# INTERNATIONAL AIRPORTS AUTHORITY OF INDIA ETC. E'fC. A v. MIS GRAND SLAM INTERNATIONAL AND ORS. ETC. ETC

- **Citation:** [1995] 2 S.C.R. 149
- **Court:** Supreme Court of India
- **Decided:** 1995-02-21
- **Bench:** R.M.' Sahai, S.P. Bharucha, N. Venkatachala
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/international-airports-authority-of-india-etc-e-fc-a-v-mis-grand-slam-12872
- **Pages:** 51

## Headnote

B
Customs Act--Section45--Levy of demurrage-/mport of goodsDetention for clearanc~oods detained or seized by Customs department-Detention certificate issued by Customs Authorities-Whether any c
demu"age could have been charged for ~e period detention certificate was
issued-Held, yes.
,,
,
I
The respondents had imported goods by air· and. filed bills of entry
with the Customs authorities. The Customs authorities detained the goods
and passed an order enhancing the value of the goods. In appeal, the D
Custom, Excise and Gold (Control) Appellate Tribunal quashed the order
)
of the Additional Collector; the goods were released and the Collector of
Customs issued detention certificates for the periods of the detention
stating that the detention was due to pendency of acJJudicatlon proceed·
ings. The respondents thereupon applied to the Authority for waiver of E
demumige charges for the perl'>ds covered by the detention certificates.
However, the appellants Instead of treating entire period as free period
determined the liability of the respondent in accordance with Rate
Schedule framed by them for the periods for which the detention certifi·
_I,
cates had been issued. 'The.respondents filed writ petitions challengJng the
requirement to ·pay demurrage for the periods for which the detention F
certificates bad been issued. The High Court, while allowing the petitions
held that Airport Authority and the Central Warehousing Corporation
being custodian of the Customs Department, the Authority was not entitled
to recover any amount on account of demurrage charges for the periods
_/
for which detention certificates bad been issued. These appeals bad been G
Oled against the Judgment and orders of· the High Court directing the
--(
appellant to release the go~ds imported by the respondents without cbarg·
Ing any demurrage thereon for the periods for which defentlon certificates
had been Issued by the Collector of Customs.
Th~ appellant urged that the power to levy demurnp bJ the mter- H.·
149
150
SUPREME COURT REPORTS
[1995] 2 S.C.R.
I
A national Airport Authority of India is derived from the International
Airport Authority Act, 1971, it could not be regulated or controlled by any ·
order statute; that the Customs Authorities could neither levy demurrage
no waive it, therefore, the Detention Certificate could not compel the
. appellants to treat the entire period during which the goods remained in
their custody to be free period and that the rate schedule for. demurrage
B having been made in exercise of statutory power and the appellants have
been granted waiver to the extent of 80% und~r the Policy framed by the
IAAI, the respondents were not entitled to any relief.
c
Allowing these appeals, this Court
HELD: Per Majority (S.P. Bharucha and N. Venkatachala, JJ. by
} separate concurring judgments).
The orders passed by the High Court relieving respondent-1 from
his liability to pay demurrage charges were liable to be set aside and the
D Writ Petition stand dismissed. [199-A, B]
Per S.P. Bh<l1Ucha, J.
1.1. An importer is liable to pay demurrage th«>ugh he is not respon·
sible for the delay in clearing his goods. Under the provisions of the
E International Airports Authority Act, 1971, the International Airports
Authority of India are 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. The Authority was entitled
to charge demurrage even hi respect ,of periods during which the importer
p was unable to clear goods because of the detention thereof by the Customs
authorities and also for the period for which a detention certificate bad
been issued. The Airport Authority is an entity in its own right. By virtue·
of the power vested in the Authority u/s 37, the Authority bas framed
regulations called the IAAI (Storage and Processing of Goods) Regulations, 1980. Under the Regulations the Authority is empowered to levy
G ·charges, includin

## Text

_Characters 0–39,859 of 129,636. This is a partial read: ask again with offset=39859 for what follows._

INTERNATIONAL AIRPORTS AUTHORITY OF INDIA ETC. E'fC. A
v
MIS GRAND SLAM INTERNATIONAL AND ORS. ETC. ETC.
FEBRUARY 21, 1995
[R.M.' SAHAI, S.P. BHARUCHA AND N. VENKATACHALA, JJ.)
B
Customs Act--Section45--Levy of demurrage-/mport of goodsDetention for clearanc~oods detained or seized by Customs department-Detention certificate issued by Customs Authorities-Whether any c
demu"age could have been charged for ~e period detention certificate was
issued-Held, yes.
