Tag: #DHILLONOVERSEAS

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 29.09.2026

P&H HC: Importer Cannot Be Saddled with Demurrage and Ground Rent for Delay in Release of Detained Goods

In a significant ruling concerning prolonged detention of imported goods, Customs clearance, detention waiver, demurrage and ground-rent liability, the Punjab & Haryana High Court has come down strongly on authorities and other stakeholders for allowing an importer to suffer for more than two years because of disputes amongst themselves.

A Division Bench comprising the Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor allowed the writ petition filed by M/s Dhillon Overseas and issued a writ of mandamus directing release of the imported goods within two weeks. The Court also held that the importer could not be saddled with demurrage and ground-rent charges for the periods specified in the judgment.

The Court opened its judgment with a striking observation, describing the dispute as:

“a classic case” demonstrating how an importer was unduly harassed because of inter-se disputes among the respondents.

Background: Import of “Low Alloy Scrap”

• M/s Dhillon Overseas is an importer of ferrous and non-ferrous scrap.
• The petitioner imported goods declared as “Low Alloy Scrap”, which arrived on 18 December 2023. Bill of Entry No. 9307732 was presented to Customs on 19 December 2023.
• Customs subsequently detained the goods on 24 January 2024, taking the view that the imported goods were actually “Wire Bundles” rather than “Low Alloy Scrap.”
• This resulted in reassessment and imposition of additional duty. The reassessment was carried out on 14 February 2024, and the petitioner paid the additional duty demanded by Customs.
• Thus, despite the initial dispute concerning the description of the imported goods, the importer complied with the reassessment and discharged the additional Customs duty.

Customs itself directed waiver of detention charges

• An important development followed on 18 March 2024.
• The Customs Department issued a communication intimating that the goods had been detained and that detention charges were liable to be waived under the applicable provisions of the Sea Cargo Manifest and Transhipment Regulations, 2014 and Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR).
• Customs separately directed issuance of a detention certificate for waiver of detention charges for the period beginning from detention until the date of Out-of-Charge.
• The respondents’ own pleadings recorded that the detention-waiver certificate was issued on 18 March 2024, while Out-of-Charge was granted on 18 April 2024.
• Yet, despite reassessment, payment of additional duty, the detention-waiver certificate and OOC, the goods remained in custody at the Inland Container Depot.
• That continuing non-release ultimately led the importer to approach the High Court.

High Court had already ordered release in December 2024

• During the pendency of the writ petition, the High Court passed an interim order on 16 December 2024 directing release of the goods upon the petitioner furnishing surety bonds equivalent to the value of the goods.
• The Court specifically directed that, once the bonds were furnished, the goods should be released forthwith.
• Nevertheless, the goods were still not released.
• The petitioner consequently instituted Contempt Petition No. COCP-2388-2025 alleging non-compliance with the High Court’s interim direction. The contempt proceedings recorded that the petitioner had furnished surety bonds and that the goods nevertheless continued to remain unreleased.

Shipping line vs custodian: importer caught in the middle

• The judgment reveals that the continued detention arose substantially from disagreement among the respondents.
• The custodian’s position was that although the goods were in its possession, they could not be released unless the shipping line issued a Delivery Order.
• The shipping line, on the other hand, maintained that it had not been present when the earlier release order was passed and disputed the basis on which the release direction had been obtained.
• The shipping line had also challenged the Customs order dated 18 March 2024 before the CESTAT, Chandigarh Regional Bench, but that challenge was dismissed on 3 February 2026.
• The practical result was that the importer continued to be deprived of its goods while the various respondents disputed responsibility amongst themselves.

Dispute over statement that goods were “perishable”

• Another issue arose from the High Court’s interim order dated 16 December 2024, which had recorded that the imported goods were of a “perishable nature”.
• The petitioner subsequently explained that no such factual representation had actually been made. Instead, the expression appeared to have entered the order inadvertently because the petitioner had relied upon earlier High Court orders concerning similar issues in which the goods had been described as perishable.
• Counsel for the Customs authorities, who had been present when the interim order was passed, confirmed that the petitioner had not represented the goods as perishable.
• The High Court therefore directed deletion of the observation concerning the goods being perishable.
• Despite that clarification, the goods were still not released.

High Court finds respondents’ conduct “wholly arbitrary”

• The Division Bench ultimately found the conduct of the respondents “wholly arbitrary.” DHILLON OVERSEAS P&H HC
• The Court noted that the Bill of Entry had been presented on 19 December 2023 and questioned why the goods had not been promptly examined by Customs.
• This led the Court to examine the prescribed timelines for Customs assessment and examination.

Customs examination and assessment must be completed promptly

• The judgment referred to circular/instructions dated 22 August 2006, issued by the Chief Commissioner of Central Excise, Delhi Zone pursuant to an earlier High Court order in CWP-9882-2006.

According to the judgment, those instructions contemplated that:

• in the case of first appraisement, examination of imported goods should take place within 48 hours, followed by assessment within 24 hours; and
• in the case of second appraisement, assessment should be undertaken within 24 hours of filing the Bill of Entry and examination completed within 48 hours.

The instructions also provided that the importer should be informed in writing about the option of shifting the goods to a bonded warehouse under Section 49 of the Customs Act, 1962, failing which demurrage could accrue.

