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TMI Blog2010 (11) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... he Customs Act for safe storage of goods till they are cleared for home consumption or for warehousing. Chapter III of the Customs Act (Sections 7 to 10) deals with appointment of Customs ports, airports, warehousing stations, etc. Section 7 of the Customs Act empowers the Central Board of Excise and Customs (hereinafter referred to as the Board) to appoint Customs Ports, Customs Airports, places for Inland Container Depots, Coastal Ports, etc. Section 7(aa) of the Customs Act authorises the Board to appoint Inland Container Depots (ICD) for unloading of imported goods and loading of export goods. Under these provisions, ICDs have been appointed at various places. Under sub-section (b), the Board is empowered to appoint places which shall be land customs stations, for the clearances of goods imported or to be exported and under sub-section (c), the routes by which alone goods or any class of goods specified in the notification may pass by land or inland water into or out of India or to or from any land customs station from or to any land frontier. 3. Section 8 of the Customs Act authorises the Commissioner to (a) approve proper places in any customs port or customs airport or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act, 1962. The primary liability to file the IGM is on the person in charge of the vessel or aircraft in accordance with the form provided under the Import-Manifest (Vessels) Regulations, 1971. The import manifest of the vessel is required to be delivered to the Customs Officer in terms of Section 30 of the Customs Act. The shipping lines/steamer agent has to declare in the IGM, general declaration, cargo declaration, ship stores declaration, etc., of particulars of goods to be unloaded for the cargo. As the declaration has legal consequences which bind the carrier, any misdeclaration will attract penal provisions of Sections 111(1) and 112. Section 31 of the Customs Act specifies that only those goods as are mentioned in the import manifest would be unloaded and at the place which is approved for that purpose. 5. Chapter VII of the Customs Act (Sections 44 to 51) contains provisions regarding clearance of imported goods and export goods. 6. Under Section 45 of the Customs Act, it is stated that all imported goods unloaded in a customs area shall remain in the custody of the Customs Authorities as are approved by the Commissioner of Customs until they are cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FS allow destuffing of goods and after the formalities of assessment and payment of customs duty are made, the Customs give out-of-charge orders. The custodian releases the goods from the CFS by issuing the gate pass. As provided under Section 46, goods can be cleared by the importer by filing a bill of entry for home consumption or warehousing, pursuant to which, clearance of goods is granted under Section 47 by the Customs Officer. 9. Thus it is clear that unloading of the imported goods can take place only after the Customs Officer permitting entry and after Import Manifest had been delivered. With the obligation on the part of the Customs Officer to consider as to whether the goods are imported or attempted to be imported or brought within the Indian Customs water for the purpose of being imported in accordance with the provisions of the Customs Act, unloading of only those goods are permitted, as are mentioned in the Import Manifest. 10. Section 141 of the Customs Act states that all conveyances and goods in the customs area, for the purpose of enforcing the provisions of the Act, are subject to the control of the officers of the Customs. 11. Chapter V of the Major Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eously at the hatch. The steamer agents challenged the amendments that idle labour charges cannot be recovered from the steamer agents. 14. In considering the said issue on the liability of the steamer agents, the Supreme Court held that the Board is not an agent of the consignee for the purpose of taking delivery of the goods, because the delivery to the importer-consignee is to be on the presentation of the bill of lading. Sub-section (3) of Section 39 of the Major Port Trusts Act empowers the Board to take charge of the goods for the purpose of performing certain services, which do not include taking delivery of the goods from the ship owner. The Supreme Court pointed out : 38. ... It is true that on the Board s taking charge of the goods and giving a receipt about it to the ship owner, the master or the owner of the vessel is absolved from liability for any loss or damage which may occur to the goods which had been landed, but this provision by itself does not suffice to convert the receiving of the goods by the Board after they had been landed by the ship owner to the Board s taking delivery of those goods on behalf of the consignee. The Board simply takes charge of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Peterson v. Freebody Co.) that the ship owner must put the goods in such a position that the consignee can take delivery of them. It is useful here to repeat and extract the judgment of Lord Esher as quoted in the decision of the Apex Court, which clearly touch on where the ship owner s responsibility ends : Wherever the delivery is to be, the ship-owner, on the one hand, must give delivery. If he merely puts the goods on the rail of his ship, he does not give delivery : that is not enough. If, on the other hand, the consignee merely stands on the other ship, or on the barge or lighter, or on the quay, and does nothing, he does not take delivery. The ship-owner has performed the principal part of his obligation when he has put the goods over the rail of his ship; but I think he must do something more - he must put the goods in such a position that the consignee can take delivery of them. He must put them so far over the side as that the consignee can begin to act upon them; but the moment the goods are put within the reach of the consignee he must take his part in the operation. At one moment of time the ship-owner and the consignee are both acting - the one in giving and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion therein was the availability of the goods returned to the importer and when the goods, either in whole or in part, are not traceable, the goods, being in the custody of the Customs Department, any loss or damage, hence, has to be met only by the Customs Department. 