2024 (8) TMI 31 - HC - Customs

Applicability, enforceability and the binding nature of the Regulations, which contemplate waiver of demurrage/detention charges - Whether the importers are liable to pay detention/demurrage charges to the CFS and the shipping lines/steamer agents when the goods have been detained by the Customs Department for verification, and after the verification, it was found that the imported goods were in order? - Whether the waiver certificate for the detention/demurrage charges granted by the Customs Department is statutorily binding on the CFS and shipping lines/steamer agents? - Maintainability of the writ petitions, question raised by the CFS/Steamer Agents/Shipping Line - Whether the statutory regulations would have an overruling effect on the contract between the parties? Legal Framework - HELD THAT - The demurrage/detention charges are payable only when the goods are not cleared either voluntarily by the importer or because of action or inaction of the Customs authorities in completion of the adjudication proceedings or in taking a decision on provisional release. It would be apropos to mention here that the question of payment of demurrage/detention charges arises only if the goods are not cleared within the free period. An objection has been raised by the CCSP stating that they are only rental/storage charges and not demurrage/detention charges. This objection will not hold water as such narrow approach cannot be given to the words demurrage /detention charges as they are charges payable by the owner/Importer of the goods for not having cleared the goods within the agreed free time. Though the word detention has not been defined under the Act, it is held that it is to be treated as synonymous with the seizure of the goods which takes place when the same is directed not to be cleared. It would be relevant to refer to Sections 158 and 170 of the Contract Act which deal with repayment by bailor and bailees particular lien, wherein the word remuneration is used. The word remuneration would refer to the charges payable by the importer/owner of the goods to the CCSP, by whatsoever nomenclature agreed by them. When it is not in dispute that the charges become payable only after a particular period and upon default in clearance, the nomenclature used in the agreement as rent or penal or storage charges is nothing but the demurrage or detention charges as stated in the both the regulations. In fact, regulation 6 (1) (l) also uses the word rent , implying that no charges during the period of detention can be charged. Will the contract between the parties prevail over statutory regulations? - HELD THAT - The words subject to any other law for the time being in force would have to be read as a reference to the provisions of the Customs Act with regard to result of the final adjudication proceedings. Though any contract entered into would be governed by the provisions of the Contract Act to decide the inter se rights between the parties, it is still subject to law of the land, which in this case is the Customs Act, 1962 and the Regulations framed thereunder. The saving clause in Section 1 of the Contract Act clearly states that nothing contained in the Act shall affect the provisions of any Statute, Act or Regulations. This cannot be disputed. Further, as per Section 23 of the Contract Act, the consideration or object is unlawful if it is forbidden by law or if permitted would defeat the provisions of any law. In the present cases, when the goods are presented, detained and ultimately cleared after having found that there is no fault on the part of the importer, and subsequently a waiver certificate is issued, then, the contract between the parties cannot be implemented - the power to issue Regulations is traceable to Section 141(2) which provides that the conditions for receipt, storage, delivery, despatch or otherwise of imported goods or goods meant for export handled in a customs area and the responsibilities of persons engaged in the aforesaid activities shall be as prescribed. Therefore, the contention that the Regulations are contrary to the Act cannot be countenanced. Maintainability of the writ petitions against CCSP's, CFA, Shipping Lines/Steamer Agents - HELD THAT - The terms of the contract are subject to the Regulations which have statutory force and that the importers who are found not to be guilty of any violation are entitled to waiver, if a certificate is issued by the