w w w . L a w y e r S e r v i c e s . i n


M/s. Anton Engineering, Represented by its Propx: Zita Vijay, Chennai v/s The Chairman, Chennai Port Trust, Chennai & Others

    W.P. No. 14327 of 2008 & M.P.No.1 of 2008
    Decided On, 08 August 2022
    At, High Court of Judicature at Madras
    By, THE HONOURABLE MR. JUSTICE N. ANAND VENKATESH
    For the Petitioner: K. Jayachandran, Advocate. For the Respondents: R1 & R2, R. Karthikeyan, R3 & R4, V. Sundareswaran, Advocates.


Judgment Text
(Prayer: Writ Petition is filed under Article 226 of the Constitution of India to issue a

Writ of Certiorari, calling for the records relating to the impugned communication

No.Legal/577/2003/TC dated 30.10.2007 issued by the second respondent and quash

the same as illegal, arbitrary and unsustainable in law.)

1. This Writ Petition was filed challenging the impugned communication dated 30.10.2007 issued by the second respondent directing the petitioner to pay demurrage charges to the tune of Rs.73,22,231/-.

2. The case of the petitioner is that one Chokhani International Limited, Chennai, which was a 100% E.O.U was engaged in ship repairing business. For this purpose they had imported certain materials. The materials were stored in the bonded house. They had borrowed money and had defaulted in the repayment of the same. Hence, the concerned bank initiated proceedings before the DRT and ultimately all the properties belonging to the above said company was brought up for public auction.

3. The auction was conducted on 17.12.2002, and petitioner participated in the auction with regard to lot No.4 and the petitioner was declared as the highest bidder. The goods that were remaining in the bonded warehouse was sought to be removed and at that point of time, petitioner made a representation to the fourth respondent and the fourth respondent opened the godown. The raw materials that were found therein were classified as scrap and the fourth respondent conducted a survey and based on the survey report, the duty payable was assessed at Rs.6,65,152/- The petitioner paid the customs duty on 28.08.2007 and the fourth respondent permitted the petitioner to clear the bonded goods after paying the necessary service charges.

4. The petitioner thereafter approached the Port Trust for permission to clear the goods. The petitioner also provided with the payment of the customs duty and the fourth respondent also through their letter dated 15.05.2008 informed the Chennai Port Trust, that they do not have any hold/lien over the goods. When the petitioner requested for the clearance of the goods, the second respondent through letter dated 30.10.2007 directed the petitioner to pay a sum of Rs.73,22,231/- towards demurrage charges and thereafter remove the goods. Aggrieved by the same, the present Writ Petition was filed before this Court.

5. The second respondent has filed a counter affidavit. The relevant portions in the counter affidavit are extracted hereunder:-

3.The respondent submits that the Tribunal was pleased to direct the auction purchaser to remove the goods from the Port premises within a reasonable time. It is submitted that no specific order was issued by the DRT regarding the time limit for removing the materials of Lot No.IV since the sale of Lot No.IV was confirmed on 08.08.2003. The 6 months free period awarded in respect of Lot No.I & II for the clearance of auctioned materials from the date of purchase was further extended to 3 months by DRT and the same criteria had been followed in the Lot No.IV also. Hence, the free period of delivery of Lot No.IV was taken as 9 months and the demurrage was calculated after the date of expiry of free period in respect of Lot No.IV (i.e. 09.05.2004 to 31.10.2007). This respondent submits that the petitioner removed some part of Lot No.IV materials lying in the open yard on 15.11.2003 and 22.11.2003 under Special Vehicle Ticket by paying Port dues (i.e Wharfage alone) vide Account Voucher No.1313 dated 17.11.2003. It is submitted that with regard to the materials lying inside a sealed godown/shed the petitioner by letter dated 29.03.2004 had requested the Assistant Commissioner of Customs to open the shed to find out the conditions of the materials. It is learnt that when it is opened, it was found that the materials lying there were totally damaged and became junk. Hence, the petitioner has requested for conducting a fresh survey by the Customs authorized surveyor for the purpose of reassessment of customs duty. It is pertinent to submit that the petitioner had filed W.P.No.49041 of 2006 against the Assistant Commissioner of customs before this Hon'ble Court and as per the Court order the survey was conducted by M/s.SGS India Limited and based upon the said report, the customs had reassessed the duty payable by the petitioner as Rs.6,65,152/- against the earlier assessed value of Rs.9,77,490/-. This respondent submits that due to the pendency of the dispute between the customs and the petitioner herein the petitioner had approached the respondent herein for clearance of remaining materials of Lot No.IV during 2007 (i.e) only after a lapse of 4 years which had caused accrual of demurrage charges on the uncleared materials. It is submitted that this respondent by letter dated 30.10.2007 had advised the petitioner to pay the demurrage charges to the tune of Rs.73,22,231/- for the period (09.05.2004 to 31.10.2007). The petitioner by letter dated 30.11.2007 had requested to clear the same without payment of demurrage charges, the said request of the petitioner herein was not considered and was advised to pay the demurrage charges till the date of clearance and hence the present Writ Petition had been filed by the petitioner.

