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TMI Blog2016 (12) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... s not on account of any fault of the petitioner, rather, found to be illegal action on the port of DRI and customs, the petitioner cannot be burdened for detention and demurrage charges and the liability has to be put on customs department, who shall be at liberty to seek waiver thereof. The Authority, as constituted under the 1963 Act, is only meant to fix the rates to be charged by the port authorities. Under Section 53 of he 1963 Act, the Board can deal with only such cases which seek waiver of charges. In the case in hand, the direction of the Government is as a matter of policy, which is applicable uniformly in all cases, where detention of goods is by customs and the certificate is issued. It is not in dispute that in the case in hand, the certificate has been issued, hence, in terms of Regulation 6(l) of the 2009 Regulations, which are binding on the Port Trust, customs can waive off the demurrage charges. Malafide of respondent No.7-Santokh Singh Senior Intelligence Officer and respondent No. 8-Roopesh Kumar, Intelligence Officer, DRI - Held that: - This court is not going into much detail on this aspect, but it can safely be opined that the action was not bonafide, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate for Mumbai Port Trust.Mr. Rajinder Goyal, Mr. Kapil Arora and Mr. S.V. Singh, Advocates for respondents No. 10 and 11 in CWP No. 10036 of 2016.Mr. Amardeep Sheoran, Advocate and Mr. Akshay Jindal, Advocate for respondent No. 12 in CWP No. 10036 of 2016 and for respondent No. 10 in CWP No. 10021 of 2016. Mr. Rajesh Sethi, Mr. Gaurav Kamboj, Mr. Tushar Gera, Mr. Arun Biriwal, Advocates for respondent No. 13 in CWP No. 10021 of 2016 in CWP No. 10036 of 2016. Mr.Sharad Aggarwal, Advocate for JUDGMENT Rajesh Bindal J. 1. This order will dispose of CWP Nos. 10021 and 10036 of 2016, as common questions of law and facts are involved. 2. Inter-alia, the issue raised is regarding illegal detention of the goods imported by the petitioners and demand of detention and demurrage charges from the petitioners. 3. The facts have been taken from CWP No. 10021 of 2016, unless otherwise referred to. Arguments of the petitioner 4. Learned counsel for the petitioner submitted that the petitioner imported defective/secondary cold rolled sheets/coils from South Korea with varied thickness vide commercial invoice dated 27.10.2015. Pre- inspection report was also annexed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The delay was incurring demurrage and detention charges. It was followed by another reminder on 1.1.2016, when no action was taken by the Customs authorities in terms of the letter from DRI. 5. It was further argued that under these circumstances, the petitioner had no choice but to approach this court by filing CWP No. 572 of 2016-M/s Shri Lakshmi Steels v. UOI and others, in which notice of motion was issued for 11.1.2016. Prior thereto, without any intimation to the petitioner, Positive Material Identification test was got done by the customs authorities on 5.1.2016 with reference to bill of entry No. 3480776 dated 4.12.2015. He further submitted that it was only after filing of the writ petition by the petitioner in this court that the goods imported were got inspected from the Chartered Engineer. The inspection report dated 19.1.2016 has been produced on record. The inspection was done only in the presence of the customs officials under their guidance. The petitioner was not present. Despite this fact, the conclusion was that the goods were cold rolled defective sheets/coils, as was declared by the petitioner in the bill of entry. Despite this fact, the goods were not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter, revised report dated 17.2.2016 was received from the same laboratory mentioning the bill of entry number. It further mentioned that the samples were received in the laboratory on 22.1.2016, i.e., after the earlier report had already been received. To similar effect were two other reports of TCR Engineering Services Pvt. Ltd. 9. Learned counsel for the petitioner referred to order dated 3.2.2016, passed by this court in CWP No. 185 of 2016, in the case of M/s Inder International. Though by that time reports from Chartered Engineer- Rajendra S. Tambi and one from TCR Engineering Services Pvt. Ltd. were produced in court, nothing was pointed out regarding any order of detention having been passed. 10. Though the Commissioner of Customs passed order on 28.1.2016 directing production of PD Bond and bank guarantee for provisional release of goods, however, the copy was not supplied. It was supplied only in court at the time of hearing on 3.2.2016. 11. Letter dated 19.1.2016 from DRI to the Commissioner of Customs (Import), Mumbai was referred, directing release of goods on provisional assessment after drawing representative samples. The letter referred to an earlier let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being no power of review under the 1962 Act. The thickness was sought to be measured despite there being two earlier reports already available. The department had been changing its stand time and again. Sometimes, the issue was whether the goods imported were hot rolled or cold rolled steel and now the issue sought to be raised was regarding its thickness. Order dated 4.4.2016 passed in earlier CWP No. 572 of 2016 was referred to. The aforesaid petition was filed by the petitioner in the earlier round of litigation. In the aforesaid order, the customs authorities were directed to de-stuff the consignment, subject to petitioner's making necessary arrangement within one week. Sampling of the disputed consignments was to be done by the customs authorities in the presence of representatives of the DRI and the petitioner. When the petitioner approached the authorities for de-stuffing the goods, he was man-handled and de-stuffing was not permitted. He referred to affidavit of Shailesh M. Gondhalekar in the earlier round of litigation. The deponent therein was associate of Rajendra S. Tambi, who was Chartered Engineering. He stated on oath that he was pressurized by Santokh Singh, Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms authorities issued out of charge order on 8.8.2016 calculating the duty payable. Learned counsel referred to a communication dated 18.8.2016, which is in the form of detention/ demurrage certificate issued as per Handling of Cargo in Customs Area Regulation, 2009 (for short, 'the 2009 Regulations'), which was addressed to the Port Trust as well as the Shipping Line. It clearly mentioned that the goods detained vide bills of entry have been finally assessed on 8.8.2016. They were directed that the certificate be considered as per the 2009 Regulations. The certificate was issued with the approval of the Commissioner of Customs (Export-I). Despite the final assessment, the goods were still not released on account of the pending dispute regarding demand of detention and demurrage charges by the Port Trust and Shipping Line. The authorities refused to honour the detention certificate issued by the customs authorities. 