2025 (4) TMI 1417 - HC - Customs

Waiver of detention and demurrage charges on imported goods detained by Customs - respondent No. 4 is a delivery agent of the shipping line - respondent No. 4 is bound by the waiver letter issued by respondent No. 2 to deliver the Cargo to the petitioner or not - Authorized Sea Carrier or an Authorized Carrier under the SCMTR 2018 - HELD THAT - As per the provisions of the Regulations 2018 the Authorized Carrier means an Authorized Sea Carrier authorized train operator or a custodian registered under Regulation 3 and postal authority. Respondent No. 4 is registered under sub-regulation (3) as Authorized Sea Agent which is apparent from the inquiry made by respondent Nos. 1 and 2 on the portal of the regulation. Therefore the contention of the respondent No. 4 that the Regulations are not applicable to respondent No. 4 cannot be accepted. The contention raised on behalf of respondent No. 4 that the respondent No. 4 is only a delivery agent appointed by authorized Sea Carrier as per the definition of section 2 (1) (d) respondent No. 4 is neither the authorized Carrier nor Authorized Sea Carrier nor an authorized train operator or a custodian as defined under section 2 (1) (e) and 2(1) (f) and therefore the Regulations are not applicable to the respondent No. 4 who is only the owner of the containers and was asked to deliver the goods to the petitioner as a delivery agent of the Authorized Sea Carrier and therefore the contention that the impugned waiver letter dated 17.01.2025 is not binding upon the respondent No. 4 is not tenable in view of the fact that respondent No. 4 is already registered as an Authorized Sea Agent and was an agent of the Authorized Sea Carrier who has filed the Bill of Lading in question. The provision of Regulation 10 (1) (l) of Regulations 2018 makes it clear that the Authorized Carrier is not permitted to demand any container detailed charges if the containers are detained by the customs for the purpose of verifying the entries made under section 46 and section 50 of the Act if the entries are found to be correct. In the facts of the case by letter dated 10.10.2025 respondent No. 2 has granted No Objection Certificate for release of the goods as the Bill of Entry was found correct and accordingly waiver letter dated 17.01.2025 was issued and accordingly the petitioner is exempted from making payment of detention charges from 24.12.2024 to 10.01.2025. Conclusion - i) The waiver order/letter dated 17.01.2025 issued by respondent No. 2 is binding upon respondent No. 4 and respondent No. 4 is required to implement waiver order passed by the respondent No. 2 as per the provisions of the Regulation 10 (1) (l) of the Regulations, 2018. ii) The respondent No. 4 is hereby directed to release the goods which is under their custody and not under the detention of the Customs authority by implementing waiver letter dated 17.01.2025 for waiver of the detention charges under Regulation 10 (1) (l) Regulations 2018 for the period from 24.12.2024 to 10.01.2025 as stated in the waiver letter. Petition disposed off.

Summary

Issues Presented and Considered

The core legal questions considered by the Court in this matter are:

1. Whether the waiver letter dated 17.01.2025 issued under Regulation 10(1)(l) of the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMTR, 2018) and Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulations, 2009 (HCCAR, 2009) is binding on the delivery agent (Respondent No. 4) for waiver of detention and demurrage charges on imported goods detained by Customs.

2. Whether Respondent No. 4 qualifies as an "Authorized Sea Carrier" or an "Authorized Carrier" under the SCMTR, 2018, and thus is bound by the provisions of the Regulations, including the waiver of detention charges.

3. Whether the detention and demurrage charges claimed by Respondent No. 4 are recoverable despite the waiver letter, considering the contractual terms under the Bill of Lading and the Customs Act, 1962.

4. The applicability and scope of the SCMTR, 2018 and the interplay between the Regulations and the contract of carriage, including the validity and binding nature of subordinate legislation relative to primary legislation.

5. The entitlement of the petitioner to physical delivery of the goods pending final disposal of the petition, given the financial constraints and ongoing detention.

Issue-wise Detailed Analysis

Issue 1: Binding Nature of the Waiver Letter dated 17.01.2025

Legal Framework and Precedents: The waiver letter was issued under Regulation 10(1)(l) of SCMTR, 2018 and Regulation 6(1)(l) of HCCAR, 2009. Regulation 10(1)(l) prohibits an authorized carrier from demanding container detention charges for containers laden with goods detained by Customs for verifying entries under sections 46 or 50 of the Customs Act, 1962, if entries are found correct. The waiver was issued after Customs examination confirmed the correctness of entries.

Court's Interpretation and Reasoning: The Court examined the nature of the waiver letter and the regulatory mandate. It held that the waiver letter is binding on Respondent No. 4, as it is issued by the competent Customs authority under the relevant regulations. The Court emphasized that the waiver applies to the detention charges from the date the goods were detained (24.12.2024) until the issuance of the No Objection Certificate (10.01.2025).

Key Evidence and Findings: The waiver letter dated 17.01.2025 was addressed to the Custodian (Respondent No. 3) and copied to Respondent No. 4 and the petitioner. The Customs examination report dated 10.01.2025 confirmed that the goods were found as declared, triggering the waiver under the Regulations.

Application of Law to Facts: Since the goods were detained for verification and found correctly declared, the waiver letter legally exempts the petitioner from paying detention charges for the relevant period. Respondent No. 4, as the delivery agent involved in the import transaction, is obliged to implement this waiver.

Treatment of Competing Arguments: Respondent No. 4 contended that the waiver letter was addressed only to the Custodian and not binding on them. The Court rejected this, noting the regulatory framework and the registration status of Respondent No. 4 as an Authorized Sea Agent, which binds them to comply with the waiver.

Conclusion: The waiver letter dated 17.01.2025 is binding on Respondent No. 4 for the period from 24.12.2024 to 10.01.2025 and must be implemented to waive detention charges accordingly.

Issue 2: Status of Respondent No. 4 as Authorized Sea Carrier or Authorized Carrier under SCMTR, 2018

Legal Framework and Precedents: SCMTR, 2018 defines "Authorized Carrier" (Regulation 2(1)(c)) as an authorized sea carrier, authorized train operator, custodian, or postal authority registered under Regulation 3. An "Authorized Sea Carrier" (Regulation 2(1)(d)) means the master of the vessel carrying goods, his agent, or any other person notified by the Central Government. Registration under Regulation 3 is mandatory for persons delivering arrival or departure manifests.

Court's Interpretation and Reasoning: Respondent No. 4 argued it is merely a delivery agent and not an Authorized Sea Carrier or Authorized Carrier, thus not bound by SCMTR, 2018. However, Respondent Nos. 1 and 2 produced evidence from the Customs ICEGATE portal showing Respondent No. 4's registration as an Authorized Sea Agent (ASA) under SCMTR, 2018.

The Court noted that Authorized Sea Agents act on behalf of Authorized Sea Carriers and are therefore subject to the Regulations. The Court further observed that Respondent No. 4's registration as ASA brings it within the regulatory ambit and obliges compliance with the waiver provisions.

Key Evidence and Findings: The registration snapshot from the Customs portal and the letter from Respondent No. 2 confirming Respondent No. 4's status as ASA were pivotal.

Application of Law to Facts: The Court applied the definitions and registration requirements of SCMTR, 2018, concluding that Respondent No. 4 is covered by the Regulations as an Authorized Sea Agent and must comply with its provisions.

Treatment of Competing Arguments: Respondent No. 4's contention that it is not the master of the vessel or its agent for filing Import General Manifest was countered by the registration status and the regulatory scheme, which expressly includes Authorized Sea Agents.

Conclusion: Respondent No. 4 is an Authorized Sea Agent under SCMTR, 2018 and is bound by the Regulations, including the waiver of detention charges.

Issue 3: Recoverability of Detention and Demurrage Charges Despite Waiver Letter and Contractual Obligations

Legal Framework and Precedents: The contract of carriage embodied in the Bill of Lading (B/L) imposes liability on the merchant (petitioner) to pay all dues, taxes, and charges, including demurrage and detention charges. Section 170 of the Indian Contract Act supports the carrier's lien for unpaid charges. The Customs Act, 1962 and SCMTR, 2018 regulate detention charges and their waiver in specific circumstances.

Court's Interpretation and Reasoning: Respondent No. 4 relied on the contract and its lien rights to claim detention charges for containers not returned within free days. It argued that the waiver letter was addressed only to the Custodian and did not absolve the petitioner of contractual obligations. It also contended that the Regulations, 2018 are subordinate legislation and cannot override the contract or primary legislation.

The Court noted that while contractual rights exist, the waiver letter issued by Customs under the Regulations applies specifically to detention charges for containers detained due to Customs verification where entries are found correct. The Court distinguished the period covered by the waiver (24.12.2024 to 10.01.2025) from any charges accruing thereafter.

Key Evidence and Findings: The Bill of Lading clauses and invoices for detention charges issued by Respondent No. 4 were examined. The Court noted the absence of any challenge to the validity of the waiver letter by Respondent No. 4 before any forum.

Application of Law to Facts: The Court applied the waiver provisions to exempt the petitioner from detention charges for the specified period. However, it did not preclude Respondent No. 4's right to claim charges accruing beyond that period or under other contractual terms.