4.The averments in para 2 of the affidavit are hereby denied. It is submitted that after a lapse of three years, in September 2007, M/s.Anton Engineering had come to this office after settling all disputes with customs and producing a letter from the Assistant Commissioner of customs (Bonds) and requested clearance of the above said cargo. This respondent submits that the petitioner's contention to pay only the Wharfage charges for the clearance of the cargo cannot be accepted as it is submitted that the respondent herein is collecting the statutory charges for all the cargoes passing through the Port and it is submitted that so far as the payment of Port dues is concerned the order applicable in respect of other lots are equally applicable to Lot No.IV also, in the absence of any specific order from DRT Mumbai restraining the respondent herein from collecting the charges for Lot No.IV. It is submitted that the Port cannot forfeit the statutory charges as the auction purchased materials were being safeguarded for more than 8 years, hence the request of the petitioner to pay only the wharfage charges was not accepted and the petitioner was advised to pay also demurrage charges and hence the contentions to the contrary are hereby denied. This respondent states that the above said cargo is still lying in the Port premises for more than 8 years and occupying the valuable space of the Trust and the Trust has been safeguarding the cargo pending payment of Port dues. Hence, the petitioner has to pay the cargo related charges (i.e.Wharfage and Demurrage) to the Trust from 09.05.2004 till the date of clearance of the cargo as per the Scale of Rates.

5.This respondent submits that subsequently the petitioner was advised to remit a sum of Rs.73,22,231/- approximately towards the demurrage charges for the period from 09.05.2004 to 31.10.2007 vide this office letter dated 30.10.2007 and 21.01.2008. It is submitted that the petitioner had paid a sum of Rs.6,65,152/- towards duty to the Commissioner of customs on 28.02.2007 for clearance of cargo from the Port Trust, and the Customs Department had declared that it is not having any hold/lien over the said cargo. It is submitted that the Writ Petitioner in his letter dated 30.11.2007 had mentioned that when they approached the Department for clearance of cargo, they were directed to pay the wharfage charges @ 0.57% on the assets value and when the petitioner went to pay the said sum the Accounts Department advised the petitioner to pay the demurrage charges also. Hence, a demand was made for Rs.73,22,231/- and the same was issued on 30.10.2007. The petitioner had requested the respondent herein to move the goods without payment of demurrage charges and their request was rejected by letter dated 21.01.2008. The said demand of demurrage has arisen due to the reason that the valuable space of the Trust was occupied for more than 8 years and the respondent herein was safeguarding the cargo without receiving its legitimate dues. As such, any uncleared materials lying in the Port premises after the expiry of free days will subject to the Port dues hence, this subject material is liable for both wharfage and demurrage charges. The 'wharfage' is the basic due recoverable on all cargo imported or exported or transshipped or passing through the Port, whether porteraged by the CHPT or not. The demurrage is chargeable on all goods left in the CHPT's transit sheds or yards beyond the expiry of the free days.

6. Heard Mr.K.Jayachandran, the learned counsel for the petitioner, Mr.R.Karthikeyan, the learned counsel for respondents 1 and 2 and Mr.V.Sundareswaran, the learned counsel for respondents 3 and 4.

7. This Court has carefully considered the submissions made on either side and materials available on record.

8. The goods in question are remaining in the warehouse from the year 2003 onwards and even when the earlier inspection was done in the year 2004, the goods were found to be damaged and it was classified as scrap. It is brought to the notice of this Court that till date the goods continue to remain in the warehouse and the Port Trust is also not in a position to remove the goods, since it is in a bonded warehouse.

9. The demurrage charges have been imposed for the period from 09.05.2004 to 31.10.2007 after giving credit to the free period. The demurrage charges were not paid and the goods continue to remain in the bonded warehouse. Unfortunately, the petitioner who was an auction purchaser, inspite of paying the customs duty, is not in a position to remove the goods due to the dispute with regard to the demurrage charges. The demand made by the Port Trust is well within their powers and there is no ground to interfere with the same.

10. This Court takes into consideration the precarious situation in which the petitioner has been placed. The petitioner who was the auction purchaser was the highest bidder and he had bid an amount of Rs.1.20 crores/-. That apart, the petitioner had also paid the customs duty to the tune of Rs.6,65,152. However the petitioner was not able to remove the goods due to non payment of demurrage charges. Considering the fact that the goods are remaining in the bonded warehouse for nearly twenty years, nothing substantial can be salvaged and it is doubtful whether the goods will have any worth today even to the extent of the amount paid by the petitioner towards c

Please Login To View The Full Judgment!
ustoms duty. 11. In view of the above, this Court is inclined to issue appropriate directions to the first respondent to place the matter before the Board to consider providing for exemption or remission from payment of the demurrage charges leviable on the goods that are lying in the bonded warehouse. The Board has been vested with this power under Section 26 (1) (g) of the Major Port Authorities Act, 2021. 12. In the result, this Writ Petition is disposed of with a direction to the petitioner to make a representation along with all relevant documents to the first respondent seeking for exemption/remission from paying the demurrage charges. The representation shall be made within a period of two weeks from the date of receipt of copy of this order. On receipt of the same, the first respondent shall place the same before the Board and the Board shall consider the same in the light of Section 26 (1) (g) of the Major Port Authorities Act, 2021 and a final decision shall be taken within a period of eight weeks thereafter. 13. This Writ Petition is disposed of in the above terms. No costs. Consequently, connected miscellaneous petition is closed.
O R