16. With reference to the allegations of mala fide alleged against respondents No. 7 and 8, namely, Santokh Singh and Roopesh Kumar, learned counsel for the petitioner referred to the allegations contained in para Nos. 14 to 17 and 29 of the petition and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that where for justifiable reasons under exceptional circumstances, release of consignment is not considered advisable even on provisional basis, option must be given to the importer by sending intimation in writing to keep the goods in warehouses in terms of Section 49 of the 1962 Act. Any default by the officer was to be viewed seriously and accountability fixed. He referred to subsequent circular No. 22/2004-Cus. dated 3.3.2004 issued by the Central Board of Excise Customs (for short, 'the Board') reiterating the same view and further adding that even disputed or offending consignment should not be held up, unless the import is totally prohibited or banned under any law or where prosecution is contemplated. In other cases, the importer should be given option for provisional clearance/assessment, if the enquiry is going to take time. He further referred to instruction No. 0172006:CCO (D2) dated 22.8.2006 (Annexure P-20). In the aforesaid instructions, while referring to the order passed by this Court in CWP No. 9882 of 2006 regarding undue delay in clearance of goods without any valid justification, comprehensive instructions were issued, prescribing the proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a record thereof and shall not permit such goods to be removed unless the permission is granted by the competent authority. Section 49 of the 1962 Act provides that if the goods cannot be cleared within reasonable time, pending clearance, the same can be permitted to be stored in a warehouse. Section 141 of the 1962 Act provides that conveyances and goods in a customs area shall be subject to control of officers of customs. Such goods are to be handled in the manner prescribed. The Board is authorised to issue instructions to the officers for the purpose of implementation of the 1962 Act, under Section 151A. Section 156 thereof enables the Board to make Regulations. Section 159 provides for placing the Rules and the Regulations so framed before each House of the Parliament. 19. Learned counsel for the petitioner referred to Section 2(j) of the Major Port Trusts Act, 1963 (for short, 'the 1963 Act'), which defines that Indian Ports Act means Indian Ports Act, 1908. Section 2(aa) of the 1963 Act defines that Authority to mean the Tariff Authority for Major Ports constituted under Section 47A of the Act. Section 2(b) of the 1963 Act defines Board to mean the Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the ports notified under the Major Ports Act, 1962 (38 of 1963) or the State Government, Central Government or their undertakings. Regulation 6 of the 2009 Regulations provides for responsibilities of the customs cargo service provider. Clause (6)(l) thereof provides that subject to any other law for the time being in force, the customs cargo service provider shall not be entitled to charge any rent or demurrage on the goods seized or detained or confiscated by the proper officer. Other provisions provide for filing of application for grant or renewal of licence. The explanatory memorandum attached with the above Regulations mentions that the 2009 Regulations have been framed to comply with the recommendations made by the Public Accounts Committee (2005-2006) to the Government to formulate appropriate provisions in this regard. The object is to provide for a comprehensive mechanism for handling of goods in a customs area. It also provides for the conditions and responsibilities of the persons handling consignments and adequate control over them. The 2009 Regulations were notified on 17.3.2009. It was further submitted that Section 159 of the 1962 Act provides that all Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the issue and stated that where for justifiable reasons, in exceptional situation, release of consignment is not advisable even on provisional basis, option must be given to the importers/exporters by sending intimation in writing to keep the goods in warehouses. Non-compliance of the instructions were to be viewed seriously. The instructions dated 14.3.2012 were issued by the Government of India, Ministry of Finance (Department of Revenue) with reference to the 2009 Regulations. It noticed that in large number of cases, the containers detained by DRI etc. are not released even after lapse of considerable time, which resulted in hardship to the importers and all concerned. It was felt that one of the reasons for longer detention can be lack of adequate space for storing such goods in a customs area. It was desired that customs cargo service provider should provide sufficient space for storage of goods after de-stuffing the containers. 23. It was submitted that despite there being enabling provisions under the 1962 Act for de-stuffing of the goods and number of instructions issued by the Government/Department on the issue, the petitioner was not given an opportunity to de-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai International Airport Pvt. Ltd. v. The Union of India, New Delhi and others, 2014-TIOL-1819-HC-MUM-CUS was cited, wherein vires of the 2009 Regulations were challenged by a licensee customs cargo service provider, which were upheld. SLP (C) No. 3420 of 2015 filed against the aforesaid judgment was withdrawn, however, the question of law was left over. The judgment of Delhi High Court in W.P. (C) 374 of 2014-Delhi International Airport Private Limited v. Union of India and others, decided on 27.10.2016 was also cited, where challenge to the vires of the 2009 Regulations was negated. 27. Learned counsel further referred to the following judgments by different courts opining that on account of default on the part of the customs authorities, they were liable to pay demurrage and detention charges etc.: (i) Union of India v. Sanjeev Woollen Mills, 1998 (100) ELT 323 (SC); (ii) Shipping Corpn. of India Ltd. v. C. L. Jain Woollen Mills, 2001 (129) E.L.T. 561 (SC); (iii) Donald Macarthy (P) Ltd. v. Union of India, 1997 (89) ELT 53 (Cal.); (iv) Sujana Steels Ltd v. Commr. of Cus. C. Ex. (Appeals), Hyderabad, 2002 (141) ELT 343 (A.P.); (v) Austin Engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the imported consignment in terms of para 6 (iii) of the letter dated 26.2.2016. Though in the letter dated 5.3.2016, DRI, Ludhiana directed customs regarding provisional release of the consignment after measuring thickness, the petitioner vide letter dated 7.3.2016 was informed that consignment is seized and the same is ordered to be released provisionally on payment of duty and on compliance of other conditions. Letter dated 27.9.2016 (Annexure R-4/21) from DRI, Ludhiana to customs was referred to, whereby customs was directed to assess the consignment provisionally. Mala-fide 29. Learned counsel for the petitioner referred to a letter dated 26.2.2016 (CM No. 13183 of 2016) addressed to the Chairman of the Board, Director General of Revenue Intelligence and other senior officers for transfer of investigation from Santokh Singh and Roopesh Kumar (respondents No. 7 and 8), who had been harassing the petitioner for ulterior