18. The substance of the decisions of the Apex Court referred to above is that while the unloading charges are to be borne only by the steamer agent and that in the process of unloading, the Port Trust is the bailee and the steamer agent, the bailer, the moment the goods are unloaded, the liability to pay the storage and demurrage charges rested on the consignee. 19. It is no doubt true that in the decision reported in (2008) 4 SCC 87 = 2008 (224) E.L.T. 9 (S.C.) (Forbes Forbes Campbell Co. Ltd. v. Board of Trustees, Port of Bombay), the Apex Court doubted the correctness of the decision reported in (1997) 10 SCC 285 = 1996 (82) E.L.T. 174 (S.C.) (Trustees of Port of Madras v. K.P.V. Sheik Mohd. Rowther Co. Pvt. Ltd. and Another), wherein, the Apex Court considered the issue as to the right of the Port Trust to collect the demurrage charges from the consignee and not from the steamer agent. Holding that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed only on a written request of the Assistant Commissioner or Deputy Commissioner (Imports). Additional entries in the IGM are allowed only in bona fide cases, giving reasons for non-inclusion of entry at the first instance and the reason for delayed submission of additional entry. 22. In the EDI system, the steamer agent gets the manifest filed from the EDI or by using the service centre of the Customs House and the noting aspect is checked by the system itself, which generates the bill of entry number. Thereafter, it is forwarded electronically or manually to the concerned person, grouped in the customs house, dealing with the commodities sought to be cleared. 23. Where the goods are cleared through the EDI system, no formal bill of entry is filed, as it is generated by the computer system. The importer is required to file a cargo declaration having prescribed particulars required for processing of the entry for customs clearance. Under the EDI System, the importer submits declarations in electronic format containing all the relevant information, to the service centre. After verification, the system generates a bill of entry number which is endorsed on the printed chec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically stated that steamer agents and shipping lines could obtain the IGM well in advance; that even though the IGM at that point may be incomplete, yet, amendments are regularly carried on, prior to the arrival of the vessel and on amendment that is carried on, the ICES system sends the amended IGM messages to the custodians. Considering the auto approval system operating, the Public Notice stated that the IGM messages, henceforth, should be transmitted only after the entry inwards is granted to the vessel, which means, till it processes the entry inwards and ready for an auto approval, an incomplete IGM, wanting in any particulars, which does not go to the root of the content of the IGM, could be amended. 29. Circular No. 13 of 2005, dated 11th March, 2005, issued by the Central Board of Excise and Customs, stated that the incomplete or incorrect filing of IGM should not be treated as proper filing of IGM and that, only on filing the same in the proper format or after the amendment, IGM be treated as proper filing. It further pointed out that the amendments that are normally carried out are divided as major and minor amendments, which are as follows : Major amendments : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need to be evacuated straightaway without loss of time. Accordingly, the concept of CFS has grown in importance along with the growth and development of ports. CFS are specified as customs area under Section 8(b) of the Customs Act. The goods container landed at ports are immediately taken straight to CFS which are treated as an extension of a customs station set up with the main object of decongesting the ports. An analysis of the provisions of Sections 7 and 8 of the Customs Act reveals that Container Freight Station with a customs area located in the jurisdiction of Commissioner of Customs exercising control over the specified customs port, airport, ICD, by itself, does not have an independent existence. It has to be linked to a customs station within the jurisdiction of the Commissioner of Customs. It is an expansion of customs station set up with the main object of decongesting the ports, where, only the part of the customs process, namely, the examination of goods, is normally carried out by Customs. Goods are stuffed or destuffed into the containers or therefrom and aggregation and segregation also take place in such place. Given the aforesaid aspect of CFS being the extens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to compulsorily indicate in the IGM against each line, the name/code of the Container Freight Station where the imported cargo is proposed to be delivered. The importers and CHAs are advised to intimate the Shipping Lines about the destination CFS before the departure of the vessel from load Port. For the containers where the CFS Code has not been indicated, the Shipping Lines will be required to declare the name of one Container Freight Station where all such unlisted containers will be transported for delivery. In case such a declaration is not forthcoming up to the point of entry inwards of the vessel, CCTL will be free to choose the Container Freight Station where all such unlisted containers will be moved, under intimation to the concerned Shipping Lines/Steamer Agents. (vi) No amendments of the IGM for change of the CFS will be permitted once the vessel has berthed. 