2019 (6) TMI 1037 - HC - Customs

Validity of Public notice - Protocol of Treaty of Transit between the India and Nepal - by the public notice issued by the Commissioner of Customs (Port), Kolkata and under the pilot project a Managed Service Provider (MSP) selected by the Asian Development Bank was given the exclusive right to provide Electronic Cargo Tracking System (ECTS) for facilitating the transit of cargo to Nepal. - Delegation of power - Public notice No.08/2019 dated 25.01.2019 HELD THAT - Section 54 and specifically the proviso to Section 54 of the Customs Act is applicable in the present case. It is to be noted that the Treaty between India and Nepal categorically provides for the manner of transfer/transhipment, of all goods that are imported via India to Nepal. The Memorandum of Intent dated June 6, 2017 referred to a Pilot project being started for such transhipment. Even if Section 143AA was to be applied in this particular case, the action taken under this Section shall have to be done by way of a notification by the Board of Central Excise and Customs. There is no provision in Section 143AA allowing the Board to delegate this power to the Commissioner of Customs (Port). As no proper documents have been placed by the Union of India with regard to the basis and jurisdiction under which the Commissioner of Customs (Port) has passed this public notice, the same is required to be partly stayed for the time being. Accordingly, the operation of the impugned notice and the e-mail dated March 22, 2019 are stayed with regard to the complete stoppage of the old procedure that was followed prior to the pilot project. Application disposed off.

Summary

Issues:
Challenge to public notice by Association of Customs Brokers, Transporters and Handling Agents regarding a pilot project for Electronic Cargo Tracking System (ECTS) for goods transiting through India to Nepal without payment of customs duty.

Analysis:
1. The petitioner, an association challenging a public notice issued by the Commissioner of Customs (Port), Kolkata regarding a pilot project for ECTS for cargo transit to Nepal without customs duty payment under Article 226 of the Constitution of India.
2. The petitioner's counsel argued that the impugned notice initiated a pilot project granting exclusive rights to a Managed Service Provider (MSP) for ECTS, hindering Cargo Handling Agents' role for Nepalese importers.
3. The counsel referenced a Deputy Commissioner's email discontinuing the old procedure post-March 31, 2019, offering Nepalese importers the choice between old and new procedures.
4. The counsel cited the treaty of transit between Nepal and India, emphasizing the old procedure outlined in the Memorandum to the Protocol and the pilot project's initiation in 2017.
5. Emphasizing the need for mutual agreement between Nepal and India for ECTS impact review and protocol amendment, the counsel argued against the unilateral change without Board regulations under Customs Act sections 54, 143AA, and 157.
6. Referring to the Finance Bill 2018, the counsel highlighted the Board's power to prescribe trade facilitation measures through regulations under Section 143AA.
7. The counsel contended that the Commissioner's action required Board regulation as per the memorandum, citing Section 157 for procedural changes.
8. The counsel asserted that while a pilot project could start with Board approval, a complete procedure change necessitated Treaty amendment and Board regulations under Customs Act sections 143AA and 157.
9. The Additional Solicitor General for the Union of India argued that the impugned notice aligned with Board directions under Customs Act Section 143AA, dismissing the petitioner's representations.
10. Despite the Union's claim, no Board notification/regulation supporting the public notice was produced, raising doubts on the notice's validity.
11. Changes in representation and intervention applications were noted during the proceedings.
12. The Court considered arguments from both sides and found the Customs Act's Section 54 applicable, emphasizing the Treaty's provisions for transhipment and the need for protocol amendments post-pilot project review.
13. The Court observed the absence of supporting documents from the Government of India, highlighting the public notice's challenge and the requirement for Board notifications for procedural changes.
14. The Court noted the lack of produced documents allowing the Commissioner's action under Section 143AA without Board notification.
15. The Court emphasized the ongoing pilot project's similarity at Visakhapatnam Port, allowing transhipment under old procedures, contrasting with the severed process at Kolkata Port.
16. Due to insufficient documentation supporting the Commissioner's action, the Court partially stayed the notice, allowing importers to choose between old and new procedures until further orders.
17. The Court highlighted the necessity of Board notifications for procedural changes under Section 143AA, questioning the Commissioner's authority to implement changes without Board involvement.
18. The Court noted the need for proper documentation from the Union of India to justify the public notice, leading to a partial stay on the notice's complete stoppage of old procedures.
19. The Court issued an interim order allowing importers to follow either procedure until further orders or August 16, 2019, staying the notice's operation.
20. The Union of India was directed to file an affidavit, setting timelines for submissions and listing the matter for August 2019.
21. The Court kept the maintainability of the writ petition open for further consideration.
22. An application for intervention was listed for future proceedings, with timelines set for submissions.
23. Parties were instructed to act based on the court's order copies available on the official website.