the Collector of
Customs or his delegatee has not been empowered under the

WP (C) 7577/2019 other connected matters Page 32 of 88
provisions of the Act or its Rules or its Regulations to direct
release of the imported goods without collection of keeping
charges, for the keeping of which by the IAAI, charges are to be
paid under the Rules made under the International Airports
Authority Act, 1971.

*****

68. Therefore, my answer to the question considered by me is
in the negative i.e. the Collector of Customs is empowered under
sub-section (1) of section 45 of the Customs Act, 1962 to
approve persons to be custodians of imported goods in customs
areas until they are cleared as provided for therein, while
approving the International Airports Authority of India to be the
custodian of such imported goods in the customs area of Indira
Gandhi International Airport, New Delhi and Central
Warehousing Corporation to be the custodians of such imported
goods received at the customs area – the Container Freight
Station, CWC Complex, Pragati Maidan, New Delhi, by issue of
public notice or otherwise in that regard, if by such notice or
otherwise directs such custodians not to collect custody charges
from the consignees of such goods – “the Cargo”, because of
detention certificates issued by him or his delegatee, will not be
acting within the powers conferred upon him under the Act, its
Rules or its Regulations and hence directions given by the
Customs Collector or his delegatees to release the goods of
importers or consignees without collecting demurrage charges
from them cannot be enforced by Courts either against IAAI or
CWC.‖

(Emphasis and underscoring supplied)

62. Relying on Grand Slam4, the Supreme Court held, in Trustees of
Port of Madras v. K. P. V. Sheikh Mohd Rowther Co. Pvt Ltd 6, that
the liability to pay demurrage charges, to the Port Trust, lay on the
consignee of the goods, and not on the steamer agent. Trustees of Port
of Madras v. Nagavedu Lungi7 reiterated the position that the importer-

6

1996 (82) ELT 174 (SC)
7
1995 (18) ELT 241 (SC)

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consignee, or exporter-consignor, of goods could not avoid his liability to
pay demurrage charges and other incidental charges, even if the goods
were illegally detained by the Customs authorities.

63. U.O.I. v. Sanjeev Woollen Mills8 is a decision, rendered by two
Hon’ble Judges, which assumes importance, not so much for its own
precedential value, as for the fact that it led to the subsequent judgement
in Shipping Corporation of India Ltd v. C. L. Jain Woollen Mills9. The
respondent, in Sanjeev Woollen Mills8, imported goods, under five Bills
of Entry, declaring them to be synthetic waste. The Customs authorities
were of the view, per contra, that the goods were prime fibre, which
fetched a much higher price. This resulted in the issuance of a Show
Cause Notice to Sanjeev Woollen Mills (referred to, hereinafter, as
―SWM‖).

64. As, owing to their continued detention, the goods were incurring
demurrage, SWM filed CWP 802/1991, before this Court, in respect of
two of the four Bills of Entry. In the said proceedings, on 3 rd April, 1991,
the learned Counsel appearing for the Union of India stated that, in case,
after inspection, the goods were found to be synthetic waste, as declared
by SWM, the entire demurrage and container charges would be borne by
the Customs Department, which would also issue the necessary detention
certificate.

65. Pursuant to further directions issued by this Court in the said
proceedings, the Collector, vide two separate adjudication orders dated
8
1998 (100) ELT 323 (SC)
9
2001 (129) ELT 561 (SC)

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28th June, 1991, confiscated the goods, with option to redeem. In each
case, the value of the goods was enhanced to ₹ 28.14 per kg. Personal
penalty was also imposed. Consequent on the passing of the said
adjudication orders, this Court, vide order dated 24th July, 1991,
dismissed CWP 802/1991, relegating SWM to the remedy of statutory
appeal, before the Tribunal. The Tribunal remanded the case, qua all four
Bills of Entry, to the Chief Commissioner of Customs, for de novo
adjudication. Vide order, dated 11th August, 1995, the Chief
Commissioner ordered unconditional release of all the goods.

66. In the interregnum, SWM filed a second writ petition, being CWP
3469/1994, before this Court, seeking the release of the goods covered by
all the aforesaid four Bills of Entry. Vide judgement and order dated 15th
July, 1996, this Court allowed CWP 3469/1994, holding that there was
no justification for detaining the consignments covered by the aforesaid
four Bills of Entry, especially in view of the order of unconditional
release, passed by the Chief Commissioner on 11th August, 1995. In view
of the statement, made by learned Counsel for the Customs authorities,
before this Court on 3rd April, 1991, in CWP 802/1991, the goods were
directed to be released without recovery of any demurrage, and the
Customs authorities were directed to issue the requisite certificate, as
undertaken by this Court on 3rd April, 1991, for the said purpose.
Detention certificate was, accordingly, issued by the Customs authorities
on 15th October, 1996.

67. The Shipping Corporation of India (hereinafter referred to as ―the
Shipping Corporation‖), being the custodian in respect of part of the

WP (C) 7577/2019 other connected matters Page 35 of 88
goods, waived 96% of the charges claimed by it, but insisted,
nevertheless, on payment of ₹ 56,43,470/-. This provoked SWM to file
Contempt Petition 340/1996, before this Court. Vide order dated 19th
March, 1997, this Court granted one more opportunity, to the Union of
India, to comply with the directions contained in the order dated 15th
July, 1996 supra, further directing release of the goods, to SWM, within
three weeks, and resolution, of the issue of payment of charges, by the
Container Corporation of India and the Shipping Corporation, between
themselves.

68. Though, pursuant to the aforesaid order, dated 19 th March, 1997,
the Union of India reported that the matter stood resolved with the
Shipping Corporation, and delivery of the goods was also allowed by the
Container Corporation of India, without payment of any demurrage
charges, SWM did not take delivery of the goods, owing to an inter-se
dispute among its partners, which resulted in the filing of Civil Suit No
748/1997, in this Court, in which an injunction, restraining the defendant-
partners from taking delivery of the goods, was passed by this Court on
27th January, 1998.

69. Be that as it may, the judgement, dated 15th July, 1996, as well as
the subsequent order, dated 19th March, 1997, passed by this Court in
CWP 3469/1994, were carried, in appeal, to the Supreme Court, by the
Union of India. It was contended, by the Union of India, that this Court
erred in directing it to issue a detention certificate, or to bear the
demurrage and container detention charges.

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70. The Supreme Court dismissed the appeal. It was observed, by the
Supreme Court, that the orders, under challenge before it, had been
passed by this Court in the special facts of the particular case before it, in
which the test reports confirmed the contention, of SWM, that there had
been no misdeclaration on its part, despite which the goods were not
being released by the Customs authorities. This had resulted in the
Supreme Court directing the Customs authorities to file a detailed
affidavit, in which the erring officers were claimed to have been located,
and their explanation, in the matter, sought. The Supreme Court held that
it was keeping in mind the totality of the circumstances, and the
inordinate delay of about six years that had been occasioned in the
release of the goods, that this Court had passed orders, directing the
Customs authorities to issue detention certificate and bear the demurrage
and container detention charges. These, it was held, were ―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‖. As the conduct of the
Customs officers were also under investigation, the Supreme Court
opined that no interference, at the hands of the Supreme Court, was
warranted. It also allayed the apprehension, voiced by the Union of India,
that the case would constitute a precedent, as ―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‖.

71. Though the Supreme Court itself clarified that the judgement, in
Sanjeev Woollen Mills8 was passed in the peculiar circumstances of the

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case, and would not constitute a precedent, a subsequent appeal, preferred
by the Shipping Corporation against M/s C. L. Jain Woollen Mills, was
referred, by a bench of two Hon’ble Judges of the Supreme Court, to a
bench of three Hon’ble Judges, under the impression that there was
inconsistency between the decisions in Sanjeev Woollen Mills8 and
Grand Slam4. As the three-Judge bench, which was constituted to
resolve the issue, went on to hold, unexceptionably, in Shipping
Corporation of India Ltd v. C. L. Jain Woollen Mills9, there was,
actually, no such inconsistency, inasmuch as Sanjeev Woollen Mills8 was
decided on its own peculiar facts, with the express clarification that the
judgement would not constitute a precedent.

72. C. L. Jain Woollen Mills9 is, however, an important decision, not
for that reason, but because it is erroneously cited, on numerous
occasions, as an authority for the proposition that, where the detention of
the goods, by the Customs authorities, is illegal, the burden, to bear the
demurrage charges, would fall on the Customs authorities. As would
become apparent from the recital that follows hereinafter, the Supreme
Court never held so. The direction to the Customs authorities to bear the
detention and demurrage charges, as issued in the said case, was
attributable solely to an order, dated 9th September, 1994, passed by this
Court, the Special Leave Petition, preferred whereagainst, was also
dismissed, by the Supreme Court, on 13 th November, 1995. Else, a
holistic reading of C. L. Jain Woollen Mills9 makes it apparent that the
burden, to pay demurrage charges, is on the importer, and cannot be
waived by the Customs authorities, by issuance of a detention certificate.
It is also important to note, in the context of C. L. Jain Woollen Mills9,

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that the decision was rendered, not in the context of any statutory
enactment, authorising collection of demurrage charges, but in terms of
the contract between M/s C. L. Jain Woollen Mills (hereinafter referred
to as ―CLJ‖) and the Shipping Corporation.

73. Adverting, now, to the facts of C. L. Jain Woollen Mills9, the case
involved a consignment of polyester filament, imported by CLJ at
Bombay, with the port of delivery being ICD, Delhi. As such, there was
no Customs clearance at Bombay, and the sealed container was
transshipped to ICD, Delhi, where it remained in the custody of the
Container Corporation of India (CONCOR). Carriage, of the goods, had
been effected by the Shipping Corporation.