,,
,
I
The respondents had imported goods by air· and. filed bills of entry
with the Customs authorities. The Customs authorities detained the goods
and passed an order enhancing the value of the goods. In appeal, the D
Custom, Excise and Gold (Control) Appellate Tribunal quashed the order
)
of the Additional Collector; the goods were released and the Collector of
Customs issued detention certificates for the periods of the detention
stating that the detention was due to pendency of acJJudicatlon proceed·
ings. The respondents thereupon applied to the Authority for waiver of E
demumige charges for the perl'>ds covered by the detention certificates.
However, the appellants Instead of treating entire period as free period
determined the liability of the respondent in accordance with Rate
Schedule framed by them for the periods for which the detention certifi·
_I,
cates had been issued. 'The.respondents filed writ petitions challengJng the
requirement to ·pay demurrage for the periods for which the detention F
certificates bad been issued. The High Court, while allowing the petitions
held that Airport Authority and the Central Warehousing Corporation
being custodian of the Customs Department, the Authority was not entitled
to recover any amount on account of demurrage charges for the periods
_/
for which detention certificates bad been issued. These appeals bad been G
Oled against the Judgment and orders of· the High Court directing the
--(
appellant to release the go~ds imported by the respondents without cbarg·
Ing any demurrage thereon for the periods for which defentlon certificates
had been Issued by the Collector of Customs.
Th~ appellant urged that the power to levy demurnp bJ the mter- H.·
149
150
SUPREME COURT REPORTS
[1995] 2 S.C.R.
I
A national Airport Authority of India is derived from the International
Airport Authority Act, 1971, it could not be regulated or controlled by any ·
order statute; that the Customs Authorities could neither levy demurrage
no waive it, therefore, the Detention Certificate could not compel the
. appellants to treat the entire period during which the goods remained in
their custody to be free period and that the rate schedule for. demurrage
B having been made in exercise of statutory power and the appellants have
been granted waiver to the extent of 80% und~r the Policy framed by the
IAAI, the respondents were not entitled to any relief.
c
Allowing these appeals, this Court
HELD: Per Majority (S.P. Bharucha and N. Venkatachala, JJ. by
} separate concurring judgments).
The orders passed by the High Court relieving respondent-1 from
his liability to pay demurrage charges were liable to be set aside and the
D Writ Petition stand dismissed. [199-A, B]
Per S.P. Bh<l1Ucha, J.
1.1. An importer is liable to pay demurrage th«>ugh he is not respon·
sible for the delay in clearing his goods. Under the provisions of the
E International Airports Authority Act, 1971, the International Airports
Authority of India are 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. The Authority was entitled
to charge demurrage even hi respect ,of periods during which the importer
p was unable to clear goods because of the detention thereof by the Customs
authorities and also for the period for which a detention certificate bad
been issued. The Airport Authority is an entity in its own right. By virtue·
of the power vested in the Authority u/s 37, the Authority bas framed
regulations called the IAAI (Storage and Processing of Goods) Regulations, 1980. Under the Regulations the Authority is empowered to levy
G ·charges, including storage charges and demurrage. The Authority may in
its discretion waive charges in deserving cases. The provisions of the
In~ernational Airports Authority Act, 1971 are similar to the provisions of
, the Major Port Trusts Act, 1963 and the Port Trusts Act that preceded it.··
~d the regulations framed by the Authority u/s 37 of the Act, in reganl le
H the storage or processing of imported goods and the policy in regard te
''-
INIERNATIONALAIRPORT AUIBORI1Y v. GRAND SIAM INTERNATIONAL
151
the waiver of demurrage, are also similar to those of the Boards of A
~
Trustees of the ports.
Trustees of the Port of Madras v. Mis Aminchand Pyarelal and Ors.,
(1976] 1 S.C.R. 721, Board of Trustee of the Port of Bombay v. Indian Goods
Supplying Co.,, (1977] 3 S.C.R. 343 and Board of Trustees of the Port of
B
Bombay v. Jain Hind Oil Mills Company and Ors., (1987] 1 S.C.R. 932,
relied on.
1.2. None of the provisions of the Customs Act entitle the Collector
~-
of Customs to debar the collection of demurrage for the storage of im·
ported goods. They do not entitle him to impose conditions upon the c
proprietors of ports or airports before they can be approved as Customs
ports or Customs airports Section 45 provides that all imported goods
l
imported in a Customs area must remain in the custody of the person who
,.