motive. He further referred to letter dated 18.8.2016 from customs to Port Trust and Shipping Line informing that the goods have been finally assessed on 8.8.2016 and that detention/demurrage certificate may be considered as per the 2009 Regulations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment laboratory. Initial report by the Chartered Engineer appointed by the customs was in favour of the petitioner, however, the same was discarded without any reason. The second report was taken from a laboratory, which did not have the facility for testing. It opined the material to be hot rolled steel. When finally this court got the same tested from Bokaro Steel Plant, Jharkhand, the opinion was in favour of the petitioner. The stand of the petitioner was vindicated, which clearly establishes that very initiation of proceedings against the petitioner was bad. He further submitted that against the allegations of mala fide levelled in the petition, there is no specific affidavit filed by any of the respondents impleaded by name, hence, those allegations are established. Arguments of respondents No. 10 and 11-Shipping Line 32. Mr. Rajinder Goyal and Mr. Kapil Arora, learned counsel for respondent No. 10 submitted that there are no allegations made against the Shipping Line in the entire petition except at some places, where generally all the respondents have been referred to. Shipping Line has otherwise nothing to do with the dispute between DRI, customs and the petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had never authorised Rajendra S. Tambi, Chartered Engineer to send the samples to any laboratory for testing. He could not refer to any communication appointing Rajendra S. Tambi as the Chartered Accountant and his scope of inspection. The sampling of the consignment was completed on 11.1.2016 in the presence of the representative of the petitioner. It was sent for testing to TCR Engineering Services Pvt. Ltd. on 20.1.2016. On the same day, a communication dated 19.1.2016 was received from DRI mentioning that report of the Chartered Engineer has not been received and the samples have not been forwarded to the laboratory for testing and the process may take some time, hence, provisional assessment be made under Section 18 of the 1962 Act, however, before release of the goods, representative samples be drawn, especially the lots which are suspected to be hot rolled. The report was received from TCR Engineering Services Pvt. Ltd. on 28.1.2016. Vide communication dated 28.1.2016, the petitioner was requested to submit PD bond and bank guarantee in order to release the consignment on provisional basis, which was followed by another reminder on 8.2.2016, however, the petitioner did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e direction of DRI, appeal has been filed against the order of assessment. Customs is not responsible for any delay in the process as the consignments were put on hold on the directions of DRI and all actions were being taken as guided by them. When the goods were released, the petitioner failed to avail of the facility, as he failed to furnish PD bond and bank guarantee. Arguments of DRI 37. Mr. Satish Aggarwala, Mr. R. K. Handa, Mr. Pritpal Singh Nijjar and Mr. Aditya Singla, learned counsel appearing for DRI submitted that affidavit dated 4.4.2016 of Shailesh M. Gondhalkar, as is stated to have been filed in CWP No. 4648 of 2016, is in fact not on record in that case, as there is no order for that taking on file. The petitioner herein is a habitual offender, as entire effort was not to cooperate with the authority and delay testing of samples, resulting in delay in payment of duty and evade demurrage charges. The writ petition was filed merely at the stage when the matter was being investigated when even show cause notice had not been issued. When show cause notice is issued, the petitioner would be at liberty to raise all the pleas. He referred to earlier conduct of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther side had no opportunity to respond. 39. He referred to letter dated 14.1.2016 (reply to CM No. 13183 of 2016) from Customs to DRI informing that examination of the containers was completed by 11.1.2016. Some delay was explained while stating that weighbridge was not working properly. It was informed that final report will be forwarded to DRI as soon as received. At this stage, the petitioner filed the writ petition in this court. The object was to hamper investigation, otherwise the petitioner should have co-operated in the process of investigation. The department was just to ensure that there was no mis- declaration. There was no interim stay granted by this court. Vide letter dated 8.1.2016 (CM No. 14102 of 2016), DRI asked customs to send the samples for testing to find out whether the imported consignment was hot rolled or cold rolled steel. He further referred to letter dated 12.1.2016 from customs to the petitioner that his agent was not co-operating in the process of examination, the statement made by the partner of the firm during search at Ludhiana on 12.1.2016 and also a panchnama, where the partner was found to be recording the proceedings without any authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n present. Vide letter dated 1.3.2016 (reply to CM No. 13183 of 2016), the request made by the petitioner for re-testing of the samples was rejected. Vide letter dated 3.3.2016, the petitioner requested customs to keep the process of re- examination in abeyance as the matter was pending in this court on 8.3.2016. Vide letter dated 4.3.2016, DRI requested the petitioner to co- operate in examination of the goods to measure its thickness. On 5.3.2016, DRI asked customs to pass provisional release order immediately. On 7.3.2016, provisional release order (CM No. 14102 of 2016) for part of the consignment was passed. Immediately on 10.3.2016, the petitioner preferred fresh writ petition. In the aforesaid writ petition, vide order dated 4.4.2016, this court directed de-stuffing of the goods. Despite the order passed by this court, there was no co-operation from the petitioner for inspection. A complaint was made on 7.4.2016 to the police against the petitioner for obstructing departmental officials from discharging their duty. He referred to a panchnama prepared on 22.4.2016 at the time of inspection showing non- cooperation by the petitioner. As the petitioner was not co-operating, eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by Chartered Engineers were acepted. He further referred to affidavit dated 4.4.2016 filed by Shailesh M. Gondhalekar stating therein that the petitioner was called upon by the officers of customs to examine the consignment to ascertain as to whether the imported material was hot rolled or cold rolled steel. The consent was given to the customs on 4.1.2016. The inspection was carried out in the presence of the officers of customs. In order to determine composition of the material, on request of officers of customs, services of Perfect Laboratory Services were engaged, who personally visited the dockyard and collected the samples. The samples were received by Perfect Laboratories Services, on 11.1.2016. The report was given on 18.1.2016, which was sent to customs by the Chartered Engineer on 