74. While the goods were in the custody of the Shipping Corporation,
the Customs authorities, by an order, confiscated the goods, alleging their
import to be unauthorised, with option to redeem on payment of
redemption fine of ₹ 7 lakhs. The said decision was assailed, by CLJ, by
way of appeal to the Tribunal, which adjourned the appeal, directing
amendment of the Advance Licence held by CLJ. This decision was
challenged, by CLJ, before this Court, by way of CWP 1604/1991, which
was disposed of, vide judgement dated 9th September, 1994, quashing the
decision of the adjudicating authority as well as of the Tribunal and
directing the Collector of Customs to release the goods forthwith. The
said order further held that, as the action of the Customs authorities was
illegal, the goods would have to be released to CLJ without requiring
payment of any detention or demurrage charges by CLJ. The Shipping
Corporation was not made a party to the writ petition. The said order,

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dated 9th September, 1994, of this Court, was challenged, by way of SLP
5671/1995, which was dismissed, by the Supreme Court, vide order dated
13th November, 1995. As such, the order, dated 9th September, 1994, of
this Court, became final, resulting in the liability of CLJ, if it ever
existed, to pay demurrage charges, being completely extinguished. This
has been clearly noted, by the Supreme Court, in para 4 of the report in
C. L. Jain Woollen Mills9 thus:

―But in view of the specific directions of the Delhi High Court in
the writ petition filed by the importer of the goods, challenging
the legality of the order of the Customs authorities in
confiscating the goods and levying the penalty and that order
having reached finality by dismissal of the special leave petition
against the same filed by the Union of India, the liability of the
importer to pay the demurrage charges ceases and that question
cannot be reopened.‖

75. It needs to be noted, even at this stage, therefore, that the Supreme
Court, in C. L. Jain Woollen Mills9 did not direct CLJ to pay demurrage
charges, as it felt its discretion, in that regard, to be constrained by the
dismissal of SLP 5671/1995 on 13th November, 1995. As the recital
hereinafter – as well as a holistic reading of the decision in C. L. Jain
Woollen Mills9 – would, however, disclose, the liability of the importer,
in law, to pay the demurrage charges, was upheld by the Supreme Court.

76. To return to the recital of facts in C. L. Jain Woollen Mills9,
despite the judgement, dated 9th September, 1994 supra, passed by this
Court, CLJ was unsuccessful in getting the goods released, resulting in
the filing, by CLJ, of CCP 120/1995, before this Court, for initiation of
contempt proceedings. The said contempt petition was, however,
dismissed, by this Court, reserving liberty, with CLJ, to move the

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Division Bench of this Court, for appropriate directions regarding
payment of demurrage/detention charges. An application, to the said
effect was, therefore, filed by CLJ, which was disposed of, by the
Division Bench of this Court, vide order dated 18th January, 1999,
holding that the entitlement of Shipping Corporation to charge demurrage
charges and, if such entitlement existed, whether the charges would be
required to be paid by the Customs authorities, or not, were matters
which would have to be sorted out between the Shipping Corporation and
the Customs authorities. Insofar as the liability of CLJ was concerned,
the Division Bench held that, in view of the judgement, dated 9 th
September, 1994, of this Court in CWP 1604/1991, CLJ was entitled to
secure release of the goods without payment of detention and demurrage
charges. In these circumstances, the Customs authorities, as well as
Shipping Corporation and CONCOR, were directed to sort out the matter
within a specified period, further directing that, if any detention or
demurrage charges were payable, they would be borne by the Customs
authorities, which would discharge the said liability within three weeks.
The Shipping Corporation and the CONCOR were directed to release the
goods, after payment of the said detention/demurrage charges by the
Customs authorities.

77. The entire issue was carried, in appeal, to the Supreme Court,
where a bench of two Hon’ble Judges, as already noted hereinabove,
referred the matter to a bench of three Hon’ble Judges, under the
impression that there was inconsistency, inter se, between the decisions
in Grand Slam4 and Sanjeev Woollen Mills8.

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78. Having observed that, in view of the judgement and order, dated
9th September, 1994, of this Court in CWP 1604/1991, and the dismissal
of SLP 5671/1995, preferred thereagainst, by the Supreme Court, on 13th
November, 1995, there could be no question of CLJ being made liable to
pay any demurrage charges, the Supreme Court delineated the larger
question, arising before it, thus:

―The next question that arises for consideration which is a larger
issue, namely if the customs authorities do not release the goods
and initiates proceedings and finally passes order of confiscation
but that order was ultimately set aside in appeal and it is held by
Court of law that the detention of the goods was illegal, then in
such circumstances whether the career of the goods who had a
over the goods for non-payment of duty, can enforce the terms
and conditions of the contract against the customs authorities,
making the said authorities liable to pay the demurrage charges.‖

79. The Supreme Court went on to reproduce Section 45 of the
Customs Act and, after referring to the said Section, in juxtaposition with
other provisions of the said Act, held that it was apparent, from the said
provisions, that the Customs Authorities had full power and control over
the imported goods and that, without their permission, the goods could
not be cleared.

80. At the same time, it was held, ―there is no provision in the
Customs Act, conferring power on the Customs Authorities to prohibit or
injunct any other authority where the imported goods are stored from
charging the demurrage charges for the services rendered for storing the
imported goods‖. The Supreme Court also clarified that it was not
concerned with a situation in which any statute, such as the Major Ports
Trust Act, or the IAA Act, applied.

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81. Before the Supreme Court, it was sought to be contended, on
behalf of the Shipping Corporation, that the right of the Shipping
Corporation, to claim demurrage, flowed from the terms and conditions
of the contract between CLJ and the Shipping Corporation, and that the
said right could not be divested by issuance of a detention certificate by
the Customs Authorities. As such, it was sought to be contended, even if
the court directed that the importer was not liable to pay demurrage, the
Shipping Corporation would not be bound by the said direction,
especially as it was not a party to the proceedings between the Customs
Authorities and CLJ.

82. On behalf of the Union of India, it was contended, per contra, that
the expression ―or otherwise dealt with‖, as contained in Section 45(2)(b)
of the Customs Act restrained the custodian – in that case, the Shipping
Corporation – and operated as a complete embargo on the goods being
released. If, therefore, the outcome of the adjudication proceedings was
nullified by a competent court, and detention certificate was issued by the
Customs Authorities, it was contended that the importer would not be
liable to pay demurrage charges, notwithstanding the contract between
the Shipping Corporation and the importer. In any case, it was contended,
demurrage charges could not be fastened on the Customs Authorities and
that, therefore, in so directing, vide its order dated 18th January, 1999, this
Court had erred.

83. Dealing with the said issue, the Supreme Court held, in para 7 of
the report, that the terms of the contract between the Shipping
Corporation and the CLJ, and the provisions of the Bills of Lading,

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permitted the Shipping Corporation to retain the goods, till all its dues
were paid. This right, it was clarified, could not be nullified by issuance
of a detention certificate by the Customs Authorities, in the absence of
any provision, in the Customs Act, authorizing issuance of such detention
certificate. No such provision, it was observed, had been brought to the
notice of the Supreme Court, as would enable the Custom Authorities to
compel the carrier i.e. the Shipping Corporation, not to charge demurrage
charges, the moment a detention certificate was issued. Inasmuch as the
Shipping Corporation continued to retain a lien over the imported goods,
so long as its dues were not paid, the Supreme Court held that the
Customs Authorities had no power to restrain the Shipping Corporation
from charging demurrage charges, and no such injunction would flow
from the issuance, by the Customs Authorities, of a detention certificate.
The right, of the Shipping Corporation, to charge demurrage charges, it
was held, was owing to the occupation, by the imported goods, of the
space of the Shipping Corporation.

84. The following words, of the Supreme Court, as occurring in para 7
of the report, merit reproduction:

―7….. But that by itself, would not clothe the customs authorities
with the power to direct the carrier who continues to retain a lien
over the imported goods, so long as his dues are not paid, not to
charge any demurrage charges nor the so- called issuance of
detention certificate would also prohibit the carrier from raising
any demand towards demurrage charges, for the occupation of
the imported goods of the space, which the proprietor of the
space is entitled to charge from the importer. The importer also
will not be entitled to remove his goods from the premises unless
customs clearance is given. But that would not mean that
demurrage charges could not be levied on importer for the space
his goods have occupied, since the contract between the importer
and the proprietor of the space is in no way altered because of the

WP (C) 7577/2019 other connected matters Page 44 of 88
orders issued by the customs authorities……………………..We
are unable to accept this contention inasmuch as the expression
otherwise dealt with used in Section 45(2)(b), in the context in
which it has been used, cannot be construed to mean, it authorises
the customs officer to issue a detention certificate in respect of
the imported goods, which would absolve the importer from
paying the demurrage charges and which would prevent the
proprietor of the space from levying any demurrage charges.
Having scrutinized the provisions of the Customs Act, we are
unable to find out any provision which can be remotely construed
to have conferred power on the customs authorities to prevent the
proprietor of the space from levying the demurrage charges and,
thereby absolving the importer of the goods from payment of the
same. In fact the majority decision in Grand Slam Internationals
case4 clearly comes to the aforesaid conclusion with which we
respectfully agree.

(Emphasis supplied)

85. Apropos its earlier decision in Sanjeev Woolen Mills8, the
Supreme Court clarified that there was no inconsistency between the said
decision and Grand Slam4, as Sanjeev Woolen Mills8 turned on its
peculiar facts (to which detailed allusion has already been made
hereinabove) and was, expressly, declared not to constitute a precedent.

86. Even while, therefore, refraining from interfering with the orders,
of this Court, under challenge before it – in view of the dismissal, by the
Supreme Court, of the SLP preferred against the judgement, dated 9 th
September, 1994 – the decision in C. L. Jain Woollen Mills9 also
confirms the position, in law, that (i) the responsibility, to pay
demurrage, was on the importer, and (ii) the Customs authorities were
not possessed of jurisdiction or competence to issue directions,
restraining charging of such demurrage.