has been approved by the Collector of Customs until they are cleared and
such person is obliged not to permit them to be removed from the Customs
area or otheIWise dealt with except under and in accordance with the D
permission of the Customs officer. Section 45 does not state that such
-I
person shall not be entitled to recover charges from the importer for such
period as the Customs authorities. direct. (186-G-H, 187-A]
1.3. An importer must land the imported. goods at a sea-port or . E
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 oftlcers are aecommodated therein to
facilitate clearance. For the occupation by the imported goods of space ln
the sea-port or airport, the Board or the Authority which is Its proprietor
_J,
is entitled to charge the importer. That until Customs clearance the Board. F
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. [187·C·D]
-
/("
1.4. It cannot be gainsaid that, by reason of unjustified detention of
his goods by the Customs authorities, the importer is .put to loss by having G
to pay demurrage charges for the periods of such detention. 1be Central
-<
Goftl'llment is empowered by section 35 of the International Airports
Authority A.ct, 1971, and section 111 of the Major Port Trusts Act,. 1963,
'lo Issue to the Authority and the Board of Trustees, respectively, dinctlons
-• .. 11dons of p0lky after giving them an opportunity, as ~
as practld· · H
152
SUPREME COURT REPORTS
(1995) 2 S.C.R
A able, of expressing their views. The Central Government can, if so advised,
after giving to the Authority and the Boards of Trustees the opportunity
of expressing their views, direct them not to levy demurrage charges for
periods covered by detention certificates. [187·E·ff]
1.S. The Central Warehousing Corporation is established under the
B provisions of the Warehousing Corporations Act, 1962. The provisions of
the Warehousing Corporations Act are substantially similar to those of the
International Airports Authority Act, 1971, and the Major Port Trusts Act,
1963. What bas been held in regard to the International Airports Authority
applies as well to th,e Central Warehousing.Corporation. [188-B]
c
Per Venkatachala, I. (concurring)
1.1. An· authority created under a statute even if the custodian of the
imported goods because of the provisions of the Customs Act, 1961 would
be entitled tO charge demurrages for the Imported goods In Its custody and
D make the Importer.or consignee liable for the same even for periods during
which be/It was unable to clear the goods· from the.Customs area, due·to
fault on the part of the Customs author(tles or of other authorities who
might have Issued detention certlftcates owning such fault. [196-B, 1'7·A] ·
i.2 When the IAAI In exercise of its powers conferred by sub-section
· E (1) of section 37 of the Intematlonal Airports Authority Act, 1971, and with
the prior approval of the Central Government have made regulations
called the International Airport Authority (Storage and Preservation of
Goods) Regulations, 198o, regulating levy of charge or surcharges, scale
of charges and waiver of charges payable by the owner In case of
F warehoused goods with the IAAI, those Regulations not only do not -=ome
in conmct with the Customs Act or its Regulations or its Rules but
conform to the requirement of the provision of section 63 of the Customs
~
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 dem~rrage charges on production of detention certlftcate
G Issued by the Cutoms authorities showing that detention of goods was for
· . no fault of consignee, it can be safely concluded that any directions Issued
by Customs Collector contrary to such Regulations and the policy direc·
dons as those Issued without authority In law are ultra vires his powen.
Therefore, condition (vii) In clause (d) of the Customs PublliNotlce No.
H .. ~·~the
IAAI not to collect the custody charges in respect of the·
"'
'
.. ·.
. .
'
)
I
~'
)-
INTERNATIONAL AIRPORT AlTIHORITY v. ORANDSLAM INTERN~TIONAL · 153
goods for which detention certificate.s may be issued by the Collector of A
Customs or his delegatee, has to be regarded as conditions iinposed by the
Collector of Customs without being conferred any power in that regard
either in the Act or the Rules or the Regulations. If condition (vii) of clause
(d) of the Customs Public Notice was regarded as that imposed by the
Collector or Customs without authority of law, it having been imposed B
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 ~erely 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 C
such goods by the Collector of Customs under sub-section (1) of section
45 of the Act. (193-G-H, 194-A-E]
.
1.3. The IAAI, an authority constituted under the ·International
Airports Authority Act, 1971, when is entitled to collect charges for keeping D
custody of the imported goods by regulations made thereunder and ac·
cording 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 tile Importer without collecdo:m 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 provisions of the Act or its Rules or its E
Regulations to direct release of the imported goods without collection of
keeping ch'!rges, for the keeping of which by the IAAI, charges are to be
paid under the Rules made under the International Airports Authority
Ad, 1971. (197-C·D]
F
1.4. Since Central Warehousing Corporation created under
warehousing Act,· 1962 stands in the same footing as that of the IAAI
created under the International Airports Authority Acts, 1971 in the
matter of keeping of goods as custodians on behalf of the Customs Depart· G
ment and the entitlement of both of them under the respective Ad, Rules
and Regulations to levy and collect demurrage charges from the ownen or
consignees of such goods, not being different, the view taken on the ,
entitlement of IAAI to.levy and collect charges for keeping goods by it u
· cutodian on behalf of the Customs Department, equally holds for Central ·
W•oula& Corporation. (197-E-F]
1
H
154
SUPREME COURT REPORTS
(1995) 2 S.C.R.
