Customs Delay Causing Loss? Petitioner Entitled to Refund and Compensation for Damaged Kiwi Consignment: Punjab & Haryana High Court

“Even after the intervention of this Court directing the respondents to take action expeditiously, the officers have put a lot of obstacles… resulting in the goods becoming unusable for human consumption.” –Punjab and Haryana High Court delivered a strong judgment where it slammed the customs authorities and shipping line for the inordinate delay in clearing a consignment of perishable kiwi fruit, causing the entire shipment to rot. The Court held that the petitioner was entitled to a refund of customs duty and proportionate compensation for the financial and reputational loss suffered due to the negligence of public authorities.

The case marks a significant ruling on the responsibility of customs officers under Section 30 and Section 26A of the Customs Act, 1962, especially in dealing with perishable goods.

The petitioner, M/s Prenda Creations Pvt. Ltd., an importer of food items, had imported a consignment of kiwi fruit in April 2023. As per the Bill of Lading dated 16.04.2023, the final destination for the goods was ICD GRFL, Ludhiana. However, the shipping line erroneously filed the Import General Manifest (IGM) showing Mundra Port as the final delivery point.

Despite repeated requests and a circular allowing manual Bills of Entry for perishable goods, the customs authorities did not permit the filing of the Bill of Entry at Ludhiana, leading to prolonged delays in transportation and clearance.

Justice Sanjeev Prakash Sharma noted: “There has been huge delay in compliance of the procedure... while initially the respondents did not issue the necessary orders, it is only with the direction of this Court that the respondents permitted the amendment of the IGM.”

The Court examined the statutory duty under Section 30(3) of the Customs Act, which allows the proper officer to amend an IGM where no fraudulent intent is suspected. The High Court sharply criticized the failure of customs to act:

“The Respondents had miserably failed to act in accordance with the provisions of 30 (3) of the Act... despite passing of interim orders.”

It was also emphasized that Section 26A(3), which bars refund for perishable goods, does not apply in cases where the delay and consequent spoilage of goods is due to negligence of the authorities themselves.

“Provisions of Section 26A(3) of the Act would not be applicable in the facts of the present case where the goods perished on account of non-compliance of Court’s order within time.”

The Court found that 89,420 kilograms of kiwi fruit worth ₹66,79,674 had become unfit for human consumption. Based on the disposal certificate from the fruit dealer and other records, the Court ruled in favour of the importer.

“Once we find that the goods have been destroyed, the respondents cannot be allowed to retain the import duty as it would mean unjust enrichment.”

Justice Sharma further underscored that the concept of "unjust enrichment" is firmly rooted in equity and must be prevented: “The principle of unjust enrichment demands that no party can be enriched at the cost of another.”

Relying on precedents from the Supreme Court including Nagendra Rao, Basavva Kom Dyamangouda Patil, and Ramrameshwari Devi, the High Court declared that monetary compensation was the only effective remedy in such circumstances.

Concluding its ruling, the High Court ordered:

•    Full refund of customs duty paid under protest;
•    Proportionate compensation for the loss of goods (₹66.79 lakh approx.);
•    Directions to the customs department to process the refund and frame accountability mechanisms.

The Court strongly emphasized the need for sensitivity and urgency in handling import consignments of perishable goods and held the Customs Officers and Shipping Line jointly accountable for the loss suffered by the importer.

Date of Decision: April 4, 2025