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87. Grand Slam4 was relied upon, yet again, by the Supreme Court, in
U.O.I. v. R. C. Fabrics (P) Ltd10, though the main issue in controversy,
in the said case, was different. Vide the said judgement, the Supreme
Court decided three Civil Appeals. The respondent R. C. Fabrics (P) Ltd
(hereinafter referred to as ―RC Fabrics‖) imported a consignment,
declared as 100% polyester fabric, vide Bill of Entry dated 16th August,
1990. The consignment was found to be misdeclared, with respect to
dimensions as well as quantity. At the request of RC Fabrics, show cause
notice was waived, and a formal adjudication order was passed, by the
Assistant Collector, on 15th January, 1991, allowing release, to RC
Fabrics, of the excess goods, on payment of redemption fine of ₹
25,000/- and personal penalty of ₹ 5000/-. The said amounts, along with
Customs duty of ₹ 43,657/-, on the quantity of goods allegedly in excess,
were deposited, by RC Fabrics on 22nd September, 1990. On the same
day, however, officers of the Directorate of Revenue Intelligence (DRI)
detained the consignment which was, subsequently, seized, by the DRI,
on 15th November, 1990.

88. RC Fabrics petitioned this Court, seeking issuance of a mandamus,
to the Customs authorities, to release the aforesaid consignment. The DRI
contested the writ petition, alleging invasion of Customs duty, by RC
Fabrics, of over ₹ 60 lakhs. This Court allowed completion of
investigation, by the DRI, as well as issuance, to RC Fabrics, of Show
Cause Notice, with directions, to RC Fabrics, to respond, thereto, within
48 hours of the receipt thereof. Adjudication was directed to be

10
2002 (139) ELT 12 (SC)

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completed and concluded within one week of completion of the
investigation.

89. Show Cause Notice was issued, to RC Fabrics on 18 th February,
1991, which culminated in the passing, by the Additional Collector of
Customs, of an order, dated 25th February, 1991, directing confiscation of
the aforesaid goods, with option to redeem, on payment of redemption
filed of ₹ 4 lakhs and duty, of over ₹ 60 lakhs. Penalty of ₹ 5 lakhs was
also imposed on RC Fabrics. This order was, however, set aside, by this
Court, on the ground of violation of the principles of natural justice, and
the matter was remanded to the adjudicating authority for decision afresh.
In the said de novo adjudication, the Collector, vide order dated 22nd
October, 1993, dropped the proceedings, on the ground that, the matter
having been adjudicated once, vide order dated 15th January, 1991,
passed by the Assistant Collector, there could be no second adjudication
order in respect of the same consignment. The Collector refrained,
therefore, from entering into the merits of the case. An appeal, preferred
against the said order, dated 22nd October, 1993, of the Collector, was
dismissed, by the Tribunal, on 13th September, 1999, against which SLP
(C) 1663 of 2000 was preferred by the Collector.

90. In the interregnum, vide judgement dated 17th October, 199411, this
Court directed release of the aforesaid imported goods to RC Fabrics, and
also directed the Collector to pay the demurrage, container charges and
ground rent to the CWC, for the period from 16 th January, 1991 till the
date of release of the goods, limiting the liability, to pay demurrage, of
RC Fabrics, to the period prior thereto, i.e. from the date of storage of the
11
R. C. Fabrics (P) Ltd v U.O.I., 1995 (76) ELT 9 (Del)

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goods till 15th January, 1991. This decision was also assailed, by the
Union of India, before the Supreme Court, and decided by the judgement
presently under discussion.

91. The Supreme Court set aside the decision, of the authorities below,
that, in view of the order, dated 15th January, 1991, of the Assistant
Collector, the imported goods could not be adjudicated upon, by the
Collector, once again. For the purposes of the present controversy, it is
not necessary to go into the reasoning, adopted by the Supreme Court, in
that regard. What is relevant is that the Supreme Court also set aside the
direction, of this Court, rendering the Customs authorities liable to pay
demurrage, container charges and ground rent, to the CWC, for the
period after 16th January, 1991, on the ground that the said direction was
contrary to the judgement in Grand Slam4. Grand Slam4 was, thereby,
reiterated and reinforced.

92. The next judgement of significance, chronologically, is Om
Shankar Biyani v. Board of Trustees, Port of Calcutta12. The appellant
Om Shankar Biyani (hereinafter referred to as ―Biyani‖) imported a
consignment of bearings, vide Bill of Entry dated 13th July, 1989. The
goods were seized on 1st August, 1989. Biyani filed a writ petition in the
High Court of Calcutta. Vide order dated 27th September, 1989, the High
Court permitted Biyani to clear the goods on payment of duty, as
assessed, on the basis of the CIF value as appearing in the invoice. Biyani
was, however, directed to furnish a bank guarantee, for the difference
between the duty found payable on proper assessment, and the duty being

12
2002 (140) ELT 321 (SC)

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paid by it. The order did not, however, allow removal, by Biyani, of the
goods, without payment of the charges due to the Board of Trustees. The
order dated 27th September, 1989 was, however, modified, by the High
Court, vide order dated 15th December, 1989, directing that the goods be
stored in a Customs bonded warehouse. Till this stage, the Board of
Trustees was not impleaded as a party in the proceedings.

93. When, on the basis of the order, dated 15th December, 1989, Biyani
attempted to remove the goods and shift them to the bonded warehouse,
without paying demurrage, the Board of Trustees resisted. Biyani,
thereupon, impleaded the Board of Trustees as a party in the writ petition.
Vide order dated 2nd February, 1990, the High Court permitted Biyani to
remove the goods to the bonded warehouse, without payment of port
charges to the Board of Trustees, and also directed the Board of Trustees
not to object. Biyani was merely directed to furnish an undertaking to pay
all charges, as well as Custom duty, consequent on the issue being
adjudicated. This order was assailed, by the Board of Trustees, before the
Division Bench, which stayed the order.

94. In the interregnum, the Customs authorities lifted the seizure of the
goods, on 19th December, 1989. Biyani, nevertheless, made no effort to
clear the goods, but allowed them to remain with the Board of Trustees,
despite the mounting demurrage.

95. The aforesaid writ petition, filed by Biyani, was disposed of, by a
learned Single Judge of the High Court, vide order dated 16th September,
1991, by directing the Customs authorities to complete adjudication in a

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time bound manner. It was further directed, by the learned Single Judge,
that, were the adjudication proceedings to end in favour of Biyani,
demurrage would be borne by the Customs authorities. It was further held
that the Board of Trustees could claim demurrage only till 2 nd February,
1990, i.e. the date of order, of the High Court, permitting Biyani to
remove the goods without payment of port charges.

96. The Board of Trustees appealed. In the appeal, vide interim order
dated 16th November, 1991, Biyani was permitted to clear the goods on
payment of demurrage till 2nd February, 1990, subject to furnishing of
Bank Guarantee in the name of the Chairman of the Board of Trustees,
covering the charges of the Board of Trustees from 3 rd February, 1990,
till the date of the Bank Guarantee. Biyani, however, neither paid
demurrage till 2nd February, 1990, nor furnished the Bank Guarantee. The
appeal was disposed of, by the Division Bench of the High Court, vide
order dated 27th July, 2000, whereby the directions, of the learned Single
Judge, permitting recovery of demurrage, by the Board of Trustees only
till 2nd February, 1990, was set aside, and the Board of Trustees was held
entitled to recover demurrage for the entire period during which the
goods remained with it.

97. This order, dated 27th July, 2000, was challenged, by Biyani,
before the Supreme Court.

98. The Supreme Court first extracted Section 58 of the Major Port
Trusts Act, 1963, which clearly provides that, in respect of goods to be
removed from the premises of the Board of Trustees, demurrage would

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be payable before the goods are so removed. In view of this categorical
statutory position, the Supreme Court held that the High Court had
seriously erred in permitting removal of the goods without payment of
port charges. It was observed that the Board of Trustees was not
concerned with the question of the person who would have to bear the
said charges. Biyani being interested in clearance of the goods, it was the
responsibility of Biyani to pay the charges and clear the goods. The
Supreme Court went on to hold that, even if Biyani were to contend that
demurrage was required to be borne by the Customs authorities, Biyani
ought to, first, have cleared the goods by paying demurrage to the Board
of Trustees and, thereafter, claimed reimbursement from the Customs
authorities.

99. The Supreme Court further noticed that Section 59 of the Major
Port Trusts Act conferred statutory lien, on the Board of Trustees, over
the goods consigned to its custody, whereunder it was entitled to retain
the goods until all amounts, payable to it, were paid. The direction, of the
High Court, permitting removal of the goods, from the custody of the
Board of Trustees, without payment of the charges due to the Board, it
was held, resulted in setting at naught this statutory lien.

100. The Supreme Court also discountenanced the observation, of the
High Court, that, having exercised its lien over the goods, the Board of
Trustees was estopped from claiming demurrage. The Supreme Court
opined that the proposition that a bailee, who exercises a lien, is not
entitled to charge rent for storage of goods, could never apply to a case
where the lien was invoked for non-payment of rent, or storage charges.

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The Supreme Court provided an involved reasoning, to support this
finding, with which we need not concern ourselves. Suffice it to state that
the Supreme Court endorsed, entirely, the insistence, of the Board of
Trustees, on payment of demurrage, to it, before allowing clearance of
the goods of Biyani. It also endorsed the conclusion, of the Division
Bench of the High Court, that the Board of Trustees was entitled to
recover all charges till the date the goods remained with it.

101. On facts, thereafter, the Supreme Court held that, as the Board of
Trustees had applied, to the Division Bench of the High Court, for
permission to sell the goods, and that, vide order dated 10th January,
1992, passed on the said application, the Division Bench had held that the
cause of action had to be decided by the Board of Trustees itself, the
Board of Trustees ought to have sold the goods at that stage, especially as
it was aware, by then, that Biyani was not paying demurrage. Inasmuch
as the High Court had permitted the Board of Trustees to take recourse to
actions permissible in law, and sale was one of the courses of action
permitted by the Major Port Trusts Act, the Supreme Court held that the
Board of Trustees ought not to be allowed to charge demurrage charges
after 10th January, 1992. This decision, however, obviously turns on the
peculiar facts before the Supreme Court, and cannot be treated as
constituting part of the ratio decidendi of the judgement in Om Shanker
Biyani12 which, otherwise, reiterated and reinforced the principle that the
Board of Trustees/custodian was entitled to charge demurrage for the
period over which the goods were consigned to its custody.