A
1.5. The Collector of Customs empowered under sub-section (1) of
section 45 of the Customs Act, 1962 to approve persons to be custodians
of imported goods in customs are~s until theY. are cleared as prov~ded for
therein, while approving the International Airports Authority of India to
be custodian of such imported goods received at the customs area the
B container Freight Station, ewe Complex, 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 ·
C Customs Collector or his delegatees to release the goods of importers or
consignees without collecting demurrage charge from them cannot be
enforced by Courts either against IAAI or ewe. (197-G-H, 198·A·Cl
Board of Trustees of the Port of Bombay v. lndian Goods Supplying
Co., (1971) 3 SCR 343; Trustees of the Port of Madias v. M/s. Aminchand
D Pyarelal and Ors., (1976) 1 SCR 721 and Board of Trustees of the Port of
Bombay v. Jai Hind Oil Mills Co. and Ors., (1987) 1 SCR 932, relied on.
Per R.M. Sahai, J. (dissenting)
1.1. The provisions in the International Airport Authority Act, 1971
E and Regulations framed thereunder cannot be read in isolation so far as
the custody of imported goods placed under it by Customs Department is
concerned. Both the Customs Act and International Airports Authority Act
are central enactments. In either, the Central Government is empowered
to make rules to carry out the objective of the Act. Both . the legislations
F are directed towards promoting social welfare. They should be interpreted
so as to advance public good and social justice'. (167-G-H; 168-~ BJ
1.2. The Public Notice issued in 1986 in exercise of powers under the
Customs Act, directing the appellants not to charge any dues for the period
the goods were detained appears to have been issued in the first instance
G to mitigate the hardship of the importers and therefore, it should be
construed.so as to remedy the mischief which was intended to be remedied.
Apart from that the court's duty while construing two provisions coveri~ -,
the same Reid is to harmonise the two provisions in such a manner tat
I
none of them are rendered otiose. But that would be the result if sub-~
ff graph (vii) is ignored. The duty of the court is to effectuate the somt
'
I~
.• ·-1"
INTERNATIONAL AIRPORT AUIHORITY "· GRANDSLAM INTERNATIONAL
155
purpose by resorting to such constr':1ction as is beneficial and does not A
cause harm to any one or is rendered self-defeating. [168-E-G]
1.3. The intention and purport of the Notice is to avoid any harassment and loss to a consignee. It attempts to reconcile the necessity arising
out of statutory functions performed by it and yet protects an importer B
from unintended, and, may be in some cases, unjustified delay in release
of goods resulting in huge demurrage. [168-H; 169-A]
1.4. The expression, otherwise dealt with, in clause (b) of sub-section
(2) of Section 45 of the Customs Act widens the ambit of the restriction
placed on the custodian. It places complete embargo on the IAAI or ewe C
to deal with the imported goods in its custody in any manner. The custody
by the IAAI or ewe is not as it popularly understood in the commercial
sense. It is a statutory custody governed by the provisions of law. Therefore, once rules were framed or Public Notice was issued in exercise of
statutory power the IAAI or ewe cannot set up the claim that the D
intimation issued by the Customs Department could not be taken into
account ,for determination of free days. The issuance of Public Notice
would be covered in the expression, otherwise dealt with. When the goods
were entrusted in the custody of IAAI it was aware of the Public Notice. It
should be deemed to have accepted the custody subject to the condition.
In fact the statutory provisions leave no option for IAAI or ewe after E
1986 except to act in accordance with the provisions of the Act. The IAAI
or the ewe being only custodian of the Customs Department could not
ign~re the detention certificate issued in exercise of this power. Even on
principle of bailment the IAAI or ewe cannot escape from the effect of
detention certificate. Once the Customs Department issued directive to F
release the goods without charging any ground rent in pursuance of public
. notice issued under Section 45 of the Customs Act, the appellants as bailee
could not but to follow the directions which were in accordance with law.
The relationship of bailor and bailee arises out of the statutory provision
between the Customs Department and the IAAI or ewe and not with the
consignee. It does not make the IAAI or ewe a gratuitous bailee. In any G
case, even if any amount is legally due, the IAAI may claim from Customs
Department but not from consignee. (166-B, 169-B-8; 170-A-E]
1.S. The adjudicatory process is time consuming. From Assistant
Collector of Customs to the Tribunal itself it may take sumdently long H
156
SUPREME COURT REPORTS
(1995) 2 S.C.R.