19.1.2016. He further submitted that on 19.2.2016, Shailesh M. Gondhalekar was called by the officers of customs on the pretext of examination of some consignment, where he was illegally detained by the officers present there including Roopesh Kumar and Santokh Singh. He was forcibly made to acknowledge a summon and sign the statement to admit that the samples were handed over to Perfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedure was followed or is required to be followed by the Ports as constituted under the 1908 Act, hence, not applicable. It further provides that earlier agents could continue for a period of five years. Even that period has also expired as the 2009 Regulations were notified on 17.3.2009 that too by the Board and not by the Government. There is no power conferred under the 1962 Act on any authority to frame Regulations with reference to any charges payable to the Port Trust. These are two different enactments operating in their own independent fields. The 2009 Regulations are otherwise also beyond the 1963 Act, as it exceeds the authority delegated for framing the 2009 Regulations. There is no direction given by the Central Government. In support, reliance was placed upon Kurmanchal Inst. of Degree and Diploma and Ors. v. Chancellor, M J. P. Rohilkahdn University and Ors., (2007) 6 SCC 35 and Union of India and others v. S. Srinivasan v. Union of India and others, (2012) 7 SCC 683. 46. He further submitted that the judgments relied upon by learned counsel for the petitioner regarding application of the 2009 Regulations in the case in hand are distinguishable as those are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing when the case was being heard are summed up as under: 50. The writ petition was filed on 13.5.2016 placing on record 32 annexures. At page 355 on record is the written statement filed by Varinder Kaur, Deputy Director, DRI on behalf of respondents No. 1 to 3 and 5 to 8 (DRI and two officers impleaded by name). It is dated 30.5.2016. CM No. 7009-10 of 2016 dated 1.6.2016 were filed by the petitioner for preponing the date of hearing in the main petition. CM Nos. 9623-24 of 2016 dated 9.8.2016 were filed by the petitioner for placing on record Annexures P-39 and P-40 and for a direction to respondent No. 9 for release of the goods. CM Nos. 11845-46 of 2016 dated 19.9.2016 were filed by the petitioner for preponing the date of hearing and for placing on record Annexures P-39 to P-44. CM No. 13183 of 2016 dated 15.10.2016 was filed by the petitioner for placing on record Annexure P-45, a bunch of documents. CM No. 13309 of 2016 dated 17.10.2016 was filed by DRI for placing on record affidavit of Varinder Kaur, Deputy Director, DRI on behalf of respondents No. 1 to 3 and 5 to 8. CM No. 14102 of 2016 dated 27.10.2016 was filed by respondent No. 4 for placing on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless the context otherwise requires. xx xx xx (11) customs area' means the area of a customs station and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities. (12) customs port means any port appointed under clause (a) of Section 7 to be a customs port (and includes a place appointed under clause (aa) of that section to be an inland container depot); (13) customs station means any customs port, customs airport or land customs station; xx xx xx SECTION 7. Appointment of customs ports, airports, etc. - The Board may, by notification in the Official Gazette, appoint- (a) the ports and airports which alone shall be customs ports or customs airports for the unloading of imported goods and the loading of export goods or any class of such goods; (aa) the places which alone shall be inland (container depots or air freight stations) for the unloading of imported goods and the loading of export goods or any class of such goods; (b) the places which alone shall be land customs stations for the clearance of goods imported or to be exported by land or inland water or any clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be, an import report to the proper officer under section 30 or for the arrival of the conveyance in which the said goods were carried. xx xx xx SECTION 49. Storage of imported goods in warehouse pending clearance.- Where in the case of any imported goods, whether dutiable or not, entered for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored for a period not exceeding thirty days in a public warehouse, or in a private warehouse if facilities for deposit in a public warehouse are not available; but such goods shall not be deemed to be warehoused goods for the purposes of this Act, and accordingly the provisions of Chapter IX shall not apply to such goods: Provided that the Commissioner of Customs may extend the period of storage for a further period not exceeding thirty days at a time. xx xx xx SECTION 141. Conveyances and goods in a customs area subject to control of officers of customs- (1) All conveyances and goods in a customs area shall, for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery order made under sub-section (2) of section 25, other than an order relating to goods of strategic, secret, individual or personal nature, shall be laid, as soon as may be after it is made or issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session, or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or notification or order, or both Houses agree that the rule or regulations should not be made or notification or order should not be issued or made, the rule or regulation or notification or order shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation or notification or order. xx xx xx SECTION 160. Repeal and savings.- xx xx xx (9) Nothing in this Act shall affect any law for the time being in force relating to the constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproaches; (c) carnage or porterage of goods on any such place; (d) wharfage, storage or demurrage of goods on any such place; (e) any other service in respect of vessels, passengers or goods, (2) Different scales and conditions may be framed for different classes of goods and vessels. xx xx xx 53. Exemption from, and remission of rates or charges.- A Board may, in special cases and for reasons to be recorded in writing, exempt either wholly or partially any goods or vessels or class of goods or vessels from the payment of any rate or of any charge leviable in respect thereof according to any scale in force under this Act or remit the whole or any portion of such rate or charge so levied. 54. Power of Central Government, to require modification or cancellation of rates.- (1) Whenever the Central Government considers it necessary in the public interest so to do, it may, by order in writing together with a statement of reasons therefor, direct the Authority to cancel any of the scales in force or modify the same, within such period as that Government may specify in the order. (2) If the Authority fails or neglects to comply with the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The 2009 Regulations 2. Definitions.-(1) In these regulations, unless the context otherwise requires,- xx xx xx (b) Customs Cargo Services provider means any person responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a custodian as referred to in Section 45 of the Act and persons as referred to in sub-section (2) of section 141 of the said Act; (c) specified means specified by a notification or an order issued under the provisions of the Act; xx xx xx 4. Retrospective Application.