The Fault-Based Divide: When Demurrage and Detention Waiver under HCCAR 2009 & SCMTR 2018 Are Granted — and When They Are Refused

A Case Law Digest of the Key Judicial Tests Under HCCAR 2009 and SCMTR 2018

Introduction

The demurrage and detention waiver regime under Indian customs law is not a blanket entitlement. Whether a waiver will actually be granted — or whether the CCSP or carrier can successfully resist it — often depends on a single, critical question: Was the importer at fault for the detention?

This fault-based divide has emerged from a series of important judicial decisions from the Supreme Court, the Delhi High Court, the Madras High Court, and CESTAT. Understanding where a given case falls on this spectrum is the most practically important skill for any lawyer or importer navigating demurrage and detention disputes in India.

The Central Legal Question

In every demurrage/detention waiver dispute, courts and tribunals ask: What caused the detention? And who caused it?

• If detention was caused by the importer’s own action (misdeclaration, misclassification, smuggling, deliberate fraud) → waiver may be refused; the CCSP/carrier is not required to subsidise the importer’s misconduct.
• If detention was caused solely by customs/government action (DRI/SIIB investigation initiated on intelligence, customs hold for verification) and the importer was innocent → waiver is mandatory; the CCSP/carrier cannot resist.
• If detention was caused by customs action but the importer was ultimately penalised (i.e., found to have committed some violation, even if minor) → the position is nuanced and courts have applied a fact-specific analysis.

The Foundational Supreme Court Principle

Shipping Corporation of India Ltd. v. C.L. Jain Woollen Mills (AIR 2001 SC 1806)

The Supreme Court established the foundational principle governing this area. C.L. Jain Woollen Mills imported polyester filament yarn from Korea, which was transshipped to ICD Delhi and held by CONCOR. The Customs Authorities detained the goods, deeming the import unauthorised, and ordered confiscation. The Delhi HC quashed the confiscation and directed release without demurrage charges, given the illegality of the detention.

The Supreme Court held: Importers should not be held liable for demurrage charges ONLY IF the delay in releasing goods is due to UNLAWFUL DETENTION or ILLEGAL ACTIONS by customs officials. In the specific case before it, however, the SC directed the Shipping Corporation and CONCOR to consider waiving charges if an application was filed by customs authorities — placing the ultimate financial burden on the state where the detention was due to illegal state action.

Key limitation acknowledged by the SC: Even where the carrier’s lien under the Bill of Lading is valid, the specific circumstance of illegal customs detention necessitated exemption. The SC did not hold that all demurrage is waivable in all detention scenarios — only where the detention was unlawful or illegal.

CASE 1: Innocent Importer + DRI Seizure → Waiver Mandatory

G.K. International v. Principal Commissioner of Customs (Madras HC, W.P.No.6947 of 2022, 16.06.2022)

The petitioner imported wet dates from Dubai. On customs examination, walnuts were found alongside the declared goods. SIIB (Special Intelligence and Investigation Branch) detained the goods and issued a Detention Certificate in F.No.S.Misc.343/2021-SIIB, dated 17.01.2022, directing the CCSP not to charge detention, demurrage, or container storage charges from the date of detention.

The CCS/shipping line respondents refused to release the goods without payment of charges. The Madras High Court (per Justice R. Suresh Kumar) issued a writ of mandamus directing release of goods without levy of detention, demurrage, and container storage charges from the date of detention. The Court confirmed that a SIIB detention constitutes a qualifying detention under Regulation 6(1)(l) HCCAR 2009, and the detention certificate issued is binding.

Principle Extracted: DRI/SIIB investigation detention triggers HCCAR Reg. 6(1)(l). The detention certificate binds the CCSP. The CCSP has no discretion to refuse.