A time. By the' time the consignee is able to extract himself from the cobweb
of various stages he may find himself landed in the soup of demurrage. If
he is to pay the charges which in many cases due to passage of time may
be many times more than the value of goods; the entire exercise ·may be
waste. It would be anomalous that a person who ultimately succeeds in
B vindicating his claim that the goods are properly valued or that the import
c was in accordance with law is faced with demurrage of goods which may
be not only more than the value of goods but the .value plus duty and
penalty even. To remedy from such hardship sub-paragraph (vii) was
enacted by way of Public Notice. It recognises the legal consequences which
must follow the _adjudication by directing that no .. demurrage should be
C charged for that period as in law the decision by the Tribunal dates back
to the date of detention. And by fiction of law it is assumed tl,iat the
Customs Department clears that goods as it should have done when the
goods had landed. Even otherwise if the policy decision of capacity to pay
is read alongwith rate prescribed then levy of demurrage may defeat the
D very purpose and objective of the policy. Payment of three times or four
ti11,1es of demurrage of value of goods because the goods were detained at
the instance of Customs Authorities does not accord with the policy
decision. It is not in common interest. One of the settled principles of
construction is to read a provision in such manner that it may not be
E self-defeating. The levy of demurrage at the prescribed rate by ignoring the
Public Notice issued by the Customs Department in 1986 is apt to lead to
such disasterous consequences. Even according to the International Air·
ports Authority (Storage & Processing of Goods) Regulations, 1980, the
imported goods are under the control of the Customs Department. 1be
p · Airport Authority acts only as custodian of· the goods on behalf of the
Customs Department. (174-B-H, 175-A]
2. Legislations, Rules or regulations are enacted to regulate the day
to day activities. But they cannot be exhaustive and the practical dlmcul·
ties arising in working out these have to be resolved by developing prin·
G ciples by the Court which are justice oriented, serve public purpose and
promote social interest without doing violence to the language of the
Section and the objective of enactment and if the provision was enacted to
remedy any event then to construe it in a manner in which It may carry
out the objective of the enactment which was intended to suppreis tbe
ff mischief. [168·D·E]
I
INTERNATIONALAIRPORT AUTHORITY v. GRANDSLAM INTERNATIONAL
157
3. From 1976 to 1993 the entire scenario of cargo traffic from air has A
under gone tremendous change. The busy traffic, the spate of smuggling,
manoeuvring of importing goods by camouflaging to avoid payment of duty
have multiplied putting immense pressure on the IAAI and the Customs
Department. At the same time the honest and bona fide consignee shQuld
be protected for sake of credibility. The Customs Department on it'i part B
may consider the feasibility of framing a policy by dividing the imported
goods in different categories. Where the import is not prohibited or it is
against licence or permit and the only dispute is about valuation or the
~-
tariff item under which it falls it may be released on fUmi.shing of bank
guarantee or security sufficient to secure the interest of Department
subject to final decision. This determination should be done at the airport. c
It would obviate the necessity of storing goods, save the, IAAI or ewe from
unnecessary botheration, protect the Department and serve the importer
better. Tiii then the Public Notice issued by Custo.ms Department appears
to be reasonable and practicable solution to the problem. The IAAI or
ewe may be well advised to change its regulations and fall in line with D
the policy decision and refrain from charging any demurrage for the
period Customs Department issues a certificate under sub- paragraph
(vii) of the Public Notice. It would avoid litigation, harassment and would
be conducive to public interest. (175-B-EJ
The Board Trustee of the Port of Bombay v. Indian Goods Supplying E
Co., (1977) 3 SCR 943, Board of Trustees of the Port of Bombay v. Jai Hind
Oil Mills Company and Ors., (1987) 1 SCR 932 and Trustees of the Port of
Madras v. M/s. Aminchand Pyarelal and Ors., (1976) 1 SCR 721, distin·
guished.
J.,
F
CML APPELLATE JURISDICTION : Civil Appeal No. 798 of
1992 Etc. Etc.
From the Judgment and Order dated 24.9.91 of the Delhi High Court
·---..(
in C.W.P. No. 554 of 1991.
G
-<.
V.R. Reddy, Additional Solicitor General, R.F. Nariman, Joseph
Vellapalli, V. Shekhar, Atulkumar, Tarun Bajaj, Vinod Kumar, Aruncshwar Gupta, Ranjan Mukherjee, M. J. Paul, Ms. Manjula Gupta, Rajiv
Dutta, Ms. Sushma Suri, A. Subba Rao, S.P. Sharma and V.K. Mchra for
the appearing parties;
H
158
I
SUPREME COURT REPORTS
[1995J 2 s.~.R. •.
A
The following Judgments of ~~e Court were delivered by
R.M. SAHAI, J. International Airports Authority of Iitdia
(hereinafter referred to as 'IAAI') and the Central Warehousing Corporation, Container Freight Station, Patparganj (in brief 'CWC'} obtained ieave
B of this Court under Article 136 of the Constitution of India against direction issued by the High Court of Delhi for release of imported goods
without payment of any demurrage charges for the period for . which
detention certificate had been issued by the Customs Authorities.