- Any action taken or anything done in respect of appointment of Customs Cargo Service providers, immediately preceding the coming into force of these regulations, shall be deemed to have been done under the corresponding provisions of these regulations. Customs Cargo Service providers already approved on or before the date of coming into force of these regulations shall comply with the conditions of these regulations within a period of three months or such period not exceeding a period of one year as the Commissioner of Customs may allow from the date of coming into force of these Regulations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the receipt of the application. EXPLANATORY MEMORANDUM Handling of Cargo in Customs Areas Regulations, 2009 provide for a comprehensive mechanism for handling of goods in a customs area and set out the terms and conditions for all facilities where customs cargo is handled. It also provides for the conditions and responsibilities of the persons handling import or export cargo in Inland Container Depot (CD) or Container Freight Station (CFS) or seaport or airport or Land Customs Stations (LCS) and provide adequate control over the cargo handling entities to ensure that the adequate infrastructure is set up at such facilities for efficient handling of import or export goods. This also fulfills the recommendation made by the Public Accounts Committee (2005-06) for the Government to formulate appropriate provisions in this regard. [Notification No. 26/2009-Cus. (N.T.),, dated 17.3.2009] Circular dated 23.3.2009 M.F. (D.R.) Circular No. 13/2009-Cus., dated 23.3.2009 F. No. 450/55/2008-Cus. IV Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject: Handling of Cargo in Customs Areas R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Depots (ICDs), Container Freight Stations (CFSs) and Land Customs Stations (LCSs). Imported goods would cover goods under transshipment and all goods held under the custody of CCSP. However, these regulations shall not apply to Customs bonded warehouse or to the warehoused goods which are covered under Chapter IX of the Customs Act, 1962. 4.1 It may be noted that in view of the transitional provisions under Regulation 4, the existing appointments of custodians under section 45 of the Customs Act, 1962 shall continue and there would be no disruption in their operations. However, the existing custodians would be required to provide facilities and fulfill the conditions mentioned in Regulation 5 and 6, as applicable, within the specified time period. On fulfillment of the prescribed conditions, approval letters shall be issued to the existing custodians approving the facility for a period of five years and its renewal thereafter, as per Regulation 13. 4.2 Further, major ports notified under the Major Port Trusts Act, 1963 and airports notified under the Airports Authority of India Act, 1994 will continue to be authorised to function as custodians under their respective Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to discharge the responsibilities cast upon them as specified in Regulation 6 which include obtaining written permission from the Commissioner of Customs prior to outsourcing or leasing part of the premises within a customs area. This has been provided in order to take into account the concerns of the revenue for safeguarding the duty on imported goods. xx xx xx Earlier rounds of litigation M/s Shri Lakshmi Steels 53. CWP No. 572 of 2016 was filed on 5.1.2016 challenging the action of the respondents of detaining the goods imported by the petitioner and further prayer was for a direction to the respondents to waive of demurrage and detention charges on the goods illegally detained. During the pendency of the above petition, the petitioner filed CWP No.4641 of 2016 on 9.3.2016 challenging the seizure memo dated 23.2.2016 with a prayer for release of the goods. Challenge was also made to communication dated 5.2.2016 rejecting the petitioner's request for waiver of demurrage and detention charges or for a direction to the respondents to bear those charges, they being at fault. The writ petitions were dismissed as withdrawn on 9.5.2016 with liberty to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 11.12.2015. 56. Vide letter dated 14.12.2015 (p. 62), DRI, Ludhiana directed the Port Trust to put on hold the imported consignments by the parties, namely, M/s Inder International, Ludhiana; M/s Shri Lakshmi Steels; Ms Narayan Steels, Ludhiana; M/s Gurbachan Sales Corporation; M/s Singal Overseas; M/s Global Impex; M/s Signal Udhyog and M/s Kapil Steel Industries. These were to be examined 100% by DRI/customs. 57. Vide letter dated 22.12.2015 (p.77), the petitioner sent a reminder to DRI, Ludhiana as well as customs requesting for provisional assessment of the imported consignments and release of the goods within 48 hours, as the consignments were incurring detention and demurrage charges. 58. Vide letter dated 28.12.2015, DRI, Ludhiana directed customs that it had put on hold the imported consignments on a specific intelligence input that import was being made to come out of the rigors of notification No. 2/2015-Cus (SG) dated 14.9.2015. It was further directed that imported consignments be examined 100% by customs officers with the assistance of local Chartered Engineer and a detailed report be prepared and sent to DRI, Ludhiana. It should be regarding nature of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be having thickness above 1 mm. It was concluded that the material was cold rolled defective steel. He also annexed photographs of the material alongwith the report. A certificate from Perfect Laboratory Services, which admittedly was a Government approved laboratory, was also attached opining the consignments imported to be of cold rolled steel. It was the admitted stand of counsel for the parties that sampling of the material was done between 5.1.2016 and 11.1.2016. Samples were sent to Perfect Laboratory Services on 13.1.2016. In the affidavit of Shailesh M. Gondhalekar filed in the earlier writ petition filed by the petitioner, he retracted the statement taken from him by DRI, Ludhiana at the Port Trust under pressure. He claimed that he was illegally detained by the officers including Santokh Singh, Senior Intelligence Officer and Roopesh Kumar, Intelligence Officer, DRI at Mumbai. He was forced to admit that samples were handed over to him outside the customs area. He was threatened of his removal from the panel of Chartered Engineer. However, the counsel appearing for him in court stated that he is still on the panel. 61. Similar process was followed in other two consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cold rolled or hot rolled. The letter also noticed that the petitioner had been making representations regarding delay in examination of the imported consignments with reference to detention/demurrage charges. It further directed that pending live import consignments be released by resorting to provisional assessment under Section 18 of the 1962 Act, if deemed fit, however, before release representative samples be drawn, especially from the lots, which are suspected to be hot rolled. 