|Chapter No. 016|
|Detention of Imported & Export Cargo and Release/Storage Options in Disputed Cases|
Detention of Imported & Export Cargo and Release/Storage Options in Disputed Cases
In the last few years, the Department has taken a number of steps to simplify customs procedures for expeditious clearance of export and import goods. The Department has made a commitment in its Citizen’s Charter & Vision Document that it would take all possible measures to maximize trade facilitation and minimize the grievances of importers/exporters, inter-alia, by ensuring speedy clearance. However, in a number of situations, such speedy clearance is not possible and it becomes necessary to detain the goods for investigation. Normally, the goods liable for confiscation under the Customs Act, are seized by the Customs. However, in some cases where seizure is not practicable, the goods are detained.
2. The provisions for detention of goods are contained in section 110 of the Customs Act. Once order for detention of goods is served to the owner of the goods, he cannot remove, part with, or otherwise deal with the goods except with the prior permission of the proper officer of the Customs. The goods are detained for various reasons and at the instance of various agencies of the Department, such as the Directorate of Revenue intelligence, the Directorate of Central Excise Intelligence, Narcotics Control Bureau and Directorate of Enforcement and even other agencies, like the Central Bureau of Investigation. During such investigation and subsequent adjudication proceedings, sometimes the contravention of provisions of the Customs Act and other allied laws is established, and action is taken against the importers/ offending goods as provided in the law. In some cases, the charges are dropped at initial stages or at the appeal stage.
3. In respect of goods detained at the port/airport/ICD/CFS/LCS etc, the custodians of goods demand their dues for storing the goods (i.e. the warehousing charges) from the importers/exporters. Likewise the shipping lines demand container detention charges for the period the goods are kept in their custody. In situations where the goods are detained for a long period, the warehousing/demurrage charges and container detention charges become high. In cases where the charges against the importers or exporters are dropped, the Customs usually issues detention certificates for the period when goods were under detention. The custodians normally remit the detention/demurrage charges wholly or partially on the basis of detention certificates issued and recommendation made by the Customs. However, it is not obligatory, as held in some recent Court judgements that cutodians must waive the rentals payable to them.
4. The issues like the quantum of demurrage and payability of demurrage, were examined by the Honourable Supreme Court in the case of International Airport Authority of India vs Grand Slam International (1995 (77) ELT 753 SC) and Trustees of Port of Madras Vs. Nagavedu Lungi & Co., [1995 (80) ELT 241 SC]. The final decision of these two judgements is that the detention charges and warehousing charges are payable to the custodians and shall be paid by the exporter or the importer even where the Customs detention has been finally held as improper/illegal.
Guidelines for expeditious Customs clearance/provisional release:
5. To avoid delays in the release & minimize hardship to importers which is caused if goods remain detained pending investigation into any dispute in relation to assessment etc., a number of instructions have been issued recently. The stress is on expeditious assessment/investigations and unless the goods are prohibited or involved in serious fraud even if there is a dispute in assessment etc., provisional release option be given to the importers. Broadly the following guidelines are to be followed by importers/officers of the Department to keep a check on unnecessary detention of goods & ensure speedy Customs clearance: –
(a) Import/export goods are not to be detained by the Department unless prohibited as per the EXIM Policy and/or under other allied laws. Goods are not to be detained on simple valuation or classification disputes.
(b) If it becomes necessary to detain the goods for investigation of any serious suspected fraud etc., the importer/exporter must be intimated in writing that he may shift the goods to a bonded warehouse under section 49 of the Customs Act, 1962, with a clear indication that if he does not avail of this facility and the goods incur demurrage, etc., he would have to bear the demurrage and other charges levied by the custodian/other agencies.
(c) But for certain exceptional categories, in any dispute case pending investigation wherever importer or exporter is willing, he should be allowed provisional clearance of the goods by furnishing a bond for full value of the goods supported by adequate bank guarantee as may be determined by the proper officer. (The value of bank guarantee shall not exceed twice the amount of duty). The provisional clearance should be allowed as a rule and not as an exception. However, in the following situations, provisional release may not be resorted to:
(i) The prohibited goods whose import/export are not in the interests of the country;
(ii) imports which do not comply with the prescribed specifications/conditions/requirements of various Orders/Acts. (eg. those laid down under DGFT Notification Nos.3 to 5/(RE-2001)/1997-2002 dated 31.3.2001); Livestock Importation Act, 1898, Prevention of Food Adulteration Act, 1954, etc.);
(iii) where gross fraudulent practices are noticed and it is viewed that release of the consignment may seriously jeopardize further investigations as also interests of the revenue ;
In these situations also, as mentioned earlier, option for storage in warehouses under Section 49 should be provided to the importers. Goods can be allowed entry into the country only after the laid down quality standards etc. are satisfied.
(a) In the case of containerized cargo, wherever the parties are not in a position to execute bond and bank guarantee for taking provisional release or the Department is of the view that clearance cannot be allowed, the goods may be even de-stuffed from the containers after giving notice to all concerned and stored in port’s godowns and warehouses to avoid container detention charges.
(b) Wherever in adjudication proceedings, the parties have been allowed to clear the goods on payment of redemption fine and penalty and parties, instead of clearing the goods on payment of fine and penalty, prefer an appeal, they will have to pay demurrage/detention charges, etc. even if they succeed in appeal, as the liability has arisen due to their filing appeal and not clearing the goods for which option was available.
(c) The officers will be held accountable for cases where detention of goods have been ordered on insufficient and weak grounds resulting in unconditional release of detained goods in adjudication stage itself, where importers have to suffer avoidable demurrage charges/loss by pilferage etc.
(Reference Board’s instructions issued vide letter F.No. 450/82/95-Cus.IV, dated 7th July, 1997 and circular No. 42/2001-Cus. dated 31/7/2001)
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