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Mumbai Port Trust v. M/s. Shri Lakshmi Steels and Ors. Etc.

Civil Appeal · 2017 INSC 682Decided 27 Jul 2017
Civil Appeal Nos. 9831-32 of 2017
Justice Madan B. Lokur · Justice Deepak Gupta

Background

Two sister import firms brought in consignments of what they declared as "cold rolled" steel coils/sheets, but the Directorate of Revenue Intelligence suspected the goods were actually "hot rolled" coils (subject to different import restrictions) and had Customs detain the consignments for testing. The High Court of Punjab & Haryana held the detention illegal, ordered the goods released on payment of duty, ruled that the Port Trust could not charge demurrage because a detention certificate had been issued, and made the Customs/DRI liable for shipping-line detention charges and costs. The Union of India and Mumbai Port Trust appealed against this High Court ruling.

Decision Breakdown

The Supreme Court found that while there was some delay on the DRI/Customs side, the importers themselves had also significantly delayed resolution: they declined multiple offers to release the goods on furnishing a bank guarantee and provisional assessment, and test reports from a government testing agency found most of the consignments were indeed non-compliant hot-rolled coils. Because the importers shared responsibility for the delay, the Court held they could not escape demurrage and detention charges, and separately held that the High Court had no power in writ proceedings to direct DRI/Customs to pay detention charges owed to the shipping line, since those charges arose from a private contract between the importers and the shipping line. The appeals were allowed, the High Court's judgment was set aside, and the importers' writ petitions were dismissed, though the Court left open the importers' right to separately seek a discretionary waiver of demurrage from the Port Trust under Section 53 of the Major Port Trusts Act.

Lesson Learnt

An importer who is offered a reasonable route to get detained goods released (such as via bank guarantee) but declines to take it cannot later blame the authorities alone for resulting storage and detention charges: courts will apportion responsibility for delay, and charges arising from private contracts (like shipping-line detention fees) cannot be shifted onto government authorities through a writ petition.

Official source (sci.gov.in)View Judgment (PDF)

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