authorities. That apart, it is held that the CCSP are obliged to perform their duties in accordance with the provisions of the Customs Act and the Regulations, namely the HCCA Regulations, and SCMT Regulations. The Regulations not only insist on obtaining appropriate approval under Section 8 of the Act but also require declarations and documents to be executed by the CCSP failing which they can neither operate in the customs area nor handle imported goods. While acting in accordance with the directions given by the Customs authorities, they are performing their statutory obligation. Therefore, what is also to be considered in the present case is the circumstances and the object for which the Regulations have been brought into force. The findings of the learned Judge in the orders dated 22.06.2021 01.07.2021 that the rights of the parties should be determined by the civil court, cannot be agreed upon. The writ petitions ought not to have been rejected on that ground and as the directions sought are only to enforce a statutory right, a writ of mandamus is entertainable. CCSP's right to be heard - whether the CCSPs ought to have been heard before the waiver certificates were granted? - HELD THAT - The detention of the goods is a statutory act for verification of the correctness of the particulars furnished. The resultant actions of confiscation or assessment of duty or levy of penalty are also statutory acts in which the role of the CCSP is limited to the extent of holding the goods. More importantly, the Regulations do not contemplate any provision for the CCSP to be heard when a waiver is issued and only contemplates for opportunities before penal action is taken against them for non-compliance. It is not to be forgotten that the authorities in the adjudication process perform quasi-judicial function and therefore, the detention order for waiver cannot be said to be purely administrative, more so in the light of our findings that it cannot be in a blanket manner issued just because the goods were detained. As the facts are not in dispute and as the legal issues have already been decided against the CCSP, the grant of opportunity is only an useless formality and therefore, the contention is unsustainable. Period of waiver - HELD THAT - The time of 90 days provided under Regulation 6 (1) (m) for clearance of the goods under 2009 Regulations is enforceable only if there is no detention by the authorities and when there is a detention of goods for verification, the timelines would not apply. This postulates the question that if the goods are not verified and an order is not passed within 60 days of detention, can the liability be fastened on the importer or the Customs Authority? The answer again is similar. If the goods are cleared with the adjudication ending in favour of the importer, there cannot be any demand and if the detention is found to be in order and such an order is passed after the time prescribed for waiver under the Regulations, the liability would fall on the authorities for the period after 60 days and on the importer until 60 days. Similarly, if the authorities delay the issuance of any order for re-export or clearance, the liability would fall on the authorities. At this juncture, it would be appropriate to recall the circumstances and object of the HCCA Regulations. An importer who has ultimately succeeded in the adjudication proceedings is entitled for refund. However, insofar as the claim for interest in concerned, it is open to the parties to approach the authority concerned, who shall consider the same in accordance with law. Noncompliance of the waiver certificates by the CCSPs and the authorised carriers - HELD THAT - The provisions of the Customs Act, the 2009 HCCA Regulations and the 2018 SCMT Regulations, contain various provisions for cancellation of licence, suspension and imposition of penalty. When the waiver certificate is issued, it is the obligation on the part of the CCSP to honour the same and waive the charges. Further, the Act and the provisions do not carry any provision for payment of interest. Therefore, the only deterrent for non-compliance can be initiation of appropriate action against the CCSPs. Therefore, in cases, where the certificates are issued after conclusion of the adjudication proceedings in favour of the importer/exporter and if not complied, appropriate action may be initiated by the department by following the due process of law. Application disposed off.