65. Nothing from the record was pointed out to show that DRI, Ludhiana was ever informed about the opinion expressed by the Chartered Engineer. Despite clear direction issued by DRI, Ludhiana for release of goods after provisional assessment and drawal of samples, no action was taken by customs. Without there being any material pointed out on record as to why the report of the Chartered Engineer was not considered, vide communication dated 15.1.2016 signed on 20.1.2016, the samples were sent for testing to TCR Engineering Services Pvt. Ltd, stated to be a Government approved laboratory, to test and certify the composition of the material and as to whether it is hot rolled or cold rolled. The petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment should have the data-base to find out what kind of samples could be tested by the laboratory. The facilities available in any laboratory and the kind of infrastructure with reference to technical man-power has to be reviewed periodically. It should not be that permission once granted is valid for all times to come. It is also required to be reviewed that in how many cases, the report given by a particular laboratory has been found to be incorrect/false with or without notice. A lot depends on the opinion expressed by the laboratories. They all have to be above-board and perfect in testing of the samples sent to them. 67. Though on the one hand, the stand sought to be taken was that the report received from TCR Engineering Services Pvt. Ltd. could not be acted upon for the reason that it did not contain the bill of entry number and a request was made for sending revised report, which admittedly was received after 17.2.2016, as it is of that date, but still vide letter dated 28.1.2016, the petitioner was directed to furnish PD bonds and bank guarantee for all three consignments. As claimed by the petitioner, the aforesaid letter was not served upon him, rather, handed ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner. 71. Vide order dated 4.4.2016 passed in the earlier writ petition filed by the petitioner, this court directed to de-stuff the disputed consignment as the petitioner was incurring demurrage and detention charges. The stand of the petitioner was that he was man-handled when went to customs office for de-stuffing. The fact that atmosphere there was not cordial is not in dispute, however, who was at fault cannot be made out. As the stand of the petitioner from the very beginning was that the consignments contained cold rolled steel, this court further directed for drawing fresh samples. 72. As lot of developments had taken place during the pendency of the earlier writ petition, the petitioner sought permission to withdraw that petition with liberty to file fresh one, which was granted vide order dated 9.5.2016. 73. In the present writ petition, after the service of the respondents was complete and the dispute still was as to whether the imported consignments were hot rolled or cold rolled steel sheets/coils, there being two contradictory opinions available with the department, vide order dated 3.6.2016, this court directed to send the samples freshly drawn to Bokar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the narration of facts, it is clear that stand of the DRI and customs had never been that the goods being imported by the petitioner were prohibited goods, which could not be imported. The only suspicion by DRI had that the consignments contained material, which is hot rolled steel and further the issue regarding thickness was also raised. For first consignment, bill of entry was furnished by the petitioner on 4.12.2015. For second and third consignments, bills of entry were furnished on 11.12.2015 and 29.12.2015, respectively. Such an issue could be resolved without any delay. For that purpose, the goods were not required to be detained for months together. It was not disputed that there was no facility available in the Government laboratory for testing as to whether a product is a hot rolled or cold rolled steel. The samples could very well be got tested from a laboratory of repute having testing facility. The report received from Rajendra S. Tambi, Chartered Engineer, along with test certificate from Perfect Laboratories Services Ltd. was ignored altogether without assigning any justifiable reason. TCR Engineering Services Pvt. Ltd., to which the samples were sent for testing ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be taken to safeguard the revenue. In case, still it is decided to detain the consignment, action should be taken to shift the same to a customs warehouse under Section 49 of the 1962 Act. Relevant part thereof is extracted below: I am directed to say that the trade has represented to the Board that the items involved in classification disputes should not be withheld but should be released by resorting to provisional assessment. 2. The matter has been examined by the Board. It may be mentioned that in case of classification disputes, by and large, option is given for provisional clearance/assessment, if the inquiries are going to take time. However, the Board desires that a disputed or offending consignment should also not be held up unless its import/clearance is totally prohibited or banned under any law for the time being in force (E.g. PFA, CITES, Weight Measures Act, etc.) or where prosecution is contemplated. At most, samples should be drawn and consignment should be allowed to be cleared on provisional basis as a matter of right. This will prevent congestion at ports and warehouses. Adequate B.G./security may be taken to safeguard revenue (including pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These instructions were issued after taking note of directions by Hon'ble the Supreme Court. It was noticed therein that despite earlier guidance, it came to the notice of the Board that the same were not being followed by the field staff. The goods are being detained on the grounds other than those mentioned in the instructions. These avoidable detentions result into mounting detention and demurrage charges. In some cases, the department was burdened to bear the same. The Board has taken serious note of it. It desired that the field staff has to take action to avoid any unwarranted delay, which can lead to levy of detention and demurrage charges. In case, for some justifiable reasons in exceptional circumstances, release of consignment is not considered advisable, even on provisional basis, option must be given in writing to the importers/exports to keep the goods in warehouses. It should be made clear that in case the facility is not availed of, any liability on account of detention and demurrage charges shall be at their risk. Non-compliance of the instructions was to be viewed seriously and accountability fixed. Relevant part thereof is extracted below: Kind attentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even on the bill of entry dated 11.12.2015 till such time communication was received by customs dated 14.12.2015 from DRI, Ludhiana. The consignments were directed to be put on hold for 100% examination by DRI/customs. No one could have