“An Example of Red-Tapism”: Punjab and Haryana High Court ₹50 Lakh Compensation and Refund with 6% Interest for “Wrongful and Illegal” Detention of Perishable Kiwi Consignment by Customs
Safiya Malik
The High Court of Punjab and Haryana Division Bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth held that the Customs Department had wrongfully and illegally detained a consignment of perishable goods comprising Kiwi fruits, despite repeated judicial directions. The Court directed that the customs duty deposited under protest be refunded and further held that the importer should be compensated proportionately for the loss suffered due to the delayed clearance and non-compliance with statutory duties. The Court held that the bar under Section 26A(3) of the Customs Act, 1962, would not apply in the present case where the goods perished due to procedural delays and inaction by the authorities. It found unjust enrichment impermissible in such circumstances.
The petitioner is a company incorporated under the Companies Act, 1956, having its registered office in Ludhiana and offices in multiple cities across India. It is engaged in the business of importing food items. The present dispute arose when the petitioner imported one consignment comprising Kiwi fruit in four refrigerated containers from R.A. Logistics & Distribution LLC, Dubai, UAE. The consignment was shipped under a Bill of Lading dated 16.04.2023, which declared the final place of delivery as ICD GRFL, Ludhiana.
As per the requirements under Section 30 of the Customs Act, 1962, the shipping company, M/s Transliner Marinetime Pvt. Ltd., was required to file the Import General Manifest (IGM) indicating the correct destination. However, the IGM was incorrectly filed at Mundra Port with Mundra as the final delivery point. This error blocked the petitioner from filing a Bill of Entry at Ludhiana under Section 46 of the Act.
The petitioner submitted manual filing requests on 25.04.2023 and 28.04.2023, citing Circulars dated 04.05.2011 and 12.05.2011, but these were not acceded to. The customs authorities cited that only the shipping line could request an IGM amendment, even though Section 30(3) allows the proper officer to make amendments.
After multiple failed requests, the petitioner approached the High Court seeking directions to permit filing of the Bill of Entry at Ludhiana and to allow transshipment. The Court, on 09.05.2023, directed that the goods be moved from Mundra Port to ICD Ludhiana and permitted the filing of a manual Bill of Entry.
Despite the Court’s direction, the containers were moved by the shipping company to Saurashtra Freight Pvt. Ltd., which lacked the required infrastructure for rail transshipment to Ludhiana. On 02.06.2023, the Court directed Customs Mundra to shift the goods back to Mundra International Container Terminal. On 07.06.2023, the Court recorded the non-compliance by the shipping line and directed that the goods be released without insisting on NOC.
After multiple compliance hearings, on 30.05.2023, the IGM was amended to change the port of destination from Mundra to GRFL ICD, Sahnewal, Ludhiana. However, by then, the goods had remained in transit or in custody for over a month.
Inspections by the Department of Food and Safety and the Plant Quarantine Department found the Kiwis initially fit for human consumption. However, Customs later alleged that the goods originated from Iran, not Chile. The petitioner produced an Export Declaration Certificate from the Dubai Customs Authority confirming Chile as the origin.
On 06.07.2023, the Court directed the release of the consignment and allowed an inquiry regarding the certificates. A deportation order dated 04.07.2023 issued by the Plant Quarantine Department was stayed.
On 24.07.2023, the Court directed that the goods be released after accepting ₹20 lakhs in cash and obtaining a bond. A joint inspection dated 27.07.2023 reported that 20–25% of the consignment was visually damaged. The petitioner agreed to take delivery of the full consignment and undertook to dispose of the damaged goods as per law.
The petitioner submitted a Disposal Certificate from Veer Singh & Brothers, stating that all 8,928 packages weighing 89,420 kg were unfit for consumption. Photographs and video evidence were also placed on record.
The petitioner later sought refund of the customs duty paid under protest and reimbursement for the value of the destroyed goods. It cited judicial precedents on wrongful seizure and unjust enrichment, arguing that delay and inaction by customs authorities had caused total damage to the goods.
In response, the respondents denied the refund claim under Section 26A(3), arguing that the goods were perishable and not destroyed in the presence of a proper officer. They also alleged forgery of the phytosanitary certificate and questioned the claim of 100% damage.
The Court observed, “We are satisfied that the respondent-Custom Department had wrongfully and illegally withheld the perishable food item i.e. Kiwi which has limited shelf life.”
It noted, “In import cases of perishable goods there is an inherent urgency which needs to be noticed and considered by the concerned stakeholders.”
It recorded, “While 100% custom duty is imposed for import of perishable goods, if the goods itself are damaged and become completely un-useable for human consumption, in our opinion, the same deserves to be refunded.”
The Court stated, “The respondents cannot be allowed to retain the import duty as it would mean unjust enrichment.”
Regarding compensation, the Court held, “We direct that the Importer should also be compensated for his loss proportionately.”
On the valuation of the goods, the Court recorded, “Kiwi weighing about 89,420 kilograms were imported to India which were of value amounting to 80,478 USD, which if calculated in rupees is approximately ₹66,79,674/-.”
The Court further observed:
“Before we close the case, we find that the present case is an example of red-tapism being followed by the government functionaries. The same needs to be creased out as it would result in discouraging the import of perishable goods. The Indian citizens also have a right to receive high-quality fruits which are available in different countries; however, if the approach, as adopted by the respondents, is allowed to continue, the importers would toe their line and release rotten fruits, vegetables, and perishable goods that have lost their freshness, and ultimately the public would be the main sufferer. A policy needs to be formulated by the concerned authorities so that testing labs, shipping companies, and Customs Authorities work in tandem and an atmosphere is created so that the imported goods reach the public as soon as possible.”
The Court ordered:
“In view of the above, we allow the writ petition and direct the respondents to release the amount paid as custom duty on the Kiwi for import into India along with interest @ 6% per annum.”
It further directed:
“Taking note of the above, we further direct that the petitioner/ importer would be entitled to compensation calculated conservatively of ₹50 lacs as the Kiwi worth weighing 89,420 kilograms were destroyed on account of delay in release by the respondents.”
The Court clarified:
“We have granted the said amount as the Importer has already paid the same to the seller for the Kiwi and brought in India. Kiwi is a high valued fruit. The amount shall be recovered from erring officers as compensation to the Importer/ petitioner.”
The judgment concludes with:
“All pending applications stand disposed of.”
Advocates Representing the Parties
For the Petitioners: Mr. Saurabh Kapoor, Advocate
For the Respondents: Mr. Ajay Kalra, Senior Standing Counsel
Case Title: M/s Prenda Creations Private Limited v. Union of India and Others
Neutral Citation: 2025:PHHC:046330-DB
Case Number: CWP No. 9301 of 2023 (O&M)
Bench: Justice Sanjeev Prakash Sharma, Justice Sanjay Vashisth
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