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102. The last judgement of the Supreme Court, in this list, would be
Jindal Drugs Ltd v. U. O. I.13. The appellant Jindal Drugs Ltd
(hereinafter referred to as ―Jindal‖) moved the Supreme Court,
challenging the decision, of the High Court of Bombay, whereby, even
while holding Jindal to be entitled to issuance of a detention certificate
and refund of detention charges paid to the Customs authorities, it was
directed to move the Port Trust authorities, insofar as its claim for
payment/refund of demurrage/Port Trust charges, was concerned. The
Supreme Court noted that the reluctance, of the Customs authorities, to
permitting clearance of the goods imported by Jindal, was owing to a
dispute regarding the meaning and import of clause (iv) of the second
proviso to Condition (2) of Notification 100/1995-Cus, dated 30th May,
1995, whereunder credit had been availed by Jindal. It was also noticed
that the CBEC had issued directions, on 19th February, 1996, which
virtually prohibited the Commissioner of Customs from clearing the
goods. The goods were ultimately cleared on the basis of interim
directions, passed by the High Court on 15 th April, 1996. Subsequently,
on 14th May, 1996 , the Revenue conceded that Jindal was entitled to
the benefit of credit. Before the High Court, as well as before the
Supreme Court, Jindal contended that, as the subsequent reneging, by the
Customs, on the stance originally adopted by it, regarding the
entitlement, of Jindal, to credit, disclosed, the detention of the goods, by
the Customs authorities, was completely unlawful. In this scenario,
contended Jindal, the liability to pay demurrage had necessarily to fall on
the Customs authorities. Having failed to succeed in convincing the High
Court in that regard, Jindal appealed to the Supreme Court.

13

2018 (361) ELT 769 (SC)

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103. The Supreme Court rejected the submission. Observing that the
facts did not disclose existence of any mala fide intent, or extraneous
consideration, attributable to the Revenue, in detaining, and refusing to
clear, the goods of Jindal, and that the reluctance, of the Revenue, in that
regard, was owing to a possible understanding of the provisions of
Notification 100/95-Cus supra, the Supreme Court held that no case, to
mulct the Revenue with the liability to pay demurrage, could be said to
have been made out. The decision of the High Court was, consequently,
affirmed.

104. From the afore-cited decisions, the following clear principles
emerge:

(i) The custodian has a lien over the imported goods, consigned
to its custody. This lien may be statutory, as provided under the
IAA Act, all the Major Port Trusts Acts, or contractual. It may also
be relatable to Sections 170 and 171 of the Indian Contract Act,
1872.

(ii) This lien entitles the custodian to retain hold of the goods,
consigned to its custody, till all its dues, including ground rent and
demurrage, are paid.

(iii) The Customs authorities have no power, or the jurisdiction,
to issue any instruction, to the custodian, requiring the custodian to
waive, in whole or in part, the demurrage chargeable by it. Of
course, this would be subject to any stipulation, in the statutory or
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other instrument governing the affairs of the custodian, to the
effect that, where the detention certificate was issued by the
Customs authorities, the importer would be entitled to waiver of
demurrage, in whole or in part. In the absence of any such
stipulation, statutory or otherwise, the Customs authorities could
not, by issuance of the detention certificate, or by any other
communication, direct the custodian not to charge demurrage, or to
waive the whole, or part, of the demurrage chargeable by it.

(iv) In applying the above principles, the issue of whether the
goods in question had been licitly, or illicitly, imported, as also the
detention of the goods, by the Customs authorities, was justified or
unjustified, bona fide or mala fide, are entirely irrelevant.

(v) The liability to pay the demurrage is on the importer,
irrespective of the justifiability, or unjustifiability, of the seizure
and detention of the goods by the Customs authorities. Even in a
case in which the seizure is entirely unjustified, the importer
would, in the first instance, have to pay demurrage, to the
custodian and, thereafter, pursue, with the Customs authorities, for
obtaining reimbursement of the amount.

(vi) The only exception, to the application of the above
principles, is in a case in which the custodian himself is guilty of
unconscionable delay, or of continuing to hold onto the goods
without good reason or authority.

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(vii) Rates of demurrage were deliberately made prohibitive, so
as to discourage importers from consigning goods to the custody of
the Port Trust or other custodian, and to avoid congestion at the
port.

Does Regulation 6(1)(l) of the Handling of Cargo Regulations change
this position?

105. The Handling of Cargo Regulations were notified vide Notification
26/2009-Cus (NT), dated 17th March, 2009, issued in exercise of the
powers conferred by Section 141(2), read with Section 157 of the
Customs Act. Regulation 6(1)(l), which stands extracted in para 2
hereinabove, stipulates that the Customs Cargo Service provider shall,
subject to any other law for the time being in force, not charge any rent or
demurrage on goods seized, detained, or confiscated by the Customs
authorities. To our mind, it appears a trifle incongruous that, even in a
case where the goods are confiscated, i.e. where the import is illicit and
in contravention of the provisions of the Customs Act, the importer
should escape demurrage. As the legality of Regulation 6(1)(l) is,
however, not in question in these proceedings, we refrain from opining
further in that regard.

106. Regulation 6(1)(l) makes for fairly plain reading. It completely
injuncts the Customs Cargo Services provider from charging demurrage
or rent, on the seized, detained, or confiscated goods, subject, however,
to any other law for the time being in force.

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107. There is no dispute about the fact that CELEBI is a ―Customs
Cargo Services provider‖, as defined in clause (b) of Regulation 2 of the
Handling of Cargo Regulations.

108. Given the law, relating to the charging of demurrage, as it emerges
from the decisions cited hereinabove, the highest that the petitioner could
contend, therefore, is that there is no ―other law for the time being in
force‖, as would mitigate the effect of Regulation 6(1)(l) of the Handling
of Cargo Regulations.

109. Per contra, in order to escape the rigour of Regulation 6(1)(l), the
Customs Cargo Service provider – in the present case, CELEBI – would
have to establish that its entitlement, to charge demurrage, is relatable to
―any other law for the time being in force‖.

110. At this juncture, we may refer, profitably, to the judgment of the
Supreme Court in Mumbai Port Trust v. Shri Lakshmi Steels14, in which
note, of Regulation 6(1)(l), has been taken. The respondent, before the
Supreme Court, imported cold rolled sheets and coils. The DRI directed
the consignment to be placed on hold, on 14 th December, 2015. On 28th
December, 2015, the DRI wrote, again, to the Customs authorities,
stating that specific intelligence had been received, that Shri Lakshmi
Steels (hereinafter referred to as ―SLS‖), and its associated firms, had
been importing consignments in violation of notifications issued by the
Customs authorities. The Customs authorities were, therefore, requested
to have the goods subjected to 100% examination. In the meantime, on

14
2017 (352) ELT 401 (SC)

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18th December, 2015, SLS requested that the goods, covered by Bills of
Entry dated 4th December, 2015 and 11th December, 2015, be
provisionally assessed and released, so as to avoid mounting demurrage
the detention charges. Three reminders followed. Thereafter, samples of
the goods were drawn and tested, whereupon they were found to conform
to the description, as proposed by SLS. It appears that, thereafter, the
goods were retested and that, this time, the test report was in favour of
the Customs authorities.

111. On 1st February, 2016, SLS wrote to the Commissioner, seeking
issuance of detention certificates, so that they could secure waiver of
demurrage and detention charges. On 23rd February, 2016, the goods
were seized, and SLS was directed to approach the concerned authority,
for provisional release thereof. The request, of SLS, for issuance of
detention certificate, was rejected, by the DRI, on 5th February, 2016. As
it happened, for one reason or the other, the goods were not released.

112. On 22nd April, 2016, the Shipping Line issued a notice, to SLS,
intimating that it proposed to auction the goods, to recover the detention
charges. Fresh writ petitions were, thereafter, filed by SLS and other
similarly situated importers. Vide order dated 12th July, 2016, the High
Court directed that the goods be released on payment of duty due
thereon, the issue of detention and demurrage charges being deferred for
decision later. This order was challenged, before the Supreme Court, by
way of SLP (C) 23479/80 of 2016, which was allowed on 15 September,
2016, with a direction, to the High Court, to dispose of the writ petition at

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an early date. In the interregnum, release/auction of the imported goods
was stayed.

113. This resulted in the passing, by the High Court, of judgement,
dated 23rd December, 2016, whereagainst the matter was carried, in
appeal to, the Supreme Court. The High Court found that SLS had been
harassed by the DRI and, therefore, ordered that SLS was not liable to
pay any demurrage, which the Port Trust was directed to waive.
Detention charges were directed to be borne by the DRI, or the Customs
authorities.

114. The Supreme Court delineated the two issues, arising before it for
consideration, as ―(1) whether any direction could be given to the
Mumbai Port Trust to waive the demurrage charges and (2) whether the
liability to pay the demurrage/detention charges in respect of the
imported goods could be fastened upon the DRI/Customs Authorities.‖

115. Noting that the Mumbai Port Trust was a statutory authority,
functioning under the aegis of the Major Port Trusts Act, 1963, the
Supreme Court, at the outset of its reasoning, extracted various
provisions of the Major Port Trusts Act and the Customs Act and
proceeded, thereafter, to refer to the various judgements, rendered by it
earlier, to which allusion already stands made hereinabove. On issue (1)
supra, as framed by it, the Supreme Court went on to answer the issue in
the negative, i.e. by holding that the Mumbai Port Trust was entitled to
charge demurrage, for the following reasons:

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(i) Section 160(9) of the Customs Act clearly laid down that
nothing, in the said Act, shall affect the power of the Port
Authority in a Major Port, as defined in the Major Port Trusts Act.
There was no dispute about the fact that the Mumbai Port Trust
was a Major Port.

(ii) The Mumbai Port Trust had power and authority to levy
rates, including demurrage, under Section 47A of the Major Port
Trusts Act. This right of the Port Trust was not affected either by
the provisions of the Customs Act, or by the Handling of Cargo
Regulations. Besides, the Regulations were in the nature of
subordinate legislation. Subordinate legislation, especially when
framed by the CBEC under the Customs Act, could not affect, in
any manner, the power and authority of the Major Port Trust,
statutorily vested in it.