any exception to the examination of the consignments as it is the lawful duty of the importer to get the needful done and the right of the department under the 1962 Act. However, if the consignments were to be detained for a longer period, opportunity should have been given to the petitioner immediately for de-stuffing. Needful was not done despite request made by the petitioner vide letters dated 22.12.2015 and 28.12.2015. Thereafter, when third consignment was received, the petitioner submitted bill of entry on 29.12.2015. The position remained the same. When even subsequent letter dated 30.12.2015 by the petitioner to DRI, Ludhiana and customs was not acted upon, the petitioner approached this court. Even then no action was taken for de-stuffing. Though DRI directed that consignments be put on hold for 100% examination and one month had passed after first bill of entry was submitted on 4.12.2015, the sampling process started only on 5.1.2016, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en obtaining bank guarantee. The fact that the laboratory did not have the testing facility is evident from the fact that prior to this, in the test report of Perfect Laboratories, the goods were found to be cold rolled sheets/coils and subsequently when the samples were sent for testing to Bokaro Steel Plant, same report was received. Customs thereafter finally assessed the import while accepting the declaration made by the petitioner, however, additional duty of a few thousand rupees was levied on account of thickness of the part of the consignment being above 1 mm. There is no justification available and could not possibly be as to why the officers of the department sent the samples for testing to a laboratory, which did not have requisite facility. The apparent object may be to harass in the garb of testing of samples. Even thereafter, there had been lot of communications inter-se between DRI and customs requiring testing/ re-testing, checking thickness of the goods imported etc. and as a consequence, the goods were not released. DRI, Ludhiana had been communicating with customs even on telephone. It is so noticed in letter dated 4.2.2016 (p. 72). The instructions were to draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instructions issued by the department, but still if required, the petitioners should have been given opportunity to get it de-stuffed immediately, which was not given immediaterly. Responsibility for detention and demurrage charges 88. As far as the goods are concerned, those have been finally assessed by customs and detention certificate has also been issued. The amount of duty has been paid by the petitioner, however, the same are yet to be actually released for the reason that the issue regarding detention and demurrage charges demanded by Port Trust and the Shipping Line is to be settled. There are two aspects as to who shall be responsible to pay those charges and the second issue connected with this that arises for consideration is as to whether in terms of the 2009 Regulations, Port Trust charges can be waived off. 89. This court has already opined that for detention of goods, the petitioner was not at fault. It was the illegal action of customs and DRI, Ludhiana on account of which goods remained in their custody. De-stuffing was not offered and allowed immediately, as a result of which detention and demurrage charges have accumulated, which are much more than ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icers of Custom Department may have justification to verify whether goods were prohibited or were otherwise liable to confiscation or to assess and recover duty, they are not immune from accountability against abuse of power by detaining goods for indefinite period on the ground that they were in the process of checking the value or nature of goods. They are under legal obligation to do so promptly and if by reason of their incompetence they are unable to do so, detention of goods beyond reasonable time cannot be allowed. 91. In Sujana Steels Ltd.'s case (supra), the issue regarding responsibility for payment of demurrage was considered by a Division Bench of Andha Pradesh High Court. While finding that detention of goods by customs authorities was illegal, the burden of payment of demurrage was shifted to customs authorities, as the importer could not be absolved from payment of storage and demurrage charges. The aforesaid order was passed before framing of the 2009 Regulations while rejecting the stand taken by customs that they had power to direct Central Warehousing Corporation not to collect the storage and demurrage charges on the goods detained by customs. 92. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llahabad High Court was regarding demand of demurrage charges from the importer. In that case, the goods were detained by customs for verification. The demand was raised by Customs Cargo Service provider, who had been given licence under the 2009 Regulations. The writ petition was filed seeking a direction to the official respondents to release the goods without demand/payment of demurrage charges for the period the goods were detained by customs. The Division Bench, while referring to a judgment of Hon'ble the Supreme Court in Grand Slam International and others' case (supra) with reference to Section 45 of the 1962 Act opined that custodian has power to levy demurrage charges. As the custodian had been given approval under the 2009 Regulations, it was held to be bound by Regulation 6 of the 2009 Regulations and the court held that service provider was not entitled to charge demurrage charges. Paragraphs 21 to 24 thereof are extracted below: 21. The aforesaid provision indicates that subject to any other law for the time being in force, the Custom cargo service provider shall not charge any rent or demurrage on the goods assessed or detained or confiscated by the Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied] 98. As stated by learned counsel for the petitioner, Special Leave Petition filed against the aforesaid judgment was dismissed as withdrawn leaving the question of law open. 99. Similar view was expressed in Paswara Chemicals Ltd.'s case (supra) by Allahabad High Court. 100. In Mumbai International Airport Pvt. Ltd.'s case (supra), a Division Bench of Mumbai High Court upheld the vires of Regulation 5(2) of the 2009 Regulations. While referring to Section 141 of the 1962 Act, it was opined that prior to the framing of the 2009 Regulations, sub-section (2) was added in Section 141 w.e.f. 10.5.2008 providing that imported and export goods may be received, stored, delivered, dispatched or otherwise handled in a customs area in such manner, as may be prescribed, and the responsibilities of the person engaged in the aforesaid activity shall be such, as may be prescribed. The prescription was by way of framing the 2009 Regulations. 101. It was pointed out at the time of hearing that the 2009 Regulations were placed before both the Houses of Parliament and there was no change proposed. 102. In Sanjeev Woolen Mills' case (supra), Hon'ble the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess in such litigation with the department. 