I·~
What persuaded the High Court to iake this view in favour of the
C respondents was founded on construction of Section 45(2) of the Customs
Act, 1962 ('Act' for short) and issuance of detention certificate by the
Customs Authorities. What is the nature of these certificates? Whether
they are)inding on the IAAI? Is there any conflict in the Public Notice
issued by tl.i~ Customs Authorities and Regulations framed by the I A.AI,
D are some of~ questions which arises for consideration in these appeals. ·
But before adverting to these issues facts in brief may be mentioned. ·
In Appeal No. 798 of 1992 the respondent filed with the Customs
Authorities bill of entry on cargo temunal along with all documents tO' seek
clearance of goods, namely, printing papers etc. of CIF value of Rs.
E 17,846.00. The valuation given in the bill of entry was objected to by
Additional Collector of Customs, and he passed an order on 8th November
1989 enhancing the value of the goods and directing confiscation of the
same. In appeal the Customs, Excise & Gold (Control) Appellate Tnounal,
New Delhi quashed the order of the Additional Collector of Customs on
p 3td July 1990. Since the order enhancing the valuation ai;id directing
confiscation was quashed the Collector of Customs issued detention cer-
. tificate from 7.8.1989 to 12.7.1990. It was mentioned in the certificate that
the detention was due to case of the respondent pending before the
Collector and in the appeal. The respondent thereupon applied for waiver
of the demurrage charged for the relevant period. On 18th December 1990
G it pres~nted an application showing as 'out of charge' of the Customs. B~t
on 9th January 1991 it was informed by the appellant that the total liability
of the demurrage charges was Rs. 1,49,100 out of which Rs. 79, 364 was
waived for the period of detention that is, 7.8;89 to 12.7.90. The appellant
further condoned the periOd from 18.12.90 to 9.1.91 as the application for
H waiver was received and processed during this period. According to the
I
}
-<
· IN'I1!RNA110NALAIRPORT Al.TIHORllYv. GRANDSLAM INTBRNATIONAL[SAHAI, J.I
159
appellant the respondent was liable to pay Rs. 69,736 as on 9.1.91 and A
thereafter the liability was Rs. 300 per package per week or part thereof.
The liability of the respondent till 12.6.1991 was determined at Rs. 1.15,936.
In Appeal No. 4227 of 1992 the respondent imported a consignment
of wool waste. It was seized by the Collector of Customs under Section 110 B
of the Act as on sample examination it appeared to be synthetic waste
which was restricted item which could not be imported without a valid
import licence. The respondent was issued notice to show cause why the
goods of declared value of Rs. 1,93,237 should not be confiscated under
Section lll(d) and lll(m) of the Act and action under Section 112 be
taken. The explanation of the respondent that test being based on sample C
drawn on 10% examination was not correct nor did it represent test of
entire consignment, was not accepted. And the respondent was given an
option to clear the goods on payment of Rs. 50.000 as fine and in addition
penalty of Rs. 1,00,000. In appeal on test of 71 % of consignment by the
chemical examiner it was held that consignment was wool waste. ConseD
quently the appeal was allowed. And in pursuance of the order of the
Tribunal the Additional Collector of Customs passed the order dated 17th
December 1990 directing release of the goods. On 24.1.1991 the Assistant
Collector sent a letter to the appellant that since the goods of the respondent were seized by Cust~ms Department on 29th April 1986 and they have
been directed to be released by the Additional Collector of Custoins on E
17.12.1990 the, 'demurrage/ground rent and other charges accrued on
consignment from 29.4.1986 to 29.12.1990 may be waived'. The appellant
replied this le~er on 25.1.1991 informing the Assistant ·Collector of Customs that the matter for waiver of ground rent for the period 31.1.1987 to
29.12.1990 has been referred to the Regional Officer/Head Office .. But the F
Assistant Collector, Custoins was requested. to inform the importer that
they will have to bear entry fee, handling and insurance charges and ground
rent after 29.12.1990 in case the Head Office agrees for waiver.
In Appeal No. 3971 of 1992 the respondent had imported . multicable-transit/cable sealing system. The clearance of goods was claimed G
under Tariff Item No. 85.47 on payment of duty@ 135.75% The department on the other hand directed it to be cleared by paying duty @ 181.75%
under Tariff Item No. 39. However, the claim of the respondent was
ultimately accepted. And provisional clearance was granted on payment of
demurrage charges. After the claim was accepted the respon~ent wrote a H
160
SUPREME COURT REPORTS
[1995] 2 S.C.R.
A letter tO the appellant that since the claim had been accepted by the
Customs Authorities and IAAI at the time of release had stated that this
question of refund shall be considered after final decision was taken by the
Customs Authorities the amount of Rs. 3,26,645 paid towards demurrage
may be refunded. But the respondent was informed that the claim of refund
was not admissible.