(iii) This was made manifest in the Handling of Cargo
Regulations, by the use of the words ―subject to any other law for
the time being in force‖, at the start of Regulation 6(1)(l). ―Any
other law for the time being in force‖ would include the Major Port
Trusts Act. The right of the Port Trust, to charge demurrage, which
emanated from the Major Port Trusts Act could not, therefore, be
defeated by Regulation 6(1)(l).

For the above reasons, it was held that “the High Court erred in holding
that the law settled by this court in a catena of judgements referred to
above was no longer applicable in view of the 2009 Regulations”.

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116. The Supreme Court addressed, next, the issue of whether the DRI,
or the Customs authorities, could be saddled with the demurrage charges,
payable to the Port Trust, and the detention charges payable to the
Shipping Line. This issue, it was held, was no longer res integra, the
judgements, cited hereinabove, having clearly held that, even if the
importer were not at fault, the liability to pay demurrage would fall on
him. It was held, further, that ―the DRI/Customs authorities can be
directed to pay the demurrage/detention charges only when it is proved
that the action of the DRI/Customs authorities is absolutely mala fide or
is such a gross abuse of power that the officials of the DRI/Customs
should be asked to compensate the importer for the extra burden which
he has to bear‖. Even in such cases, the Supreme Court hastened to
clarify, the importer had, necessarily, to, in the first instance, to ―clear
the goods by paying the charges due and then claim reimbursement from
the Customs authority‖. In this context, the Supreme Court also observed
that charges of mala fide were serious, and required a high degree of
proof.

117. In these circumstances, the Supreme Court effectively answered
both the issues, framed by it, against the importer, holding that (i) the
Mumbai Port Trust was entitled to charge demurrage and (ii) the liability,
to pay the said demurrage, was on the importer. On facts, the Supreme
Court also held that no such factors could be said to exist, which would
justify transference, of the said liability, on to the Customs authorities. It
was observed that, even if there was some delay on the part of the
Customs authorities, equally, there was delay on the part of the importer
as well. The Supreme Court, however, clarified that the importers were

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free to approach the Port Trust, under Section 53 of the Major Port Trusts
Act, seeking extension and revision of demurrage and other charges, and
opined that the Board of Trustees could take a sympathetic view in the
matter.

118. The Supreme Court also held – though this may not be strictly
relevant for the present proceedings – that, insofar as the detention
charges, payable to the Shipping Line, were concerned, the issue being
one of contract, this Court could not, in writ proceedings, have directed
the DRI, or the Customs authorities, to pay the said charges to the
Shipping Line.

119. In any event, insofar as the right of the Mumbai Port Trust, to
charge demurrage, was concerned, therefore, the Supreme Court has held,
clearly and unequivocally, that the law, as laid down from Aminchand
Pyarelal1 downwards, through Grand Slam4 and the judgements which
followed it, continues to apply, despite Regulation 6(1)(l) of the Handling
of Cargo Regulations having come into force. It has also been clarified,
yet again, that the liability to pay demurrage was on the importer, for
ensuring clearance of the goods. In a case in which the Customs
authorities were found to have acted in a manner which was grossly mala
fide, the importer could seek reimbursement, of the said amount, from the
Customs authorities; even in such a case, however, the importer would,
in the first instance, have himself to pay demurrage and clear the goods.

120. Is the position in any different, in respect of CELEBI, and its right
to charge demurrage?

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121. We do not think so.

122. Insofar as the right of CELEBI, to charge demurrage, is concerned,
we are of the opinion that, legally speaking, the position, qua the said
right, is the same as that which obtained in respect of the Mumbai Port
Trust, even though CELEBI is, admittedly, not covered by the Major Port
Trusts Act. We say so because, even in the case of CELEBI, demurrage
is charged on the basis of Regulations which are statutory by nature and
which, therefore, partake of the character of ―any other law for the time
being in force‖, for the purposes of Regulation 6(1)(l) of the Handling of
Cargo Regulations.

123. Mr. Rakesh Tiku, learned Senior Counsel appearing on behalf of
CELEBI, has demonstrated this, by explaining the statutory basis, for the
charging of demurrage, by CELEBI, thus:

(i) The AAI was constituted by the Airports Authority of India
Act, 1994 (hereinafter referred to as ―the AAI Act‖). The
preamble, to the AAI Act, recited that the Act was meant to
provide for the Constitution of the AAI, and for the transfer and
vesting of the undertakings, of the IAAI and National Airports
Authority, in the AAI.

(ii) Section 3 (1) of the AAI Act declared that the AAI stood
constituted vide Notification, in the Official Gazette, issued by the
Central Government. Section 13(1) transferred to, and vested in,

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the AAI, the undertakings of the IAAI and National Airports
Authority. All rights, powers, authorities and privileges, earlier
vested in the IAAI, stood transferred, by sub-section (2) of Section
13, in the AAI.

(iii) Section 12 of the AAI Act stipulates that it shall be the
function of the AAI, to manage the airports. Clause (g) of sub-
section (3) of Section 12 specifically empowers the AAI to
establish warehouses and cargo complexes, at airports, for the
storage and processing of goods.

(iv) Section 42 of the AAI Act empowers the AAI to make
regulations, specifically for the storage of and processing of goods
in any warehouse established by the AAI under Section 12(3)(g),
and for charging of fees for such storage and processing. In
exercise of the said power, the AAI notified the Airports Authority
of India (Storage and Processing of Cargo, Courier and Express
Goods and Postal Mail) Regulations, 2003 (hereinafter referred to
as ―the AAI Regulations‖), which came into effect on 13th June,
2003.

(v) ―Cargo Handling Agency‖ is defined, in clause (i) of
Regulation 2 of the AAI Regulations, as meaning ―a person, firm
or company handling cargo as an agent of the Authority or the
licensee and may include the Authority‖. As such, Mr. Tiku points
out, the AAI Regulations permitted licensing/delegation, of the
function of handling of the cargo, by the AAI, to its agent.

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(vi) ―Demurrage‖ is defined, in clause (n) of Regulation 2 of the
AAI Regulations, as meaning ―the rate or amount of charges
payable to the Authority by the shipper or consignee or carrier or
agent or passenger for utilising storage facility at Cargo Terminal,
for storage of cargo, goods, unaccompanied baggage, stores,
courier bags, express parcels, Postal mail, etc. for extended period
beyond the stipulated free storage period for clearance or removal
from the Cargo Terminal of the Authority or for the Customs at the
Cargo Terminal‖.

(vii) Regulation 3 of the AAI Regulations sets out the ―Procedure
and documents required for storage, processing and handling of
cargo‖. Sub- regulation (b), thereof, stipulates that the AAI shall
deliver the consignment to the consignee or the authorised agent
―after collecting applicable charges and obtaining a valid receipt
from the consignee or the authorised agent of having received the
goods‖.

(viii) The same sub-Regulation also stipulates that, till the said
charges are paid, the AAI ―shall have a lien on cargo or goods‖.

(ix) The authority to levy demurrage charges stems from
Regulation 4 of the AAI Regulations, which reads as under:

―4. Levy of Charges. – The Authority shall levy
charges, which may include Terminal handling including
‗unitization’ and ‗destuffing’ charges, facilitation charges,
Terminal Storage and Processing Charges, security
screening charges, Electronic Data Interchange or Value
Added Network service charges, demurrage and special
charges for live animals, hazardous cargo, radioactive
cargo, express cargo, courier and cargo requiring strong

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room facilities. The Authority may levy any other charges
for which services are provided by it to its users under the
provision of these regulations, which may include the
operations of Brake-bulk or consolidation of cargo and
handling of Postal Mail, etc.‖

(x) Regulation 6 of the AAI Regulations provides for ―Waiver
of Charges‖, and empowers the AAI to, ―from time to time, lay
down the procedure and policy for waiver of demurrage charges‖
under the said Regulations.

(xi) Section 12A of the AAI Act empowers the AAI to, in public
interest or the interest of better management of airports, ―make a
lease of the premises of an airport (including buildings and
structures thereon and pertaining thereto) to carry out some of its
functions under section 12 as the Authority may deem fit‖. The
proviso, to the said sub- section (1), however, clarifies that the said
lease ―shall not affect the functions of the Authority under section
12 which relates to air traffic service or watch and ward at airports
in civil enclaves‖. Functions, other than air traffic, and watch and
ward services can, therefore, be leased, by the AAI.

(xii) Sub-section (4), of Section 12A, of the AAI Act, reads thus:

―(4) The lessee, who has been assigned any function of
the Authority under sub-section (1), shall have all the
powers of the Authority necessary for the performance of
such functions in terms of the lease.‖

(xiii) In exercise of the powers conferred by Section 12A of the
AAI Act supra, the AAI entered into an Operation, Management

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and Development Agreement (hereinafter referred to as ―OMDA‖),
on 4th April, 2006, with the Delhi International Airport Pvt Ltd
(hereinafter referred to as ―DIAL‖). The said agreement has been
placed on record. The agreement recites that the AAI ―in the
interest of the better management of the Airport … and/or overall
public interest, is desirous of granting some of its functions, being
the functions of operating, maintaining, developing, designing,
constructing, upgrading, modernising, financing and managing the
Airport to the JVC and for this purpose to lease the premises
constituting the Airport Site … in accordance with the terms and
conditions set forth herein‖. ―JVC‖, it may be noted, is the
acronym employed, in the OMDA, to refer to the DIAL.

(xiv) Chapter II of the OMDA deals with the ―Scope of Grant‖,
thereunder. Article 2.1 (the OMDA refers to its various Clauses as
―Articles‖), in Chapter II, reads thus:

―2.1 Grant of Function

2.1.1 AAI hereby grants to the JVC, the exclusive right
and authority during the Term to undertake some of the
functions of the AAI being the functions of operation,
maintenance, development, design, construction,
upgradation, modernisation, finance and management of
the Airport and to perform services and activities
constituting Aeronautical services, and Non-Aeronautical
Services (but excluding Reserve the Activities) at the
Airport and the JVC hereby agrees to undertake the
functions of operation, maintenance, development, design,
construction, upgradation, modernisation, finance and
management of the Airport and at all times keep in good
repair and operating condition the Airport and to perform
services and activities constituting Aeronautical suit
Services and Non-Aeronautical Services (but excluding

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Research Activities) at the Airport, in accordance with the
terms and conditions of this Agreement (the ―Grant‖).