CASE 2: Goods Detained for 2+ Years, No Fault of Importer → CESTAT Directs Waiver Certificate

Jethanand Rohra / M/s. Jaymco Polymers Pvt. Ltd. v. Commissioner of Customs (CESTAT Mumbai, Final Order Nos. A/85436-85437/2022, decided 09.05.2022)

The appellants imported Mineral Hydrocarbon Oil. Revenue suspected misdeclaration. The goods were seized and subsequently confiscated. However, CESTAT ultimately found in favour of the appellants — the goods were freely importable, the classification was correct, and the confiscation was set aside. The goods had been lying under seizure and confiscation for more than two years, entirely without fault on the appellant’s part.

CESTAT held: ‘As the goods are lying under seizure and subsequent confiscation by the Customs Department for more than two years, for no fault of the appellant, grant of waiver of detention and demurrage charges is appropriate.’ CESTAT directed: (a) the proper authority shall issue the waiver certificate; and (b) goods shall be delivered to the appellants within two weeks.

Principle Extracted: Where goods are held under customs seizure for extended periods without the importer’s fault, CESTAT will affirmatively direct issuance of the waiver certificate — not merely permit the importer to apply for one.

CASE 3: Goods Detained, Detention Certificate Honoured — Refund of Illegally Collected Charges

M/s. Isha Exim v. Commissioner of Customs (Madras HC, W.P.No.26838 of 2018, decided 01.07.2021)

The petitioner’s goods arrived at Chennai Port. The DRI detained the goods on suspicion of misclassification of ‘Unflavoured Supari Betelnut Product known as Supari’. A Detention/Demurrage Waiver Certificate was issued by Customs in F.No.S49/340/2017-Gr.1, dated 27.10.2017, under Regulation 6(1)(l). Despite this certificate, APL India (the shipping line / authorized carrier) collected Rs.20,57,526.72 as Container Detention Charges in ‘blatant violation’ of the certificate.

The Madras HC directed the respondents to cause refund of the amount illegally collected by APL India. The Court held the detention certificate has binding statutory force — any charges collected in violation of a valid certificate are recoverable.

Principle Extracted: Charges collected in violation of a valid detention certificate are recoverable by court order. The carrier cannot retain amounts collected in breach of its statutory obligation.

CASE 4: Importer at Fault + Penalty Imposed → Waiver May Be Refused

Bhavik S. Thakkar v. Union of India (Delhi HC, W.P.(C) 982/2015, decided 14.02.2023, 2023/DHC/001046)

The petitioner imported MS Scrap which was seized by DRI on grounds of misdeclaration. After adjudication, a penalty was imposed on the petitioner. A detention certificate was issued by Customs to CONCOR (the custodian) directing waiver of Terminal Storage Charges (TSC). CONCOR refused to waive charges, citing its internal policy that waivers are not granted where penalty has been imposed on the importer.

The Delhi HC, relying on the earlier Division Bench decision in Trip Communications Pvt. Ltd. v. Union of India (28.03.2014), held against the petitioner. The Court reasoned: where the importer’s own misdeclaration caused the detention, it would be inequitable to compel the CCSP to bear the resulting charges. The waiver certificate issued by customs is an ‘eligibility certificate’ — it does not, in and of itself, compel the custodian to waive charges in all cases; the custodian retains the ability to resist where the importer caused the detention.

Principle Extracted: Penalty imposed on importer for misdeclaration = importer at fault = CCSP may resist waiver. This is the key exception to the mandatory waiver rule.

CASE 5: No Formal Detention Order → No Waiver at All

Modern Line-Export v. Deputy Commissioner of Customs (Madras HC, W.P.Nos.727 & 733 of 2024, decided 07.06.2024; W.P.No.31002 of 2024, decided 11.07.2025)

A Croatian exporter’s goods arrived at Chennai Port but the Indian importer refused to take delivery. The exporter applied for re-export permission (essentially the Section 69 pathway). Re-export was initially refused. The exporter simultaneously applied for a demurrage waiver/detention certificate. The AC of Customs rejected the waiver application on the specific ground that NO seizure, detention, or confiscation order had been issued by customs authorities in respect of the goods — they were merely uncleared.