107. In view of the aforesaid enunciation of law by different High Courts including this court, once it is found that detention of goods was not on account of any fault of the petitioner, rather, found to be illegal action on the port of DRI and customs, the petitioner cannot be burdened for detention and demurrage charges and the liability has to be put on customs department, who shall be at liberty to seek waiver thereof. Regarding application of the 2009 Regulations 108. In the previous paras of the judgment, this Court has already been opined that the inordinate delay in testing and release of goods was on account of action/in-action on the part of the officers of customs and DRI, Ludhiana. They have been held liable to bear detention and demurrage charges, the petitioner being not at fault. 109. Another issue raised by learned counsel for the parties was regarding applicability of the 2009 Regulations and the power of customs to waive off demurrage charges demanded by Port Trust by issuing a detention certificate. At the time of ordering release, customs had issued detention certificate to the petitioner. 110. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person engaged in the aforesaid activity shall be such, as may be prescribed. Section 157 of the 1962 Act provides for power to make Regulations, whereas Section 159 of the 1962 Act provides that every Rule or Regulation framed under the 1962 Act is to be placed before each House of Parliament. 113. Section 3(8) of the 1908 Act defines 'major port', to mean any part, which is notified by the Central Government in the official gazette to be a major port. 114. Section 2(d) of the 1963 Act gives 'Collector of Customs' the same meaning as is there in the 1962 Act. It provides for constitution of Board of Trustees. Section 43 of the 1963 Act provides that the Board shall be responsible for any loss, destruction and deterioration of goods, which are in its charge. Section 47A of the 1963 Act provides for constitution of Tariff Authority for Major Ports. The Authority is empowered to notify the scale of rates chargeable including wharfage, storage or demurrage charges for goods. Section 53 thereof provides that the Board has the power to exempt whole or in part any charges payable under the Act for the reasons to be recorded in writing. Section 54 of the 1963 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proper officer under the 1962 Act. Regulation 9 of the 2009 Regulations provides for filing of application for approval as Customs Cargo Service provider and the provisions thereafter provide for approval of such application, suspension or revocation of approval. 117. The 2009 Regulations were framed in view of the recommendations made by Public Accounts Committee (2004-06), as is mentioned in the explanatory memorandum attached to the 2009 Regulations. It provides that the 2009 Regulations have been framed to provide adequate control over the cargo handling entities. The fact that port trust is providing services in a customs area and is custodian of the goods under Section 45 of the 1962 Act, could not be disputed. 118. The 2009 Regulations were notified on 17.3.2009. On 23.3.2009, clarification was issued by the Government of India, Ministry of Finance (Department of Revenue) vide F. No. 450/2008-Cus.IV, indicating the salient features of the newly framed Regulations. It specifically clarified that major ports notified under the 1963 Act, airports notified under the Airports Authority of India Act, 1994 will continue to be authorised to function as custodians under their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be presribed and the responsibilities of the persons engaged in the aforesaid activity shall be such, as may be prescribed. 121. Section 157 of the 1962 Act enables the Board to make Regulations for carrying out the purposes of the Act. In exercise of powers conferred under the aforesaid provision, the 2009 Regulations were framed by the Board. In fact, these Regulations were required to be framed to streamline their working on account of various disputes coming to the court where for detention of goods by customs, demurrage was levied by the Port Trust, namely, Customs Cargo Service provider and the liability thereof was put on customs department. The 2009 Regulations have been given retrospective application. All existing Customs Cargo Service providers are deemed to have been appointed under the 2009 Regulations, however, they are required to comply with the conditions within specified time. Certain duties have been assigned to the service providers. They are also required to furnish bonds and bank guarantee. The ports notified under the 1963 Act or the Central Government or the State Governments or their undertakings have specifically been exempted from furnishing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Port Trust, customs can waive off the demurrage charges. Regarding malafide of respondent No.7-Santokh Singh Senior Intelligence Officer and respondent No. 8-Roopesh Kumar, Intelligence Officer, DRI. 123. The allegations of personal malice have been raised by the petitioner against respondents No. 7 and 8 in paragraphs No. 14 to 17 and 29 of the writ petition. It has been alleged that action of respondents No. 7 and 8 was mala fide. They had visited TCR Engineering Services Pvt. Ltd. to get the report in their favour. The sampling was directed time and again and so the testing. They had been dictating customs. The petitioner was discriminated as the other consignments containing similar material were released. The petitioner had even made representation to the senior officers for transfer of investigation from respondents No. 7 and 8 to some other officer. They had misused their power. Learned counsel further referred to the fact that respondents No. 7 and 8 are inimical to the petitioner, as this court had adversely observed against them while calling them in person in court in the earlier litigation between the parties. There also, the department was found to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of detention charges of Shipping Line 125. The issue regarding payment of detention charges of the Shipping Line is also required to be considered. The stand taken by the petitioner was that since detention of goods even by the department was also not justified, he is not liable to pay any detention charges demanded by the Shipping Line. The stand taken by the petitioner that the goods imported were cold rolled steel was found to be correct finally. On the other hand, the stand taken by the Shipping Line was that transportation of goods by the Shipping Line was in pursuance to a contract entered into between the parties, this court does not have the jurisdiction to go into the issues in writ jurisdiction. In fact, no relief has been claimed against the Shipping Line in the writ petition. The grievance raised is only against DRI and customs. The 2009 Regulations are not applicable on the Shipping Line, as it is not a Customs Cargo Service provider. There is no allegation that there was any connivance of the Shipping Line with the Government or any other agency. It has first charge as lien on the goods transported for payment of freight and other charges. 126. No doubt, the 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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