2.1.2 Without prejudice to the aforesaid, AAI recognises
the exclusive right of the JVC during the Term, in
accordance with the terms and conditions of this
Agreement, to:

(i) develop, finance, design, construct,
modernise, operate, maintain, use and regulate the
use by 3rd parties of the Airport;

(ii) enjoy complete and uninterrupted
possession and control of the Airport Site and the
Existing Assets for the purpose of providing
Aeronautical Services and Non-Aeronautical
Services;

(iii) determine, demand, collect, retain an
appropriate charges from the users of the Airport
in accordance with Article 12 hereto; and

(iv) Contract and/or sub contract with 3rd
parties to undertake functions on behalf of the JVC,
and sub- lease and/or license the Demise Premises
in accordance with Article 8.5.7.”

(Emphasis supplied)

(xv) It was, Mr. Tiku points out, in exercise of the power
conferred by Article 2.1 of the OMDA, that CELEBI was assigned
the function of managing cargo, vide Concession Agreement dated
24th August, 2009, executed between the DIAL and CELEBI. The
introductory paras of the said Agreement contained, inter alia, the
following recitals:

―WHEREAS

A. The Airport Authority of India and DIAL have
entered into an Operation, Management and Development

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Agreement dated April 4, 2006 (―OMDA‖) whereby AAI
has granted to DIAL the exclusive right and authority
during the term of the OMDA (including any renewal
thereof) to operate, maintain, develop, design, construct,
upgrade, modernise, finance and manage the Airport.

*****

B. Pursuant to the terms of the OMDA, DIAL is, inter
alia, entitled to grant concession to 3rd parties for the
purpose of upgradation, modernisation, finance, operation,
maintenance and management of the Cargo Terminal at
the Airport.

*****

E. After evaluating all the Proposals received by
DIAL, DIAL accepted the proposal submitted by Celebi
and issued a Letter of Award to Celebi for award of the
Concession.‖

(xvi) Chapter 2 of the Concession Agreement dealt with the exact
terms of the ―Grant of Concession‖, and Clause 2.1, thereunder,
reads thus:

―In consideration of the Concession Fee, License Fee,
Utility Charges and other payments as specified under this
Agreement and the Concessionaire’s governance
hereinafter reserved and contained in this Agreement,
DIAL hereby grants to the Concessionaire and the
Concessionaire hereby accepts from DIAL, the right to
upgrade, modernise and finance the Cargo Terminal and
operate, maintain and manage the Cargo Terminal and
provide Services at the Airport from the Cargo Terminal
during the Concession Period, in accordance with Good
Industry Practice, Applicable Laws and terms and
conditions of this Agreement.‖

(xvii) Clause 3.1.1 of the Concession Agreement requires CELEBI
to pay, to DIAL, commencing from the date of handing over, a

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Concession Fee for every month, equal to 36% of the Gross
Revenue, as was agreed to, by CELEBI, in its tender proposal.‖
Clause 3.4, titled ―License Fee‖, similarly, requires ―CELEBI to
pay, to DIAL, till the date of expiry or termination of the
Concession Agreement, an annual License Fee for the user right to
the Cargo Terminal, which shall be calculated on the basis of the
floor area of the warehouse (approximately 70,000 square metres),
and shall be payable in advance for each year, within 7 days of the
commencement of the year. The said annual License Fee is subject
to upward revision on year to year basis at the rate of 7.5% per
annum. At the time of entering into the Concession Agreement, the
licensee, payable w.e.f. 1st April, 2009, was ₹ 2098/-, per square
metre.‖ Mr. Tiku informs us that the License Fee has, since, been
periodically enhanced and is, presently, ₹ 5000/-, per square
metre. This, therefore, would require CELEBI to pay, to DIAL,
presently, License Fee, @ ₹ 35,00,00,000/- per year. This being the
financial outlay, on CELEBI, Mr. Tiku voices his undisguised
chagrin at the Customs authorities directing CELEBI not to charge
any demurrage from the petitioner.

124. Mr. Tiku also draws our attention to clauses 6.1.2 and 6.1.3 of the
Concession Agreement, regarding development and up-gradation of the
cargo terminal, which read thus:

―6.1.2 The Concessionaire shall at its own cost and responsibility
upgrade, modernize, finance, operate, maintain and manage the
Cargo Terminal including but not limited to providing;
maintaining and upgrading all such equipments and materials
necessary for operating, maintaining and managing the same for
rendering the Services.

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6.1.3 The Concessionaire shall, while upgrading, modernizing,
financing, operating, maintaining and managing the Cargo
Terminal, take into consideration and be responsible for
compliance with all relevant provisions of the Applicable Laws,
parameters set out in the Business Plan and obtain all such
Approvals as may be necessary for the implementation of the
Concession including but not limited to complying with the
relevant development standards as stipulated under the OMDA.‖

For all the aforesaid reasons, Mr. Tiku submits that the entitlement, of
CELEBI, to recover demurrage charges, from the petitioner, cannot be
gainsaid.

125. Mr. Tiku has also endeavoured to submit, before us, that no case,
meriting waiver of demurrage, can be said to exist, in view of the waiver
policy of CELEBI. He draws our attention, in this context, to clause
10.1.10 of the waiver policy, which reads thus:

―10.1.10 Demurrage charges shall not be waived where:

(a) Any fine/penalty/personal penalty/warning is
imposed by the Customs Authority

(b) Delay arose by reason of dispute in the assessable
value or for revalidating or correcting the license in
ordinary course of appraisal.‖

126. Mr. Tiku points out that cases, in which fine/penalty/personal
penalty, is imposed by the Customs authorities, stand, ipso facto,
disentitled to waiver from demurrage. Even on merits, therefore, Mr. Tiku
would seek to submit that no case exists to exempt, or waive, payment of
demurrage, in the case of the petitioner.

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127. We have no manner of doubt, whatsoever, in our mind, that in view
of the above factual and legal position, the charging of demurrage, by
CELEBI, is by authority of statute, or contract sanctified by statute.
CELEBI charges demurrage as per the clauses of the agreement between
CELEBI and DIAL which, in turn, was entered into, in accordance with
Article 2.1 of the OMDA which, again in turn, was authorised by Section
12A of the AAI Act.

128. This, in our view, clearly constitutes, ―law for the time being in
force, within the meaning of the expression, as employed in Regulation
6(1)(l) of the Handling of Cargo Regulations.

129. In Shrimani Sugar Mills v. Governor General In Council15, it has
been held that the expression ―law for the time being in force‖, concerning
any particular matter, ―whether it be the collection of revenue or anything
else, is a comprehensive expression which includes, not one particular
statute, but the whole body of law, whether in one or more statues or
outside a statute altogether, which for the time being governs that
particular matter‖. An administrative order, which has no authority of
statute, however, is not law, as held in Dwarka Nath Tiwari v. State of
Bihar16.

130. The expression ―law‖ has also been, from time to time, expansively
interpreted.

15

AIR 1954 All 354
16
AIR 1959 SC 249

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131. In Rashid Ahmed v. Municipal Board, Kairana17, it was held that,
―law‖ includes bye-laws made by local authorities. A resolution of the
government, fixing dearness allowance was held, in State of Madhya
Pradesh v. G.C. Mandawar18, to constitute ―law‖. As employed in Article
13 of the Constitution of India, it stands authoritatively held, in Ram
Krishna Dalmia v. Justice S.R. Tendolkar19, that the expression ―law‖
includes any notification or order. To the same effect, is Narender
Kumar v. U.O.I.20. A scheme, drawn for running motor carriages, was
held to constitute ―law‖, in H.C.Narayanappa v. State of Mysore21. In
Sant Ram v. Labh Singh22 it was held that the expression ―law‖ means
any ordinance, order, bye-law, rules, regulations, notification, custom or
usage, having, in the territory, the force of law. In Raj Kumar Narsingh
Pratap Singh Deo v. State of Orissa23, the Supreme Court held that ―law
generally is a body of rules which had been laid down for determining
legal rights and regulations which are recognised by courts‖.

132. The expression ―law‖ and, consequently, the expression ―any other
law for the time being in force‖ are, therefore, required to be
compendiously interpreted, rather than infusing, into the said expression,
any unwarranted restrictions.

133. The charging of demurrage by the CELEBI, being in terms of the
concessionaire agreement, between the DIAL and CELEBI, which was
entered into, by them, in terms of the OMDA, which, in turn, stands

17
AIR 1950 SC 163
18
AIR 1954 SC 493
19
AIR 1958 SC 538
20
AIR 1960 SC 430
21
AIR 1960 SC 10730
22
AIR 1965 SC 3314
23
AIR 1964 SC 1793

WP (C) 7577/2019 other connected matters Page 73 of 88
sanctified by Section 12A of the AAI Act, in our opinion, the CELEBI
must be treated as charging, and recovering, demurrage, in accordance
with ―law for the time being in force‖.

134. The inevitable sequitur would be that the injunction, engrafted in
Regulation 6(1)(l) of the Handling of Cargo Regulations, on the charging
of demurrage in respect of goods detained/seized, or confiscated by the
customs authorities, would not apply to, or affect, CELEBI. It has to be
remembered, in this context, that CELEBI is required to pay a colossal
sum of ₹ 35,00,00,000/-, every year (which is subject to further upward
revision) to the DIAL. There is, therefore, substance in Mr. Tiku’s
protestation, that the CELEBI cannot be expected to cede its right to
charge demurrage, solely on the basis of a ―direction‖ by the Customs
authorities.

135. It is also settled, by the decisions cited hereinabove, that the
liability, to pay demurrage to the CELEBI, was of the petitioner. In view
of the facts recited in paras 7 to 13 supra, we are unable to hold that the
Customs authorities have acted mala fide or have contributed, in any
manner, to delay in release of the consignment imported by the petitioner.