The Madras HC (2024) remanded the re-export question but on the demurrage waiver aspect, upheld the AC’s rejection as correct in principle. The 2025 order confirmed: no formal detention order = no waiver entitlement under HCCAR Regulation 6(1)(l).

Principle Extracted: Goods merely sitting uncleared at a port (because the importer refuses delivery, or re-export is pending) without any formal seizure or detention order = NO waiver. Regulation 6(1)(l) is not a general ‘goods are stuck’ waiver provision.

The Fault Matrix: Summary

Who Bears the Ultimate Cost?

When a waiver certificate is issued and the CCSP/carrier is directed not to charge the importer, a secondary question arises: Does the CCSP/carrier bear the cost, or can it recover from customs? The Supreme Court in Shipping Corporation of India (AIR 2001 SC 1806) clarified: where the detention was due to illegal state action, the carrier/custodian may seek recovery of demurrage charges from the customs authorities. This principle has practical significance in large-scale DRI investigations where significant demurrage accumulates.

Remedy After Wrongful Refusal of Waiver

If the CCSP or carrier refuses a valid detention certificate, or if customs refuses to issue a certificate when one is warranted, the importer’s remedies are:

• Writ petition under Article 226 of the Constitution before the relevant High Court — seeking a writ of mandamus to: (a) direct issuance of detention certificate; (b) direct the CCSP/carrier to honour the certificate; or (c) direct refund of charges illegally collected.
• Filing a complaint with the Commissioner of Customs for action under Regulation 13 of HCCAR 2009 / SCMTR 2018 against the non-complying CCSP/carrier.
• Representation to CBIC/DRI for intervention, particularly in major investigation cases.

Conclusion

The fault-based divide is the most practically important concept in the demurrage and detention waiver space. The law is not a blanket protection for all importers in all circumstances — it protects innocent importers from charges caused by the state’s own actions. Importers who are found to have made misdeclarations or committed violations that caused the detention face a significantly harder road. Understanding this divide — and where a given case sits on it — is essential for every customs lawyer and trade professional. Article 7, the capstone of this series, addresses the most complex scenario: goods pending Section 69 re-export that are simultaneously seized by DRI/SIIB, triggering both the re-export clearance track and the detention waiver track in parallel.

FAQ: Demurrage and Detention Waiver under HCCAR 2009 & SCMTR 2018

1. What is the key test for granting a demurrage or detention waiver under HCCAR 2009?

The central test is “who caused the detention”. If detention is due to customs action without importer fault, waiver is generally mandatory. If importer’s misconduct caused detention, waiver can be denied.

2. Is a detention certificate under HCCAR 2009 binding on shipping lines and CCSPs?

Yes. A valid detention certificate issued by Customs under Regulation 6(1)(l) is generally binding on CCSPs and carriers, and they are expected to waive charges accordingly.

3. Can a shipping line refuse a detention waiver certificate issued by Customs?

Only in limited cases. If the importer is found guilty of misdeclaration, fraud, or wrongdoing, courts have allowed CCSPs to resist waiver. Otherwise, refusal is not legally sustainable.

4. Is demurrage waiver available if goods are merely lying uncleared at the port?

No. If there is no formal detention, seizure, or confiscation order, Regulation 6(1)(l) is not triggered and waiver is not available.

5. What happens if DRI or SIIB detains goods but the importer is ultimately found innocent?

In such cases, courts have consistently held that waiver is mandatory, and CCSPs must comply with the detention certificate issued by Customs.

6. Can waiver be denied if the importer is penalised for misdeclaration?

Yes. If adjudication confirms importer wrongdoing and penalty is imposed, courts have held that CCSPs may lawfully refuse waiver, as detention is attributable to the importer.

7. What if demurrage is collected despite a valid waiver certificate?

Any charges collected in violation of a valid detention certificate are recoverable, and courts can order refund from the shipping line or custodian.