B
In each of these cases the Customs Department had issued Detention
Certificate and informed IAAI and CWC that no demurrage may be
charged for the period during which the goods were in custody of IAAI or
the CW~:'4ue to pendency of adjudication proceedings. But the IAA1 or
·c the CWC)nstead of treating entire period. as free period granted rebate
and calculated demurrage in accordance with Rate Schedule framed by
them. The a~ount of demurrage in each case came to be two or three times
more than the value of the goods, therefore, the respondents approached
the High Court by way of writ petitions under Article 226 of the ConstituD tion of India. The petitions were allowed and it was held that the IAAI or
the CWC being custodian of the Customs Department could not ignore the
Detention Certificate, therefore, no demurrage could be charged for the
period the proceedings were pending. The High Court relied on Mis
Trishul Impex v. Union of India (1991) 2 Delhi Lawyer 1. This decision in
its turn relied on an earlier decision given in Trans Asia Carpets v. Union
E of India, CCP No. 97/87. The decision in Trans_~'!_(supra) proceeded on
the basis. that Airports Authority being an agent of the . Collector 9f
Customs was bound by the Detention Certificate granted by the Collector
of Customs. In Trishul Impex (supra) it was held that the container depot
where the goods were deposited being the custodian for Customs
F Authorities it was bound by the certificate and was liable to release the
goods without any demurrage.
·
It is the correctness of this view that has been as&ailed in these
appeals. The learned counsel for the appellants urged that the power to
levy demurrage by the IAAI is derived from the International Airports
G AUthority Act, 1971. It could not be regulated or controlled by any other
Statute. It was submitted that the Customs Authorities could neither levy
demurrage nor waive it. Therefore, ~e Detention Certificate could not
compel the appellants to treat the entire period during which the goods
remained in their custody to be free perlod. According to learned counsel
H in any case the a.te Schedule for Demurrage having been made in exercise
\
INTERNATIONAL AIRPORT AU'JHORrrY v. GRANDSLAM INI'llRNATIONAL [SAHA!, J.J
161
of statutory power and the appellants having been granted waiver to the A
extent of 80% under the Policy framed by the IAAI the respondents were
not entitled to any relief.
The word 'demurrage' defined in clause (g) of Regulation 2 of the
Regulations framed by the IAAI is extracted below :
"Demurrage means the rate or amount payable to the airport by a
shipper or consignee or carrier for not removing the cargo within
the time allowed."
B
Similar word used in Port Trust of Madras Act, 1905 came up for interC
pretation before this Court in Trnstees of the Port of Madras v. M/s.
Aminchand Pyarelal & Ors., (1976) 1 SCR 721. It was explained that the
word was not used in the strict mercantile sense, 'but merely to signify a
charge which may be levied on goods after expiration of 'Free days'. This
ratio has been reiterated in The Board of Trnstee of the Port of Bombay v.
Indian Goods Supplying Co., (19n) 3 SCR 343 and Board of Trnstees of the D
Port of Bombay v. lai Hind Oil Mills Company & Ors., (1987) 1 SCR 932.
The dispute, thus is whether the days or period dm-ing which adjudication
proceedin~ were pending before the Customs Authorities could be considered to be free days on any principle of law, statutory or otherwise, or
it can be held to be so on construction of Regulations and policy framed E
by the IAAI read with the Act and the Public Notice issued under it. But
before coming to it, it appears necessary to state that the basic controversy
that arose inAminchand Pyarelal (supra) and Indian Goods Supplying Co.
(supra) centred round whether a consignee could claim immunity from
paying any demurrage when the detention of the goods was not due to any
fault or negligence of the importer. It was answered in the negative. In the F
latter decision that is Indian Goods Supplying Co. (supra) the Court after
referring to the earlier decision in Aminchand Pyarelal (supra) and some
English decisions held :
"The position therefore is that even though the delay in clearing G
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 <>flaw the
validity of which cannot be questioned."
But that is not the issue in these appeals. The respondents did not claim H
162
SUPREME COURT REPORTS
[1995) 2 S.C.R.
A any immunity from payment of demurrage because their goods were
detained for no fault on their part. What was claimed and accepted was
that the IAAI or ewe being a custodian of Customs Department the
intimation given by it that no demurrage should be charged from the
respondent for the period mentioned in the detention certificate should
have been accepted and acted upon by it. To examine the correctness of
B this claim it is necessary to ascertain the nature of relationship between the
Customs Department and IAAI and notice certain provisions in the Act;
the Public Notice issued under it, the Regulations framed by the IAAI and
the rate schedule framed by it. Section 45 of the Act reproduced below :
c
D
E
F
G
' .
"45. Restrictions on custody and removal ofimported goods.
(1) Save as o~erwise provided in any law for the time being in
force, all imported goods unloaded in a c~toms area shall remain
in the custody of such person as may be approved by the Collector
of Customs until they are cleared for home consumption or are
warehoused or are transhipped in accordance with the provisions
of Chapter Vlll.