136. We deem it appropriate to add, here, that the Customs authorities,
while exercising their power of search, seizure and investigation, are
essentially discharging sovereign functions. A reasonable amount of time
is expected to be expended in this process, and the mere fact that, by
reason of the investigative exercise conducted by the Customs authorities,
it has not been possible for the importer to clear its goods, cannot, ipso

WP (C) 7577/2019 other connected matters Page 74 of 88
facto, lead to transference of liability to pay demurrage, to the Customs
authorities.

137. It is only where a clear case of unquestionable delay, bordering on
mala fides and demonstrative of unreasonable harassment of an importer,
is made out, that the customs authorities can be mulcted with the liability
to pay demurrage or detention charges.

138. Such is the law, as enunciated by the Supreme Court in a plethora
of decisions cited hereinabove and, with the same, we express our
respectful concurrence.

139. Responding to the aforesaid submissions of Mr. Tiku, Mr.
Priydarshi Manish, learned counsel for the petitioner draws our attention
to a communication, dated 16th May, 2019, addressed by the Deputy
Commissioner of Customs to CELEBI, informing CELEBI that the case
in issue, covered by Bills of Entry, dated 3 rd May, 2019, were required to
be shifted to the office of the Commissioner of Customs. Having carefully
read the said communication, we are, however, of the opinion that it can
be of no substantial assistance, insofar as the petitioner’s case is
concerned. The said communication merely conveys, to CELEBI, the fact
that the seized goods were to be shifted to the office of the Commissioner.
Such a communication cannot, in our view, result in compulsory
abandonment, by CELEBI, of its right to recover demurrage. Indeed, as
held by the Supreme Court in the authorities already cited hereinabove,
the Customs authorities have no jurisdiction, whatsoever, to injunct
CELEBI from recovering the demurrage charges, otherwise recoverable
by it in law.

WP (C) 7577/2019 other connected matters Page 75 of 88

140. Mr. Manish also referred us to communications, dated 13th March,
2019, from the Chief Commercial Officer of DIAL to the Chief
Commissioner of Customs, and dated 15th March, 2019, from the Joint
Commissioner of Customs to DIAL, by way of response thereto.

141. The submission of Mr. Manish is that, in the letter dated, 13 th
March, 2019, there is a categorical undertaking, by DIAL, to the Chief
Commissioner of Customs, to the effect that no demurrage would be
charged, by the custodian, i.e. CELEBI, in the present case, for the period
for which detention certificate was issued by the customs authorities, and
that, in fact, it was subject to this undertaking, that the request, of DIAL,
for renewal of its license to continue as a cargo service provider, under the
Handling of Cargo Regulations, was accepted and allowed.

142. On a reading of the aforesaid communication dated 13th March,
2019, from DIAL to the Chief Commissioner, and dated 15th March, 2019
from the Chief Commissioner to the DIAL, we find this submission of
Mr. Manish to be utterly misconceived. This is apparent from a bare
reading of para 3 of the communication dated 13th March, 2019, and the
corresponding paragraph of the reply, dated 15th March, 2019, thereto.
The said paragraphs may be reproduced thus:

Para 3 of Communication dated 13th March, 2019

―3. Cases pertaining to Demurrage charges on Customs
detailed goods: As mentioned in your letter no.F. No.
Viii(12)Import/Tech/193/2018/2285 dated 19th Feb 19, the matter
regarding following cases have been discussed with Cargo
Terminal Operator-1 (CELEBI):

WP (C) 7577/2019 other connected matters Page 76 of 88
a) M/s. Md.Salim Chaiwala
b) M/s. Nanda Gum House
c) M/s.Overseas
d) M/s. Afzal Khan (Note: CELEBI is not party in this
matter)

As you are aware, the above cases (a, b c) are sub-judice
before Hon’ble High Court at Delhi to decide on the issue of
payments/wavier of demurrage charges. CELEBI has however
assured to provide all support in early settlement of these cases
as per the requirements of Customs. Further as instructed by
your good self, the Custodian will not charge any demurrage for
the particular period for which detention certificate for detention
of goods has been given to the Operators at least by the rank of
the Joint Commissioner of Customs, until any further
development on this matter.‖
(Emphasis supplied)

Para 3 of Communication dated 15th March, 2019

―3. Demurrage charges:- The cases pending in judicial forum
in respect of waiver of demurrage charges shall be settled as per
the assurance given in your letter no. DIAL/2017-18/Comm
Cargo/2014 dated 13/03/2019 and in the meeting held on
13/3/2013. Further Custodian shall not claim any demurrage
charges in compliance of regulations 6(l) of Handling of Cargo in
Customs Areas Regulations, 2009 which read as follows:-

“subject to any other law for the time being in force, shall
not charge any rent or demurrage on the goods seized or
detained or confiscated by the Superintendent of Customs
or Appraiser or Inspector of Customs or Preventive officer
or examining officer, as the case may be‖

It is clear that the aforesaid ―undertaking‖ by DIAL, to the effect that no
demurrage would be charged by the custodian, for the period covered by
the detention certificate, was with respect to four specific cases, relating
to (i) Md. Salim Chaiwala, (ii) M/s. Nanda Gum House, (iii) M/s.

Overseas and (iv) M/s. Afzal Khan. The undertaking, therefore, has no

WP (C) 7577/2019 other connected matters Page 77 of 88
application, whatsoever, to the petitioner before us and we are not,
therefore, required to express any opinion regarding the said undertaking,
or the effect, in law, thereof.

143. Mr. Manish next pointed out, to us, that the AAI Regulations of
2003 specifically stated that they superseded the earlier existing
International Airport Authority of India (Storage and Processing of
Goods) Regulations, 1993 (hereinafter referred to as ―the IAAI
Regulations‖). The waiver policy, to which Mr. Tiku had drawn our
attention, it is sought to be pointed out, was issued under the IAAI
Regulations of 1993 Act, therefore, had no application to the AAI
Regulation of 2003.

144. We do not propose to enter into this controversy, as there is no
prayer in the writ petition, by the petitioner, for being allowed the benefit
of the waiver policy of CELEBI. It would be open to the petitioner to
approach CELEBI, seeking waiver of demurrage charges, and it would be
equally open to CELEBI, to take a call thereon. We express no opinion
on that matter.

145. Mr. Manish also sought to rely on the Airports Economic
Regulatory Authority of India Act, 2008 (hereinafter referred to as ―the
AERA Act, 2008‖). He took us through various provisions of the AERA
Act, 2008 and referred us, especially, to Section 2(A)(i)(iv) and (v), and
Section 13 of the said Act. He submits that, in view of the coming into
force of the AERA Act, 2008, the AAI Regulations 2003 would cease to
apply.

WP (C) 7577/2019 other connected matters Page 78 of 88

146. This submission, too, in our view, is entirely bereft of substance.

147. The AERA Act, 2008 does not expressly or by necessary
implication supersede the AAI Act. The very preamble of the AERA Act
discloses that it is intended to provide for establishment of the AERA to
regulate tariff and other charges for aeronautical services and monitor
performance standards of airports, as well as for incidental matters.

148. We do not see the functions of AERA as overlapping, in any
manner, with the duties of CELEBI, under the Concessionaire Agreement.
In this context, we may usefully reproduce Section 13 (i) of the AERA
Act, which delineates the functions of the AERA, thus:

―13. Functions of Authority–

(1) The Authority shall perform the following
functions in respect of major airports, namely:–

(a) to determine the tariff for the aeronautical
services taking into consideration–

(i) the capital expenditure incurred and
timely investment in improvement of airport
facilities;

(ii) the service provided, its quality and
other relevant factors;

(iii) the cost for improving efficiency;

(iv) economic and viable operation of
major airports;

(v) revenue received from services other
than the aeronautical services;

WP (C) 7577/2019 other connected matters Page 79 of 88

(vi) the concession offered by the Central
Government in any agreement or
memorandum of understanding or otherwise;

(vii) any other factor which may be
relevant for the purposes of this Act:

Provided that different tariff structures may be
determined for different airports having regard to
all or any of the above considerations specified at
sub-clauses (i) to (vii);

(b) to determine the amount of the development fees in
respect of major air ports;

(c) to determine the amount of the passengers service
fee levied under rule 88 of the Aircraft Rules, 1937 made
under the Aircraft Act, 1934(22 of 1934);

(d) to monitor the set performance standards relating to
quality, continuity and reliability of service as may be
specified by the Central Government or any authority
authorised by it in this behalf;

(e) to call for such information as may be necessary to
determine the tariff under clause (a);

(f) to perform such other functions relating to tariff, as
may be entrusted to it by the Central Government or as
may be necessary to carry out the provisions of this Act.‖

149. A reading of the aforesaid sub-section (1) of Section 13 of the
AERA Act makes it abundantly clear that the AERA is basically
concerned with fixing tariff, and not with other airport services, including
actual collection of demurrage, for continued storage of the goods. The
reliance, by Mr Manish, on the AERA Act is, therefore, misplaced.

WP (C) 7577/2019 other connected matters Page 80 of 88

150. Mr. Manish also relied on the judgment of the Supreme Court in
Continental Carbon India Ltd. v. U.O.I.24, the judgment of this Court in
Trip Communication Private Ltd. v. U.O.I.25, Delhi International
Airport Private Ltd. v. U.O.I.26 and of the High Court of Allahabad in
Paswara Chemicals Ltd. v. U.O.I.27.

151. In our view, none of these judgments can come to the aid of the
petitioners.

152. Continental Carbon India Ltd.24 dealt with import of Carbon Black
Feed Stock, by M/s Continental Carbon India Private Ltd. (hereinafter
referred to as ―CCIL‖). The goods landed at ICD, Dadri, between June
and September, 2014, and were detained on 6th September, 2014, by the
Customs authorities, on the ground that the goods appeared to be
hazardous in nature. Requests, for provisional clearance of the goods,
were not acceded to. In November, 2014, the Central Revenue Control
Laboratory (CRCL) reported that the goods were hazardous and directed
CCIL to obtain No Objection Certificate (NOC) of the Ministry of
Environment and Forest (MoEF). The MoEF examined the goods and
opined that they were not hazardous. Consequent thereupon, the Customs
authorities assessed the goods and permitted clearance thereof, by CCIL.
The CCIL, thereafter, approached the Customs Cargo Service Provider, to
obtain clearance of the goods.