34. In accordance with the decision to review after 3 months, once again, after inviting suggestions from the various stakeholders, deliberation and consensus reached among the various stake-holders, on 30-3-2007, the Government of India, Ministry of Finance, through the Commissioner of Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itoring of various aspects of cargo movement and modification to ICES application. Public Notice No. 48 of 2008 deals with the amendment of IGM filing, particularly with reference to the procedure for movement of containerised import cargo from the terminal to CFS. The Public Notice states that in order to streamline and monitor the movement of the containerised cargo, modifications are issued, so that there is smooth functioning of the container movement to the respective Freight Station. 37. The Public Notice further states that the auto approval facility to move the containers from the terminal to CFS is implemented in transshipment of the cargo from the port. The movement of shipping request has to be made, which shall be part of the IGM filing process. The Importers/CHAs have to give the code of destination CFS, as provided for in the Annexure and the same must be clearly mentioned in the IGM, so that the auto approval for the movement is hassle free and is available at the time of grant of entry inward itself, as given in the Public Notice. It pointed out to the incomplete IGMs and the need for regulating the filing, as follows : 3. IGM Message Transmission : At prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tination CFS. The third one deals with the simplified approval system. It is stated by the Revenue that the system thus agreed upon and notified under the public notices are working successfully as of today. A reading of the abovesaid circulars shows that the naming of the CFS is the primary responsibility of the importer, failing which, first the steamer agent and thereafter with CCTL; that amendment to the IGM by changing the CFS could be made even after auto approval as per the procedure laid down in the Public Notice. 40. A reading of the public notices thus makes two things clear, namely, the filing of IGM with blanks as to the destination CFS codes does not make the filing of the IGM an untrue declaration and the movement request could be made by the importer or a clearing agent or a steamer agent before it gets into an auto approval for movement of the imported containers from the port to the CFS. An amendment to the proposed CFS is possible before the auto approval is granted and as well after the approval is granted, only subject to certain conditions. Whether the IGM contains the details as to the CFS or not, the movement request would be part of IGM filing process. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CFS in the IGM not having any revenue implication, the aforesaid state of affairs vis-a-vis the IGM, is not viewed seriously in the sense of rendering the IGM given by the steamer agent as not satisfying Section 30 of the Customs Act, to attract penal consequences by treating the IGM an untrue declaration, exhibiting a fraudulent intention; thereby, the truthfulness as to a statement in the IGM and fraudulent intention as regards the details given therein necessarily has its relevance to that part of the declaration viz., as to the goods brought into the country having a bearing on the provisions of the Customs Act. 43. The petitioners herein are Container Shipping Lines Association and a Shipping Company. The petitioners contend that the public notices referred to above have created adverse circumstances in terms of compliance of the Customs Act provisions, contractual obligations by virtue of shipping bills and applicable carrier laws, apart from damage suffered by the shipping lines to bear logistic burden on the implementation of the public notices without any benefit to the petitioners. 44. It is contended that the public notices have no legal sanctity to prevail ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consignor extends up to the CFS, as given under the IGM. The amendment on IGM thus resting with the petitioners herein, the unilateral alteration of the IGM, taking refuge under the impugned notices and without notification to the shipping lines, is violative of Article 14 of the Constitution of India. Further, through Public Notices, it is not open to the Customs Authorities to amend the IGM, since the power as regards the amendment to the IGM is traceable to Section 30 of the Customs Act and nothing beyond. 