Summary

Issues Involved:

1. Whether the importers are liable to pay detention/demurrage charges to the CFS and the shipping lines/steamer agents when the goods have been detained by the Customs Department for verification.
2. Whether the waiver certificate for the detention/demurrage charges granted by the Customs Department is statutorily binding on the CFS and shipping lines/steamer agents.
3. Maintainability of the writ petitions.
4. Applicability and enforceability of the Handling of Cargo in Customs Areas Regulations, 2009 (HCCA Regulations) and the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMT Regulations).
5. Whether the statutory regulations would have an overruling effect on the contract between the parties.
6. Whether the CCSPs (Customs Cargo Service Providers) and shipping lines are bound by the statutory regulations and waiver certificates issued by the Customs authorities.
7. Whether the CCSPs and shipping lines are entitled to be heard before the issuance of waiver certificates.
8. Determining the period of waiver and the liability for charges beyond the stipulated period.
9. Refund of charges paid by the importers when adjudication ends in their favor.
10. Non-compliance of waiver certificates by the CCSPs and the authorized carriers.

Detailed Analysis:

1. Liability of Importers to Pay Detention/Demurrage Charges:
The court held that importers are not liable to pay detention/demurrage charges if the goods are detained by the Customs Department for verification and the final adjudication finds the imported goods to be in order. The waiver certificate issued by the Customs authorities is binding on the CFS and shipping lines/steamer agents.

2. Statutory Binding Nature of Waiver Certificates:
The waiver certificates issued by the Customs Department are statutorily binding on the CFS and shipping lines/steamer agents. The Handling of Cargo in Customs Areas Regulations, 2009 (HCCA Regulations) and the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMT Regulations) have statutory force and override the contractual agreements between the parties.

3. Maintainability of Writ Petitions:
The writ petitions under Article 226 of the Constitution are maintainable against the CCSPs as they are bound by the statutory regulations. The court held that the writ petitions filed for the enforcement of a statutory right are maintainable.

4. Applicability and Enforceability of HCCA and SCMT Regulations:
The HCCA Regulations, 2009, and SCMT Regulations, 2018, are applicable to all entities handling imported and exported goods in customs areas. The regulations have statutory force and are binding on all Customs Cargo Service Providers (CCSPs), including CFS, shipping lines, and steamer agents.

5. Overruling Effect of Statutory Regulations on Contracts:
The statutory regulations prevail over the contractual agreements between the parties. The court held that the terms of the contract are subject to the law of the land, which includes the Customs Act, 1962, and the regulations framed thereunder.

6. Binding Nature of Statutory Regulations on CCSPs and Shipping Lines:
The CCSPs and shipping lines are bound by the statutory regulations and the waiver certificates issued by the Customs authorities. The regulations are binding on all entities operating in customs areas and handling imported and exported goods.

7. Right to be Heard Before Issuance of Waiver Certificates:
The court held that the CCSPs and shipping lines do not have a right to be heard before the issuance of waiver certificates. The waiver certificates are issued based on the outcome of the adjudication proceedings, and the CCSPs and shipping lines are bound to comply with the statutory regulations.

8. Determining the Period of Waiver and Liability for Charges Beyond the Stipulated Period:
The period of waiver is determined based on the timelines prescribed under the HCCA Regulations and SCMT Regulations. The court held that the waiver period is applicable as long as the adjudication proceedings are pending. If the adjudication is not completed within the stipulated period, the liability for charges beyond the period falls on the Customs authorities.

9. Refund of Charges Paid by Importers:
The importers are entitled to a refund of the charges paid if the adjudication proceedings end in their favor. The court held that the importers are entitled to a refund of the charges paid during the detention period if the final adjudication finds the imported goods to be in order.

10. Non-Compliance of Waiver Certificates by CCSPs and Authorized Carriers:
The court directed the Customs authorities to take appropriate action against the CCSPs and authorized carriers for non-compliance with the waiver certificates. The statutory regulations mandate compliance with the waiver certificates, and failure to comply can lead to suspension, revocation, or imposition of penalties on the CCSPs and authorized carriers.

Conclusion & Directives Issued:

1. The writ petitions under Article 226 of the Constitution are maintainable against the CCSPs.
2. The 2009 HCCA Regulations and 2018 SCMT Regulations will prevail over the contract between the parties.
3. Waiver certificates can be issued by the Customs authorities if the adjudication ends in favor of the importer/exporter.
4. Provisional release is subject to the outcome of the adjudication proceedings.
5. Importers/exporters found guilty of misdeclaration or violation must pay demurrage charges.
6. Customs authorities must follow timelines under the Act and Regulations.
7. Applications for waiver must be decided within four weeks.
8. Adjudication proceedings must be completed within four weeks.
9. Clearance for re-export must be completed within four weeks.
10. Non-compliance with waiver certificates can lead to proceedings against CCSPs.
11. Importers/exporters are entitled to a refund if adjudication ends in their favor.
12. Claims for interest must be decided by the concerned authority.
13. The Central Government may bring uniform timelines and accountability.
14. The Board must issue instructions and take action against officers responsible for delays.

The court disposed of the writ petitions and appeals in terms of the above conclusions and directives.