2021 (3) TMI 443 - HC - Customs

Seeking direction to the respondents to strictly implement and enforce the detention cum demurrage waiver certificate - respondent No.4 i.e., the shipping line and its principal have taken the stand that they are not customs cargo services provider and therefore the 2009 Regulations are not applicable to them. - conflict between provisions of a subordinate legislation and provisions of a contract - HELD THAT - A conjoint reading of sections 45 and 141 of the Customs Act makes it clear that officers of customs have an overall control over the goods unloaded in a customs area or which are in custody of persons approved by the Principal Commissioner or Commissioner. However, as we shall see, such general power cannot be invoked by a customs officer to issue a detention cum demurrage certificate to a customs freight station or to a shipping line - We need not labour much on the 2009 Regulations because the customs cargo services provider as defined under the said Regulations i.e., respondent No.5 has decided to comply with the detention cum demurrage waiver certificates dated 10th November, 2020 and 16th November, 2020 issued by respondent No.3. The only obstacle now to the release of the goods of the petitioner is respondent No.4 and its principal who have taken the stand that they are not customs cargo services provider and therefore the 2009 Regulations are not applicable to them. The detention cum demurrage waiver certificate dated 16th November, 2020 is not in terms of Regulation 10(1)(l) of the 2018 Regulations and in any case it is not bound by the same - Stand of respondent No.4 is that its principal had entered into a contract with the petitioner by way of the bill of lading dated 4th June, 2020; therefore petitioner being in a contractual relationship with the principal is bound by the terms of the contract which includes payment of detention charges for use of the containers. It has also taken the stand that it is not bound by the detention cum demurrage waiver certificate dated 16th November, 2020 of respondent No.3 because of the contract and also because the said certificate is not in terms of the 2018 Regulations. The issue boils down to a conflict between the 2018 Regulations which is a subordinate legislation having the force of law on the one hand and the contractual right of the shipping line on the other hand - The question as to whether in the event of a conflict between provisions of a subordinate legislation and provisions of a contract which one would prevail is no longer res integra - In State of Rajasthan Vs. J. K. Synthetics Limited, 2011 (7) TMI 1300 - SUPREME COURT , Supreme Court has held that the lease-deed under consideration was governed by the Mineral Concession Rules, 1960. Though the lease-deed provided that any royalty not paid within prescribed time should be paid with simple interest at the rate of 10% per annum, the same was subject to the Mineral Concession Rules, 1960 which upon amendment increased the rate of interest to 24% per annum in the event of default. In the circumstances, it has been held that any term in the lease-deed prescribing lesser rate of interest would have to yield to the Mineral Concession Rules, 1960 from the date of amendment as the rules will prevail over the terms of the lease. There are no hesitation to hold that objection of respondent No.4 is not legally tenable. The detention cum demurrage waiver certificate dated 16th November, 2020 has been validly issued as it can be traced to Regulation 10(1)(l) of the 2018 Regulations and under Regulation 10(1)(m) thereof, respondent No.4 i.e., the shipping line is under a legal obligation to comply with the certificate. Thus, the detention cum demurrage certificate dated 16th November, 2020 is binding on respondent No.4. That apart, holding on to the goods of the petitioner by respondent No.4 post the detention cum demurrage waiver certificate dated 16th November, 2020 and levying detention charges thereafter would be illegal and thus unlawful. Respondent No.2 shall take all necessary steps and ensure that the detention cum demurrage waiver certificates dated 16.11.2020 are implemented by all concerned including respondent Nos.4 and 5 and thereafter to release the imported goods of the petitioner - petition allowed.

Issues Involved:
1. Implementation and enforcement of the detention cum demurrage waiver certificate.
2. Clearance of imported goods for home consumption.
3. Inquiry into alleged acts of omissions and commissions by customs officials.
4. Compensation for losses sustained due to alleged unlawful actions.
5. Awarding of costs to the petitioner.

Issue-wise Detailed Analysis:

1. Implementation and Enforcement of the Detention Cum Demurrage Waiver Certificate:
The petitioner sought a direction for the strict implementation of the detention cum demurrage waiver certificate dated 16th November 2020. The customs authorities initially issued a waiver certificate on 10th November 2020 and subsequently issued another on 16th November 2020, directing the shipping line and container freight station not to charge any detention or demurrage charges. Despite these certificates, the shipping line (respondent No.4) refused to comply, citing contractual obligations with the petitioner. The court held that the waiver certificates were validly issued under Regulation 10(1)(l) of the 2018 Regulations, which the shipping line was legally obliged to comply with, overriding any conflicting contractual terms.

2. Clearance of Imported Goods for Home Consumption:
The petitioner had placed an order for PVC resin, and upon arrival at the Nhava Sheva port, filed the bill of entry and paid the full duty. However, the customs authorities detained the goods, alleging undervaluation based on discrepancies in the declared value. The initial adjudicating authority's order was set aside by the court due to procedural irregularities and lack of proper investigation. A fresh order was passed on 6th November 2020, accepting the declared value and directing the release of the goods. The court directed respondent No.2 to ensure the implementation of the waiver certificates and the release of the goods within 15 days.

3. Inquiry into Alleged Acts of Omissions and Commissions by Customs Officials:
The petitioner alleged that certain customs officials acted with malafide intentions and extraneous considerations, causing undue detention of the goods. The court noted the procedural errors and lack of proper investigation in the initial adjudication. It directed respondent No.2 to continue the investigation into the petitioner's complaint dated 3rd November 2020 and take it to its logical conclusion within three months, ensuring that customs officials adhere to their duties fairly and judiciously.

4. Compensation for Losses Sustained Due to Alleged Unlawful Actions:
The petitioner claimed compensation for the losses incurred due to the wrongful detention of goods and the resultant demurrage and detention charges. The court acknowledged the wrongful actions of the customs authorities but did not explicitly order compensation. Instead, it focused on ensuring the release of goods and compliance with the waiver certificates.

5. Awarding of Costs to the Petitioner:
The petitioner sought costs for the legal proceedings. The court refrained from imposing costs on the customs authorities, noting their prompt actions post the fresh order-in-original dated 6th November 2020. The writ petition was allowed to the extent of the directions issued, but no costs were awarded.

Conclusion:
The court directed respondent No.2 to ensure the implementation of the detention cum demurrage waiver certificates and the release of the imported goods within 15 days. It also mandated the continuation and conclusion of the investigation into the petitioner's complaint within three months. The court refrained from awarding costs against the customs authorities, acknowledging their subsequent prompt actions. The writ petition was allowed to the extent of the specified directions.

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