47. In this connection, learned senior counsel placed reliance on the decision reported in (1963) Supp 2 SCR 915 (The Trustees of the Port of Madras, by its Chairman v. K.P.V. Sheik Mohammed Rowther Co.) as to the role of the Port Trust and (1968) 2 MLJ 199 (The Union of India represented by the Regional Director, Southern Region v. Rally Brothers Ltd. (2008) 4 SCC 87 = 2008 (224) E.L.T. 9 (S.C.) (Forbes Forbes Campbell Co. Ltd. v. Board of Trustees, Port of Bombay); (1997) 10 SCC 285 = 1996 (82) E.L.T. 174 (S.C.) (Trustees of Port of Madras v. K.P.V, Sheik Mohammed Rowther Co.) and AIR 2002 Calcutta 179 (Board of Trustees for the Port of Calcutta and another etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substance. Section 30 of the Customs Act does not prohibit any amendment by the consignee, particularly in the matter of choosing the CFS, which has no revenue implications, to make the IGM untrue to attract the penal provisions under Section 30 of the Customs Act. 50. Referring to Sections 33 and 45 of the Customs Act, learned senior counsel pointed out that when the Commissioner has every authority to specify the CFS, taking note of the traffic in the Port Trust, a conscious decision was taken after due consultative process of all the stakeholders, as had been stated in the Notification. The contention that the contract of the petitioners for unloading would be seriously interfered with by taking the goods to a different CFS, is totally unsustainable. Once the goods are unloaded, it is the Customs Authorities, who exercise the jurisdiction to move the goods to be kept under their control. In this, the liability of the consignor is nowhere in the picture. 51. Learned senior counsel placed reliance on the decision reported in 1988 (35) E.L.T. 244 (Oswal Spinning and Weaving Mills v. CCE) only to contend that the decision relied on by the learned senior counsel appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Act to sustain the public notices, quite apart from the fact that the procedure arrived at is the result of the consensus among the various stakeholders. The incorporation of CFS code in the IGM is only a procedural one and does not make a substantial amendment to the IGM, which has an implication on the contents that go for the adjudicatory process under the Customs Act. He pointed out that contrary to assertion of the petitioner, the rights and obligations of the petitioners vis-a-vis the goods have not been taken away under the Trade Circular issued. 53. Learned standing counsel referred to the decisions reported in 2008 (232) E.L.T. 22 (Mad.) (Board of Trustees of the Port of Madras v. Shaw Wallace Co. Ltd.); (1997) 10 SCC 285 = 1996 (82) E.L.T. 174 (S.C.) (Trustees of the Port of Madras through its Chairman v. K.P.V. Sheikh Mohd. Rowther Co. Pvt. Ltd. and another) and (2003) 12 SCC 627 = 2004 (163) E.L.T. 4 (S.C.) (Union of India and others v. C. Krishna Reddy) as to when a Writ of Mandamus would lie and submitted that a CFS is an extended Port. The IGM, in the given format, gives the port of discharge and the CFS as indicative of the place where the goods wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatus of the public notices, learned senior counsel appearing for the petitioners submits that the trade notice be set aside and the writ petitions be allowed. 58. Learned senior counsel appearing for the petitioners pointed out that even though anybody could name the CFS, it is only the shipping line and not anybody else, which includes the importer as well as the Customs Authorities. Considering the liability of the ship owner to deliver the cargo to the consignee in good condition, the duty as regards naming the destination CFS lies only with the shipping lines to find out the facilities available at the CFS, the quality of service provided by such CFS, the infrastructure available at the CFS and above all, the distance between the port and the CFS, so that the cargo could be delivered in good condition to the consignee. So far as the responsibility of the steamer agent is concerned, as far as safe delivery, the exclusive right of the ship owner to indicate the particular CFS cannot, in any manner, be interfered with by the Customs Authorities at the behest of the importer/clearing agents. Consequently, the action of the respondents in allowing the consignee, or at his instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before this Court. Hence, to the limited extent alone, the port is a bailee of a ship owner and nothing beyond. As pointed out by the Apex Court, the Port Trust Authorities are not the bailee of the consignee. 62. As already pointed out in the decision reported in (1963) Supp 2 SCR 915 (The Trustees of the Port of Madras, by its Chairman v. K.P.V. Sheik Mohammed Rowther Co.) it was pointed out that it is the responsibility of the ship owner or his agent to put the goods in such a position that the consignee can take delivery of them. The delivery of the goods to the consignee depends on the law of the port and the laws of the country into which the goods are imported. Given the fact that clearance of the goods by the consignee is subject to the compliance of the procedure under the Customs Act till the Customs Department gives the out of charge orders, the goods are under the control and custody of the Customs Department. 63. Section 141 of the Customs Act provides that the goods in the customs area shall be subject to the control of the Officers of the Customs. Once the goods are unloaded from the ship, they enter the Customs Area; that these goods come under the control o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed cargo to the CFS of his choice and the Customs Department effecting the change. The decision reported in 1988 (35) E.L.T. 244 (S.C.) (Oswal Spinning Weaving Mills Ltd. v. Collector of Customs and another) and the decision reported in (1963) Supp 2 SCR 915 (The Trustees of the Port of Madras, by its Chairman v. K.P.V. Sheik Mohammed Rowther Co.) deal with two different situations and both of them have to be read in the context of the facts prevailing therein. At the same time, it must be pointed out that the decision reported in 1988 (35) E.L.T. 244 (S.C.) (Oswal Spinning Weaving Mills Ltd. v. Collector of Customs and another) emphasizes the fact that on unloading, the Customs Authorities are under the direct control of the imported goods and the consignee is not at liberty to deal with the imported goods in any manner. 