Importer Abandoned Goods: Delhi HC directs Buyer to Pay 50% Detention Charges under Customs Act [Read Order]

The Delhi High Court, in a case where goods detained by the customs department was abandoned by the importer, directed the buyer/petitioner to bear 50% of detention charges under the provisions of the Customs Act. The petitioner, Caprico International PTE Ltd, a Singapore based company, which had entered into a sales contract on 22nd December, 2021 for Discarded and Non-Serviceable Motor Scrap. After receipt of the goods, the importer M/s Earth Wire did not pay the customs duty - hence, the goods were not cleared. Thereafter, some correspondence is stated to have taken place between the Petitioner and the importer, and instead of $44057.13, the Petitioner agreed to give a trade discount of $7000 which reduced the outstanding amount to $37057.13. It is the case of the Petitioner that despite the said discount being given, the importer neither paid the Petitioner for the supply nor cleared the goods from the customs authority by paying the requisite duty.The Petitioner is willing to bear the customs duty and interest. However, neither petitioner or Importer is willing to pay detention charges. Analyzing the provisions of Section 2(26) of the Customs Act, 1962, Justice Prathiba M. Singh observed that “though the out-of-charge process was undertaken by the importer way back in August, 2022, the said importer has not paid the customs duty and taken clearance of the goods. In effect therefore he has abandoned the goods. The importer has also not paid the detention/demurrage charges and till date the goods are lying with the customs authority. The Petitioner has already received the original bill of entry and other documents from the Bank, which would therefore show that the title of the goods has, in fact, passed to the Petitioner.” The petitioner approached the Court seeking a direction to the Customs department for releasing the consignment. The Petitioner further seeks cancellation of the previous bill of entry filed with the customs in favour of M/s Earth Wire Private Limited, and permit the Petitioner to file a new bill of entry as per new consignee. “The customs authority in the present case are clearly not to be blamed, inasmuch as the importer had not stayed quiet, but had in fact, processed the bill of entry and other documents with the customs authority and the duty was also assessed. Only thereafter does the importer appear to have lost interest in clearing the goods, for whatever reasons,” the Court said. Disposing the petition, the Court held that “though there maybe no illegality in the release of the goods in the favour of the Petitioner now, the Customs authorities cannot be made to bear the burden of detention/demurrage charges, especially when they proceeded in accordance with the provisions of the Customs Act, 1962. Prior to the ownership being transferred in favour of the Petitioner, the import or release of the goods in favour of the Petitioner, could not have been permitted by the customs authority under Section 2(26) of the Customs Act, 1962 itself. The facts in the said cases would be distinguishable as in the present case, inasmuch as between September, 2022 to December, 2022, the customs authority did not even have notice of the fact that the ownership was claimed to have transferred. Be that as it may, even the importer would be liable to be blamed in the present case, inasmuch as the importer, in effect, has processed the documents but has not cleared the goods after paying the duty.” “Insofar as the detention/demurrage charges are concerned, since there is no explanation for the delay between September 2022 to December, 2022 and the first representation itself was made on 3rd December, 2022, the Petitioner would be liable to pay 50% of the detention/demurrage charges payable till 3rd December, 2022 as also demurrage charges for the period from 3 rd December, 2022 till date,” the Court ordered. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Importer Abandoned Goods: Delhi HC directs Buyer to Pay 50% Detention Charges under Customs Act [Read Order]

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Importer Abandoned Goods: Delhi HC directs Buyer to Pay 50% Detention Charges under Customs Act [Read Order]

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