(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;
(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."
This section permits removal pf imported goods from the 'customs area'
which under clause (11) of Section 2 of the Act means:
"2. (11) "customs area" means the area of a customs station and
includes any area in which imported goods or exported goods are
ordinarily kept before clearance by Customs Authorities;"
It is thus clear that the imported goods are kept at the airport or the
Warehousing Corporation in the customs area over which it is the Cwitoms
H Department which exercises control No goods can be removed from there
l
\
'
INTERNATIONAL AIRPORT AU'IHORITYv. GRANOSLAM IN'IERNATIONAL [SAHA!, J.)
163
either by the importer or even the Custodian. The detention is to enable A
the Customs Department to proceed in accordance with law and determine
if the valuation disclosed was correct or the goods had been properly
imported etc.· A person importing the goods is required to comply With
rules and notification issued by the Government permitting, prohibiting or
regulating import. Whether the importer is complying with· the Rules or B
not and acting in accordance with law is entrusted to the Customs Department. No goods can be cleared except with permission of the Customs
Department. Therefore, it is by operation of the statutory provision that an
area specified as customs area is under control of the· Customs Department. In fact fictionally it is the Customs Department which for purposes
of imported goods, its checking, storage, release etc. is in control of it.
C
The imported goods are detained in the customs area either for
assessment of duty under Section 17(3) and 17(4) of the Act or for
clearance unper Sections 45 to 47 of the Act. These appeals are concerned
with detention for clearance. The levy of demurrage for detention at the D
instance of Customs Department during adjudication proceedings en-
. ganged attention of the Government even in past. In Indian Goods Supplying Co.'s case (supra) the Central Government issued a letter requesting
the Port Trust Authorities to modify its rates as it was unreasonable to
charge an importer any demurrage once it was accepted that clearance was
delayed on account of reasons beyond his control. But Since this was only E
a letter of request and the Board in pursuance of it opted for graded scale
the court was of opinion that it could not be treated as a direction binding
on the Port Trust.
It appears the Collector or Customs, New Delhi in order to overcome F
this difficulty and for maintaining and regulating control over goods which
are unloaded at Indira Gandhi International Airport, issued Public Notice
in 1986 in exercise of powers vested under Sections 8, 33, 34 and 45 of the
Act read with Rules 56, 57, 58 and 59 of the Aircraft Rules, 1920. Paragraph (a) of it specifies the limits of customs area as whole of existing area
constituting the Indira Gandhi International Airport, New Delhi including G
domestic arrival and departure area, Cargo Terminal New Int~rnational
Terminal Complex ('CTNITC' for short) and the entire premises of the
Central Warehousing Corporation located at Gurgaon Road, New Delhi
excluding M/s. IAAI's Import Cargo Warehouse (Monkey torn). Paragraph
(b) approves all places where parking/halting of aircraft is permitted by the H
164
SUPREME COURT REPORTS
[1995) 2 S.C.R.
A Civil Aviation Department, the International Airport Authority of India for
unloading/loading of imported/export goods. Paragraph (c) assigns func- '
tions under Sections 33 and 34 of the Act to the officers of the Customs/ Air
:;.-...
customs posted at IG~ Airport. Paragraph ( d) approves M/s. IAAI as
custodian of the cargo under Section 45 of the Act. The cargo is required
B to be stored in IAAI's CTNITC subject to the conditions - (i) that the cargo
shall be subject to the control or customs; (ii) that M/s IAAI shall maintain
detailed account of all imported and exports goods received by them as
'custodian' and shall produce such account for inspection by a gazetted
officer or customs.
C
Sub-paragraph (vii) of paragraph (d) which is material· reads as
under:
D
"(vii) In case of goods detained/seized etc. by customs, the
warehousing/storage charges shall be calculat,ed by M/s. IAAI for
the period due minus the charges for the period of detention at
the instance of Customs as certified by the Assistant Collector of
Customs".
The language of the sub-paragraph is clear and unambiguous. Unlike
the letter of request sent by Central Government in Inman Goods Supplying
E Co. 's case (supra) it is a direction by the Collector of Customs to the
custodian of goods at the airport or the warehouse not to charge any
warehousing or storage charges for the period the goods detained or seized
by the Customs Department are kept in custody subject to the issuance of
a certificate by the Assistant Collector of Customs that the goods were
F detained at the instance of Customs Department. But what was urged by
,~-
the learned counsel for the appellants was that this Public Notice was not
binding on the appellants as they were independent statutory bodies. To
examine the merit of this submission, the question that arises is whether
the Notice was issued in valid exercise of power. If it be so then what
consequence flow out of it? It will then have to be examined whether it is
--.,..__
G binding on the appellants.