This aspect of the judgment is particularly important for importers facing prolonged examination or assessment delays.

Customs failed to adhere to the contemplated timeline

Applying these principles, the High Court observed that Customs was expected to conclude proceedings within the timelines contemplated in the circular.

Instead:

• Bill of Entry was filed on 19.12.2023;
• goods were examined/detained on 24.01.2024;
• reassessment was completed on 14.02.2024;
• additional duty was paid; and
• detention-waiver communication/certificate followed on 18.03.2024.

Yet the goods remained unreleased.

• The Court held that once the Bill of Entry had been presented, Customs ought to have concluded the proceedings within a reasonable time.
• It further held that the period for which the imported goods remained detained despite Customs having been informed of their arrival through the Bill of Entry rendered the impugned action arbitrary.

Importer cannot suffer because of disputes among Customs, shipping line and custodian

• One of the strongest aspects of the judgment concerns the Court’s treatment of the inter-se disputes among the respondents.
• The Bench observed that the manner in which responsibility was being shifted between the concerned respondents demonstrated that:
• the petitioner had been made to suffer for more than two years because of disputes amongst the respondents.
• The Court further characterised the continued non-release—despite the detention-waiver certificate and earlier judicial orders—as showing “complete apathy” on the part of the respondents in dealing with the petitioner’s claim.
• This finding carries wider practical significance. Once Customs formalities have been completed and the competent authorities have authorised or directed release, an importer should not ordinarily be left bearing the commercial consequences of unresolved disputes among Customs, a shipping line and a custodian.

No demurrage or ground rent liability on importer after 18 March 2024

• The High Court then dealt directly with demurrage and ground-rent charges.
• It held that the petitioner could not be saddled with liability for the imported goods that remained detained even after payment of the additional duty determined by Customs.
• The Court held that the consequences of the delay in release after 18 March 2024 would have to be dealt with inter se among the respondents themselves.
• This was followed by an even more specific direction in the operative portion of the judgment.
• The Court clarified that the petitioner would bear no liability for demurrage or ground-rent charges from 18 March 2024 until actual release of the goods.
• Significantly, the Court also held that even for the earlier period from 19 December 2023 to 24 January 2024, the respondents—not the importer—would have to bear the demurrage and ground-rent liability.

High Court orders release within two weeks

• The writ petition was accordingly allowed.
• A writ of mandamus was issued directing the concerned authorities to release the goods covered by the Bill of Entry dated 19 December 2023 within two weeks from the date of the judgment.
• The shipping line was specifically directed to issue the necessary Delivery Order within three days from uploading of the judgment.
• The Court refrained from imposing costs upon the shipping line in view of its statement that the Delivery Order would be issued within three days.
• At the same time, the Court expressly left any inter-se dispute among respondents Nos. 1 to 5 open for adjudication in appropriate proceedings.

Significance for importers and Customs practitioners

• The judgment is particularly relevant to disputes involving detention certificates, demurrage waiver, container/custodian charges and delayed release after Customs clearance.
• Three practical principles stand out.
• First, Customs detention cannot become commercially indefinite. Once an importer has complied with reassessment, paid the additional duty and Customs has taken the necessary steps toward release, continued withholding requires lawful justification.
• Second, administrative disputes cannot simply be transferred to the importer. Where Customs, a shipping line and a custodian disagree over who must issue a document or bear a particular charge, the importer should not automatically become the financial casualty of that disagreement.
• Third, the judgment demonstrates the importance of detention-waiver documentation. Once Customs itself recognises detention and issues a certificate or communication for waiver, that document becomes highly relevant when a shipping line or custodian subsequently seeks demurrage or ground rent from the importer.

Important distinction: detention charges, demurrage and ground rent

• The case also illustrates the interaction between Customs decisions and commercial cargo-handling arrangements.
• A detention certificate does not merely resolve the Customs classification or assessment dispute. It may become crucial to determining who should ultimately bear charges arising because goods remained in a Customs area during a period when the importer was prevented from obtaining possession.
• In Dhillon Overseas, the High Court went beyond simply directing release. It expressly allocated the relevant demurrage and ground-rent burden away from the petitioner for the periods specified in its operative directions.
• That makes the judgment particularly useful in cases where an importer has obtained OOC or a detention certificate but continues to face demands from other stakeholders before physical delivery is permitted.

Conclusion

The Punjab & Haryana High Court’s decision in M/s Dhillon Overseas v. Central Board of Indirect Taxes & Customs & Ors. sends a clear message against prolonged detention of imported goods caused by administrative delay and institutional disputes.

The importer had filed its Bill of Entry in December 2023, paid the additional duty following reassessment, obtained the benefit of Customs’ detention-waiver action, and was even armed with an interim High Court order directing release. Yet the goods remained unreleased for more than two years.

Finding this conduct arbitrary and reflective of complete apathy, the High Court directed release within two weeks and prevented the importer from being burdened with the specified demurrage and ground-rent charges. The ruling therefore has substantial practical relevance for importers, Customs Brokers, shipping lines, custodians and logistics operators, particularly where goods remain detained even after the underlying Customs assessment and clearance process has substantially concluded.

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Source: Punjab & Haryana High Court

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi