2019 (11) TMI 973 - SC - Customs

Period of limitation of 60 days for storing imported/exported cargo at Port - rent/usage charges for using the open space, covered space, containers, office accommodation, etc. - Validity of circular dated 31st August, 1998 - scales of rates prescribed vide Notification dated 4th November, 1993 - Past Clearance of import cargoes from Kandla Port - contentions raised by the appellant are that after the amendment vide Act 15 of 1997, applicable with effect from 9th January, 1997, in terms of Section 47A read with Sections 48 and 49 of the Port Trusts Act, only the Tariff Authority could have fixed the tariff/rent and the Traffic Manager could not have directly or indirectly fixed the said tariff, which the latter did by way of issuance of the impugned circular dated 31st August, 1998. Whether the impugned circular dated 31st August, 1998 was in conformity with the terms of the notification or had the effect of modifying or amending the notification dated 4th November, 1993? HELD THAT - The answer to the question would be in favour of the first and second respondents. The notification dated 4th November, 1993 had specified rent/usage charges for open space, covered space, containers, office accommodation, etc., which charges were payable dependent upon the space and the length of time used for storage. Note 1 to the notification stated that a person wanting to use the rental space was required to make an application for storage of goods to the Traffic Manager. It was also specified that any unauthorised occupation of rented space shall make the person liable to pay double the rent as penalty. Note 1 did not specify when and in what circumstances occupation of the rented space would be treated as unauthorised occupation. Note 2 had specified that storage charges would be paid in advance and penal interest @ 18% would be payable on the amount due and not paid from the date when the amount had become due till the date of actual payment. Note 4 had specified that the space cannot be allotted without permission of the Traffic Manager of the Port. Note 5 had stipulated that the space allotted would be vacated on notice from the Traffic Manager or any other officer on his behalf, failing which the occupation would be treated as unauthorised and the person in unauthorised occupation would be liable for penalty rent under Note 1. It is clear from the Notes that the notification had empowered and left it to the Traffic Manager to deal with the question of unauthorised occupation, including the time-limits or period during which the goods could be authorised to be stored. The notification had not specified when and in what circumstances use of the storage area would be treated as unauthorised as this was left to the wisdom of the Traffic Manager who was the person in-charge and responsible for efficient and proper functioning of the port operations and mandated to take the need based decisions on the basis of prevalent facts and circumstances. This latitude was necessary as the schedule of rates fixed vide notification dated 4th November, 1993 were applicable till a new Notification or amendment was made by following the procedure prescribed vide Section 52 of the Port Trusts Act, which would require approval from the Central Government. Prescribing different slabs or rates for storage of cargo for different periods was meant to fix rates for the rent payable and not to deny or curtail the power of the Traffic Manager to authorise and permit use of sheds and space for storage of cargo/containers. As per the Notes, the Traffic Manager, on an application by the owners or their agents was to grant permission for authorised storage. Storage without the permission or contrary to the permission was unauthorised. Further, the space allotted was to be vacated on notice from the Traffic Manager. On failure to comply, and vacate the space, the use was treated as unauthorised occupation and the person in default was liable to pay double the rent for unauthorised use. We would reject the contention that the Traffic Manager was not competent to fix time-limit for storage. The contention is unacceptable and would be contrary to the Notes and the powers vested and given under the Regulations to the Traffic Manager. It is not that levy of penalty for unauthorised occupation of the space for period beyond sixty days of storage as fixed vide the impugned circular would be illegal and invalid. In fact, it would be in conformity and in consonance with the notification and in particular Notes 1, 4 and 5 thereof. The circular had brought about uniformity, clarity and transparency in the use of storage facilities at the Kandla Port. The circular though issued on 31st August, 1998 was made effective and applicable from 1st October, 1998. Therefore, the parties were given time to take steps to avoid the usage of the storage facility from being declared as unauthorised. The impugned circular specifically recorded that there was congestion at the Port which had necessitated issuance of the circular stipulating that storage of goods beyond the period of sixty days would be treated as unauthorised occupation. The said circular ensured uniformity and equal treatment without discretion as upper time-limit of sixty days was prescribed for storage of goods failing which penalty was payable. Period of sixty days is sufficient and long and cannot be termed as unreasonable and violating Article 14 of the Constitution. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Validity of the circular dated 31st August 1998 issued by the Traffic Manager.
2. Authority of the Traffic Manager to fix tariffs and modify storage conditions.
3. Compliance of the circular with the notification dated 4th November 1993.
4. Alleged violation of Article 14 of the Constitution of India.
5. Absence of data justifying the circular's stipulations.

Issue-wise Detailed Analysis:

1. Validity of the Circular Dated 31st August 1998:
The appellant challenged the circular issued by the Traffic Manager on 31st August 1998, which restricted the storage of cargo at Kandla Port to a maximum of two months, after which the cargo would be auctioned under the provisions of the Customs Act and the Major Port Trusts Act. The circular also stated that no renewals would be considered for areas allotted on rental/warehousing terms if the stay exceeded sixty days. The appellant contended that this circular was beyond the powers of the Traffic Manager and interfered with the scales of rates prescribed in the notification dated 4th November 1993.

2. Authority of the Traffic Manager to Fix Tariffs and Modify Storage Conditions:
The appellant argued that after the amendment of the Port Trusts Act in 1997, only the Tariff Authority for Major Ports could fix tariffs and that the Traffic Manager had no authority to issue the impugned circular. The court, however, found that the Traffic Manager had the discretion to manage port operations and deal with unauthorised occupation as per the Notes in the notification dated 4th November 1993. The Traffic Manager's authority included the power to issue notices for vacating space and treating occupation beyond the permitted period as unauthorised.

3. Compliance of the Circular with the Notification Dated 4th November 1993:
The court held that the circular was in conformity with the notification, which allowed the Traffic Manager to regulate storage and manage port operations efficiently. The notification had specified escalating rates for storage but did not limit the Traffic Manager's authority to set time limits for authorised storage. The circular brought clarity and uniformity to the use of storage facilities and was not in conflict with the notification.

4. Alleged Violation of Article 14 of the Constitution of India:
The appellant claimed that the circular violated Article 14 of the Constitution by being arbitrary and unreasonable. The court rejected this contention, stating that the circular ensured uniformity and equal treatment by prescribing a reasonable upper time limit of sixty days for storage. This limit was necessary to prevent congestion and ensure efficient port operations.

5. Absence of Data Justifying the Circular's Stipulations:
The appellant argued that there was no data or evidence to justify the restriction on storage duration. The court dismissed this argument, noting that the circular explicitly mentioned congestion at the port as the reason for the new stipulations. The court found that the circular was a reasonable measure to address congestion and ensure the smooth functioning of port operations.

Conclusion:
The court dismissed the appeal, upholding the validity of the circular dated 31st August 1998. The court found that the Traffic Manager had the authority to issue the circular, which was in line with the notification dated 4th November 1993 and did not violate Article 14 of the Constitution. The circular was deemed necessary to manage congestion and ensure efficient port operations. The appeal was dismissed with no order as to costs.