24

2018 (361) ELT 193 (SC)
25
2013 (302) ELT 321 (Del)
26
2016 (234) DLT 445 (DB)
27
2016 (335) ELT 408 (All).

WP (C) 7577/2019 other connected matters Page 81 of 88

153. The service provider, however, refused to release the goods till its
demurrage charges were paid. This demand, of the service provider, was
assailed, by the CCIL, by way of a writ petition filed before the High
Court of Allahabad.

154. Vide judgment dated 14th October, 2015, the High Court held the
seizure of the goods, by the Customs authorities, to be unjust.

155. Thereafter, relying on Regulation 6(1)(l) of the Handling of Cargo
Regulations, the High Court held that the service provider was not entitled
to charge any demurrage, for release of the goods. However, the High
Court limited the immunity, to CCIL, from the requirement of paying the
demurrage for the period till 15th January, 2015. It was the Civil Appeal of
CCIL, against the limiting of the relief, granted to it by the High Court,
for the period till 15th January, 2015, which came to be decided by the
judgment under discussion.

156. Having noted these facts, the judgment of the Supreme Court
records, in para 5 of the report, thus:

―5. We may record that insofar as the respondents are
concerned, they have accepted the judgment and, thus, there is no
challenge to the findings of the High Court that the goods were
wrongly detained/seized by the Customs Authorities. It is in this
backdrop that the question is to be decided as to whether relief of
non-payment of charges should have been restricted till 15-1-
2015.‖

157. It is clear that that the Supreme Court was not concerned with the
entitlement, or otherwise, of the service provider, to charge demurrage.
The High Court had held, on this issue, in the negative, and the service
provider had not chosen to challenge it.

WP (C) 7577/2019 other connected matters Page 82 of 88

158. The only issue, on which the Supreme Court deliberated and
delivered judgment, was as to whether the High Court was justified in
restricting the relief, granted to the CCIL, for the period till 15th January,
2015. Neither of the issues which arise before us in these writ petitions,
i.e. regarding the entitlement of CELEBI to demurrage charges, or the
issue of whether the petitioner would be liable to pay the said charges,
therefore, arose for consideration before the Supreme Court. The Supreme
Court examined, and pronounced upon, an issue with which the present
proceedings are not concerned, in any manner.

159. The reliance by Mr. Manish on the decision in Continental Carbon
India Ltd.24, has, therefore, to be characterized as inapt.

160. Trip Communication Private Ltd.25, if anything, supports CELEBI,
rather than the petitioner. Demurrage charges, in the said case, too, were,
demanded by CELEBI, and the Supreme Court was seized with the issue
of the entitlement of CELEBI to the said charges, in the light of
Regulation 6(1)(l) of the Handling of Cargo Regulations (referred to, in
the judgment, as ―HACCR‖). On the said issue, however, this Court
concerned itself more with the issuance of detention certificate by the
Customs authorities, and with the waiver policy of CELEBI.

161. This Court deprecated the policy of the Customs authorities to
recklessly issue detention certificates, even in respect of cases of mis-
declaration, undervaluation and concealment, thereby equating honest,
with dishonest, importers. In case the importer was found innocent, and
no fine, penalty or personal penalty was confirmed against him, it was
WP (C) 7577/2019 other connected matters Page 83 of 88
held that the importer could apply for waiver, as per the waiver policy of
CELEBI. Para 47 of the judgment may be reproduced, to advantage, thus:

―In cases where the importer is found innocent and there is no
imposition of any fine, penalty, personal penalty and/or warning
by the customs authorities, the Policy for Waiver would be
applicable and the importer would be entitled to be considered for
its benefit provided a certificate entitling him to be so considered
is issued by the custom authorities. The importer would not be
automatically exempt but would be covered under the Policy for
Waiver and eligible for waiver which would be granted subject to
other compliances.‖

162. Clearly, therefore, Trip Communication Private Ltd.25, if anything,
underscores the position that, where the importer has suffered an order of
confiscation, fine and penalty, it would not be entitled to waiver from
demurrage, as per the waiver policy of CELEBI.

163. Inasmuch as Mr. Manish has sought to contend that the waiver
policy, on which Mr. Tiku relied, and to which reference is contained in
Trip Communication Private Ltd.25, was relatable to the IAAI
Regulations, 1993, we do not propose to opine, any further, on this aspect.

164. The reliance, by Mr. Manish, on the decision in Delhi
International Airport Private Ltd.26 is also, in our view, counter-
productive, as is apparent from paras 17 to 20 of the report, which may be
reproduced thus:

―17. In the present case, the Court notices that the power to
frame regulations is located in Section 42(1) and (2) of the
Airports Authority of India Act, 1994, which, by clause (d) (of
sub-section [2]) provides the following specific regulation
making power:

WP (C) 7577/2019 other connected matters Page 84 of 88

―(d) the storage or processing of goods in any
warehouse established by the Authority under clause (g)
of sub-section (3) of section 12 and the charging of fees
for such storage or processing‖

18. Section 141(2), – of the Customs Act, inserted by Finance
Act 18 of 2008 provides as follows:

―(2) The imported or export goods may be received,
stored, delivered, dispatched or otherwise handled in a
customs area in such manner as may be prescribed and the
responsibilities of persons engaged in the aforesaid
activities shall be such as maybe prescribed.‖

19. This court has, in its preceding discussion, held that the
above power cannot be questioned, as wide and that as long as
Parliamentary intent is discernable, subordinate legislation,
which broadly conforms to its objectives, cannot be impeached.
In exercise of its powers, Regulation 6(1) was framed; it
specifically obliges service providers not to charge demurrage in
certain cases if directed not to do so (―subject to any other law
for the time being in force, shall not charge any rent or
demurrage on the goods seized or detained or confiscated by the
Superintendent of Customs or Appraiser or Inspector of Customs
or Preventive officer or examining officer, as the case may be.‖).
Interestingly, the duty not to charge – when imposed by any
customs official authorized to do so, is specifically subordinated
to other laws (―subject to any other law for the time being in
force‖). Thus the powers under the Airports Authority Act, 1994
(like in the case of the International Airports Authority in Grand
Slam)- specifically, Section 42(2)(d)- discussed above are
available for prescribing the rate(s) for storage charges. In Grand
Slam (supra), the court had commented on the power of the
Central Government to issue directions to the IAAI with respect
to demurrage charges:

―The Central Government is empowered by section 35 of
the International Airports Authority Act, 1971, and section
III of the Major Port Trusts Act, 1963, to issue to the
Authority and the Boards of Trustees, respectively,
directions on questions of policy after giving them an
opportunity, as far as practicable, of expressing their
views. -the Central Government can, if so advised, after
giving to the Authority and the Boards of Trustees the

WP (C) 7577/2019 other connected matters Page 85 of 88
opportunity of expressing their views, direct them, under
the aforementioned provisions, not to levy demurrage
charges for periods covered by detention certificates.‖

20. Identical power vests with the Central Government under
the AAI Act to issue directions (Section 40). In the event DIAL
is of the view that customs authorities’ directions to it to not
charge demurrage are unwarranted, it can seek guidance and
directions in that regard, from the Central Government. In these
circumstances, the grievance that Regulation 6 can potentially
render DIAL’s functioning unviable and result in losses to it, has
to fail.‖

165. In the afore-extracted paragraphs, this Court has, in its judgment in
Delhi International Airport Private Ltd.26, confirmed that

(i) the AAI was empowered, under Section 42(2)(a) of the AAI
Act, to frame regulations for the storage of processing of goods in
any warehouse, established by the AAI and for charging of fees by
AAI for such processing, and

(ii) the duty, not to charge demurrage, as contained in Regulation
6(1)(l) stood statutorily subordinated to any other law for the time
being in force.

166. It was for these reasons that the challenge to Regulation 6(1)(l), by
DIAL, was repealed.

167. The contention, of Mr. Manish, that, by virtue of Regulation 6(1)(l)
of the Handling of Cargo Regulations, CELEBI is not entitled to charge
any demurrage from the petitioner, would, in fact, do disservice to the
decision of this Court in Delhi International Airport Private Ltd.26, and
the raison d’etre thereof.

WP (C) 7577/2019 other connected matters Page 86 of 88

168. The above reasoning would apply, mutatis mutandis, to all the writ
petitions before us, i.e. WP (C) 7577/2019, WP (C) 11264/2019, WP (C)
8659/2017, WP (C) 8668/2017 and WP (C) 8734/2017.

Conclusion

169. For the aforesaid reasons, we are of the view that the prayer, of the
petitioner, for issuance of directions to the respondents, not to collect any
demurrage, in respect of the goods, imported by the petitioner and in the
custody of CELEBI, is bereft of merit.

170. We confirm that CELEBI is entitled, despite Regulation 6(1)(l) of
the Handling of Cargo Regulations, to charge demurrage in respect of the
goods consigned to its custody, and to retain custody over such goods till
the demurrage is paid. We also confirm that demurrage, to CELEBI,
would be payable by the petitioners-importers in these writ petitions, and
not by the Customs authorities.

171. We do not express any view regarding the entitlement, or
otherwise, of the petitioner, to claim waiver of demurrage charges from
CELEBI. It would be for the petitioner to prefer an appropriate
application in that regard, and for CELEBI to take a call thereon, keeping
in view its policy, and assessing the entitlement of the petitioner to waiver
in terms thereof.

WP (C) 7577/2019 other connected matters Page 87 of 88

172. Subject to the observations contained in para 171 supra, these writ
petitions are dismissed, albeit with no orders as to costs.

C. HARI SHANKAR, J.

CHIEF JUSTICE
DECEMBER 20, 2019/ HJ

WP (C) 7577/2019 other connected matters Page 88 of 88

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