64. The second decision relied on by the learned Senior Counsel appearing for the petitioners reported in (1968) 2 MLJ 199 (The Union of India represented by the Regional Director, Southern Region v. Rally Brothers Ltd.) relates to the loss and damage suffered to the goods imported. Referring to the decision of the Supreme Court reported in (1963) Supp 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 157 of the Customs Act relating to Handling of Cargos in Customs Areas Regulations, 2009 . A reading of the said Notification reveals that the regulations provide for the manner in which the imported goods/export goods shall be received, stored, delivered or otherwise handled in a customs area. It also deals with the responsibility of persons viz., the Customs Cargo Service providers engaged in the aforesaid activities. 68. The regulations apply to the Customs Authorities as well as to the Cargo Service providers. Regulation 3 applies to handling of imported goods/export goods by the Customs Cargo Service providers in the customs area specified under Section 8 of the Customs Act. The above Circular issued makes an elaborate reference to a regulation that persons who hold the custody of the goods pending clearance, hold the same as custodians on behalf of the Customs Department. The regulations further provide for a complete procedure as regards the CFS operating under the control of the Customs Authorities. Regulation 6 speaks about the responsibilities of the Customs Cargo Service providers. It is further seen from Circular No. 13 of 2009 issued by the Central Board of Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FS, being an extended arm of the customs area, the issue of bailer bailee-relationship between the steamer agent and Port Trust/Customs Department, has to be viewed in a limited sense of discharge of their respective statutory duties and figuratively speaking, the steamer agent continues to be the bailee of the consignor till such time the consignee takes delivery of the goods after fulfilling the statutory formalities under the Customs Act. 71. In the above circumstances, the contention of the petitioners as to whether the port could be seen as a bailee of the consignee, or for that matter, the Customs Department as a bailee of the consignee, does not arise for consideration or have any relevance, in so far as either the importer or the Customs Department naming the destination CFS, resulting in an amendment to the Manifest. It is no doubt true that the petitioners had arrangements with 28 of the CFSs operating herein. The fact that the steamer agent is contractually under the obligation with the CFS, does not mean that the same could bind, in any manner, an importer to name the CFS, or for that matter, the Customs Department changing the CFS as against the one given under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to attract the penal consequences, has to be seen from the substantive content of the declaration from the angle of the Customs Act provisions and not from the procedural content relating to the movement of the unloaded goods to a customs station like the ICD or the CFS, which is under the effective control of the Customs. If the petitioners can have no objection to the Customs keeping the goods in the custody of the port as a custodian pending clearance from the Customs, equally so to a CFS named by the consignee. 73. It is no doubt true that the obligations of the steamer agent extend till the date of delivery to the consignee; but at the same time, till such time the adjudication process is over, for a limited period and for a limited purpose, the custody of the goods and responsibility of the steamer agent is taken over by the Port Trust Authorities as well as by the Customs Authorities. The ship owner or his agent has nothing to do with the adjudication process or as to any claim that may arise on any damage suffered by the goods while under the control of the Customs Department. 74. Given the fact that the responsibility of the steamer agent lies only as regards the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the decisions referred to above, any damage or loss caused to the goods imported while in the custody of the Port Trust or the Customs, is to be met only by those respective authorities, depending on where the goods are at the time when the damage or loss is caused to the goods. On the unloading of the goods, the anxiety to have the clearance of the imported goods at the earliest and on the rates and provisions relied on, rests on the importers and not on the petitioners. Whatever be the nature of contractual obligations that the petitioners might have with a particular CFS, when the goods come into the custody of the Customs, it is open to the Customs Authorities to give such directions as regards the handling of the cargo. Further, as already pointed out, when the failure to quote the CFS code number in the IGM is not viewed seriously either as a major or minor omission, or as an obligation imposed under the statute to be fulfilled by the ship owner or the agent, I do not find that changing the CFS in the IGM has to be treated as an amendment, inviting serious consequences at the hands of the Customs authorities and the omission is often made good by the CCTL. Even assuming th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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