Treatment of Competing Arguments: The Court rejected the argument that the Regulations are ultra vires or inapplicable to Respondent No. 4, given its registration and the regulatory framework. The Court also noted that Respondent No. 4's conditional waiver of charges until 02.03.2025 was a commercial decision, not a regulatory mandate.

Conclusion: The petitioner is exempt from detention charges for the period covered by the waiver letter. Charges beyond that period remain subject to contractual liability and are not affected by the waiver.

Issue 4: Validity and Scope of SCMTR, 2018 and Interaction with Primary Legislation and Contractual Rights

Legal Framework and Precedents: SCMTR, 2018 is framed under the Customs Act, 1962, specifically sections 30, 30A, 41, 41A, 53, 54, 56, 98(3), 157(2), and 158(2). The Regulations govern filing of manifests and related procedures, including detention charges. The Court referred to precedents affirming that subordinate legislation cannot override primary legislation or contracts unless expressly authorized.

Court's Interpretation and Reasoning: The Court acknowledged that SCMTR, 2018 is subordinate legislation but held that it is validly made under the Customs Act and governs the responsibilities of authorized carriers and agents, including waiver of detention charges in specified circumstances. The Court referred to Apex Court judgments emphasizing that arbitrariness or ultra vires claims must be grounded in statutory inconsistency or constitutional infirmity, which was not demonstrated here.

Key Evidence and Findings: The Court relied on the text of the Regulations and relevant statutory provisions, as well as the absence of any challenge to the validity of the waiver letter or Regulations by Respondent No. 4.

Application of Law to Facts: The Court applied the Regulations as valid and binding, requiring Respondent No. 4 to comply with the waiver. It also recognized that contractual rights and remedies under civil law remain available for disputes beyond the regulatory scope.

Treatment of Competing Arguments: Respondent No. 4's argument that the Regulations cannot override contractual rights was addressed by limiting the waiver's applicability to the period and conditions specified, without disturbing contractual claims beyond that.

Conclusion: SCMTR, 2018 is valid subordinate legislation applicable to Respondent No. 4 as an Authorized Sea Agent. The waiver letter issued under these Regulations is binding and must be implemented.

Issue 5: Entitlement to Physical Delivery of Goods Pending Disposal

Legal Framework and Precedents: The petitioner sought interim relief for physical delivery of goods pending final disposal, citing financial hardship and business losses due to prolonged detention.

Court's Interpretation and Reasoning: The Court, without delving into the detailed merits, directed Respondent No. 4 to release the goods in custody after implementing the waiver for the detention charges for the specified period. This direction was given to mitigate undue hardship to the petitioner and ensure smooth business functioning.

Key Evidence and Findings: The petitioner's repeated requests and correspondence with Respondent No. 4 and Customs authorities demonstrated the ongoing detention and financial impact.

Application of Law to Facts: The Court balanced the regulatory mandate and contractual rights with the commercial realities faced by the petitioner, ordering release subject to compliance with the waiver.

Treatment of Competing Arguments: Respondent No. 4's right to claim charges beyond the waiver period was preserved, and the Court clarified that this order does not preclude Respondent No. 4 from challenging the waiver or pursuing claims in appropriate forums.

Conclusion: The petitioner is entitled to physical delivery of the goods upon implementation of the waiver letter, subject to payment of any charges beyond the waiver period.

Significant Holdings

"The waiver order/letter dated 17.01.2025 issued by respondent No. 2 is binding upon respondent No. 4 and respondent No. 4 is required to implement waiver order passed by the respondent No. 2 as per the provisions of the Regulation 10 (1) (l) of the Regulations, 2018."

"Respondent No. 4 is already registered as an Authorized Sea Agent and was an agent of the Authorized Sea Carrier who has filed the Bill of Lading in question. The contention raised on behalf of respondent No. 4 with regard to challenge to the vires of Rule 10 (1) (l) also cannot be considered in these proceedings as respondent No. 4 has not challenged the legality and validity of waiver letter dated 17.01.2025 before any forum."

"The provision of Regulation 10 (1) (l) of Regulations, 2018 makes it clear that the Authorized Carrier is not permitted to demand any container detention charges if the containers are detained by the customs for the purpose of verifying the entries made under section 46 and section 50 of the Act, if the entries are found to be correct."

"Respondent No. 4 is hereby directed to release the goods which is under their custody and not under the detention of the Customs authority by implementing waiver letter dated 17.01.2025 for waiver of the detention charges under Regulation 10 (1) (l) Regulations, 2018 for the period from 24.12.2024 to 10.01.2025."

"If the respondent No. 4 is desirous to challenge the order of the Customs Authority for waiver of the detention charges, this order shall not come in its way. However, we have not expressed any opinion in respect of any such proposed proceedings."