8. Does Section 69 re-export entitlement automatically include demurrage waiver?

No. Section 69 (re-export of imported goods) is independent. Waiver requires a valid detention order under HCCAR, not just re-export proceedings.

9. Who ultimately bears demurrage cost if waiver is granted due to illegal customs detention?

Where detention is due to illegal state action, courts have recognized that CCSPs may seek recovery from Customs authorities.

10. What is the most important takeaway from judicial decisions on waiver disputes?

The entire regime is fault-based:

• No importer fault → waiver generally granted
• Importer fault → waiver can be denied
• No detention order → waiver not applicable at all

References

1. Shipping Corporation of India Ltd. v. C.L. Jain Woollen Mills (AIR 2001 SC 1806) — CaseMine — https://www.casemine.com/judgement/in/56ea8cc1607dba382a0790c1
2. K. International v. Principal Commissioner of Customs, W.P.No.6947 of 2022 (Madras HC, 16.06.2022) — CaseMine — https://www.casemine.com/judgement/in/62ab6915b50db9b9d68ec12b
3. K. International v. Principal Commissioner of Customs — LegitQuest — https://www.legitquest.com/case/ms-gk-international-v-the-principal-commissioner-of-customs-and-ors/78C16D
4. Jethanand Rohra / Jaymco Polymers v. Commissioner of Customs, Customs Appeal No. 86184 of 2021 (CESTAT Mumbai, 09.05.2022) — CaseMine — https://www.casemine.com/judgement/in/6279f243714d5833c85ed1e3
5. Jethanand Rohra v. Commissioner of Customs (CESTAT Mumbai) — TaxGuru (2022) — https://taxguru.in/custom-duty/cestat-grants-waiver-detention-demurrage-charges-goods-detained-2-years-fault-appellant.html
6. M/s. Isha Exim v. Commissioner of Customs, W.P.No.26838 of 2018 (Madras HC, 01.07.2021) — CaseMine — https://www.casemine.com/judgement/in/6159ea809fca197b22b03e94
7. Bhavik S. Thakkar v. Union of India, W.P.(C) 982/2015 (Delhi HC, 14.02.2023, 2023/DHC/001046) — CaseMine — https://www.casemine.com/judgement/in/63f0f0f2ded2162298556a83
8. Bhavik S. Thakkar v. Union of India — LegitQuest — https://www.legitquest.com/case/bhavik-s-thakkar-v-union-of-india-ors/7704DF
9. Modern Line-Export v. Deputy Commissioner of Customs, W.P.Nos.727 & 733 of 2024 (Madras HC, 07.06.2024) — LatestLaws — https://www.latestlaws.com/judgements/madras-high-court/2024/june/2024-latest-caselaw-8823-mad/
10. Waiver of demurrage not permissible without a seizure, detention, or confiscation — TaxGuru (2025) — https://taxguru.in/custom-duty/waiver-demurrage-permissible-seizure-detention-confiscation.html
11. M/s. Sai Lakshmi Engineering v. Principal Commissioner, W.P.No.14370 of 2018 (Madras HC, 01.07.2021) — CaseMine — https://www.casemine.com/judgement/in/6159e3f39fca197b22b03e78
12. M/s. R.M. Trading v. Principal Commissioner of Customs, W.P.No.6638 of 2018 (Madras HC, 01.07.2021) — LatestLaws — https://www.latestlaws.com/judgements/madras-high-court/2021/july/2021-latest-caselaw-12834-mad
13. Analysing the Conflict Between Detention Certificates and Right to Demurrage — NLIU CBCL (2023) — https://cbcl.nliu.ac.in/taxation/analysing-the-conflict-between-detention-certificates-and-right-to-demurrage/
14. Indian Perspective on Detention and Demurrage — Singhania Law (2025) — https://singhanialaw.com/indian-perspective-on-detention-and-demurrage-2/