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TMI Blog2019 (4) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... deploys manpower and creates infrastructure. The fee or consideration payable are determined by the duration or period for which warehousing is necessary, the kind of storage provided including the safety and security to the goods. Unless the rules or relevant policy clearly mandate waiver from such services, courts cannot issue directions to such service providers. In this case, CELEBI relied on Clause 10.1.10 (b) to say demurrage waiver was precluded. In so saying, CELEBI was consistent with its policy. Petition dismissed - the petitioner (ILFC) shall pay the costs of these proceedings, to CELEBI, quantified at ₹ 3,00,000/- within two weeks. - W.P.(C) No.6490/2018 - - - Dated:- 27-3-2019 - MR. S. RAVINDRA BHAT MR. PRATEEK JALAN JJ. Petitioner Through: Sh. Neeraj Sharma, Sh. Alok Tiwari, Ms. Dakshayani Saxena, Ms. Shubhangi Mehrish and Ms. Anjali Menghani, Advocates. Respondents Through: Sh. Pawan Pathak, for Sh. Vivek Goyal, CGSC, for UOI. Sh. Amit Bansal, Advocate, for Respondent No.2. Sh. Rakesh Tiku, Sr. Advocate with Sh. Sarun Jain, Advocate, for Respondent No.3. S. RAVINDRA BHAT, JJ. 1. The petitioner in this proceeding (International Lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t open. The order dated 28.07.2014 further stated that: It is also pertinent to note that since the passing of the order dated 11.02.2014 the Commissioner of Customs had also delivered his adjudication order on 25.06.2014 whereby the total demand of ₹ 17,09,48.420/- has been raised on account of custom duty, penalty, redemption filed and interest calculated as of today. Furthermore, CELEBI who has been impleaded as Respondent no. 6 has claimed a demurrage of ₹ 6.5 crores as of today. Mr. Sethi, Learned Senior Counsel appearing on behalf of the petitioner/applicant, submits that he may be permitted to release aircraft engine for re-export on the petitioners paying the entire amount of ₹ 17,09,48,420/- as well as the demurrage charges to CELEBI but without prejudice to the right to contest the same before appropriate fora. For this purpose, Mr. Sethi submitted that the bank guarantee of ₹ 8 crores may be encashed by- the custom authorities and the remaining amount out of ₹ 17,09,48A20/- after giving cash deposit of ₹ 1 crore shall be paid by Mr. Sethi's client with the Commissioner of Customs (Import General) without prejudice to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and argued that since the reexport (of the aircraft engine) after import and its utilization (towards safe return out of the country) and not for any other purpose, there was. No occasion for its commercial use. The customs authorities' position was that the drawback was impermissible on account of the deficiency memo which could not be adequately satisfied. It was submitted that the deficiency memo pertains to the requirement of the concerned entity [which seeks export] filing a declaration of Guaranteed Remittance document. It was submitted that in the peculiar facts and circumstances of this case, the question of remittance did not arise. 6. While allowing the third writ petition, by its judgment (dated 10-01-2019), this court observed as follows: 8. It is evident from the above discussion that the petitioner was compelled by the unfolding of the circumstances-which perhaps started with the unfortunate event of leasing the aircrafts in the first instance to M/s. Kingfisher Airlines, and later the inability to meet the Revenue's demands. The first setback was that the petitioner's aircraft was detained, and subsequently seizure of the aircraft engine by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auling and/or repairs abroad subject to their reimport into India . The other condition was goods imported free of cost on re-export basis. The amendment by Regulation 4 generally empowered RBI subject to the terms and conditions stipulated by it to promote the export. 13. In case the Revenue's stand were to be accepted, the petitioner would be bound to file a Guaranteed Remittance Declaration, which in turn would imply that it would remit back the amounts. The declaration is to ensure that the exporter [i.e. Indian resident by Regulation 7 of the said regulations] would receive the concerned amount. The requirement of a waiver, in the alternative, would arise only if the principal requirement of the GR declaration is at all attracted. In this case, it is undisputed that the exporter i.e. owner and the person entitled to the engine were one and the same i.e. the petitioner. Having regard to these circumstances, the necessity for blind adherence to a declaration and further necessity for waiver, in the opinion of the Court was entirely uncalled for. There is sufficient indication in the Regulations-i.e. the manner of definition of export and even the phraseology of Regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal. It is pointed out that the confiscation (of the craft) and penalty directed by the customs authorities was set aside; this court directed refund of penalty amounts deposited (previously as a condition for the re-export of the craft) along with interest. Furthermore, by the judgment in WP 6344/2018, even duty drawback was allowed to ILFC. 8. Counsel for ILFC relies on the Powers Relating to Remission/Waiver of demurrage charges (Cargo) , 1999 alluded to in the order of 28-07-2014 and argues that the restriction from sanctioning (i.e. allowing) remission of demurrage charges applies only when penalty or fine is imposed, by reason of Para 10.10 (a). It is submitted that since the penalty was ultimately held to be unjustly levied, CELEBI cannot, legitimately refuse waiver or remission of demurrage charges. It was emphasized that ILFC had to approach this court, at every stage, despite CESTAT s orders and the insistence by CELEBI- that it is entitled to retain the amounts for the period the aircraft engine was in its custody as remuneration or consideration, is plainly unreasonable. It is submitted that the real culprit in this case is the revenue, i.e. the customs and -earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. vs. Union of India Ors.2014 (302) ELT 321 , referred to in the order dated 28-07-2014, especially the following observations: 35. The AAI has framed regulations in exercise of powers conferred under the AAI Act. The regulations relied upon by the respondent CELEBI as applicable to the present case are the Airports Authority of India (Storage and Processing of Cargo, Courier and Express Goods and Postal Mail) Regulations, 2003 (hereinafter referred to as, 'the Regulation'). As per the said Regulation, the Airport Authority fixes the charges for processing of the Cargo and also formulates Policy for Waiver of such demurrage charges. The relevant portion of the policy relating to waiver of demurrage charges (Cargo) lays down as under: 10.1 GENERAL 10.1.1 Subject to such policy, rules and procedures as may be described the authorities specified hereunder are authorized to sanction, in consultation with the Finance and Accounts Department, remission/waiver of demurrage charges regarding Cargo Operation. 10.1.2 .... ....... 10.1.10 Demurrage charges shall not be waived where: (a) Any fine/penalty/personal penalty/warning is imposed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 41. The custom authorities it appears issues certificate for waiver in every type of case irrespective of the fact whether the importer is at fault or not. The custom authorities have issued certificate for waiver of the demurrage charges in both the cases at hand. In one case the release of the goods are on provisional basis pending adjudication and in the other there is imposition of both fine and penalty. These are not cases where the importer has been held to be not at fault. In one case the Importer has been found to be at fault and penalty and fine imposed. The importer has accepted the said order. In the other case adjudication proceedings are pending and are yet to be finalised. 42. There is an overlap in the Policy for Waiver framed by AAI and the HCCAR. Though initially there appears to be a conflict between the policy and the regulations but on closer scrutiny it is apparent that they can both be harmoniously construed and coexist. 43. The policy makes a distinction between the cases where the importer is innocent but his imported goods are seized and detained pending an enquiry and adjudication and the cases where the importers have indulged in mis-dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for the benefit of the Policy, the Superdginama would automatically become applicable. 48. Where the importer is clearly at fault and fine, penalty, personal penalty and/or warning is imposed by the customs authorities, making the regulations applicable and granting the benefits of waiver would be clearly unreasonable and would grant benefit of waiver, with the person who has provided space suffering. This was and is not the intention and purpose behind HCCAR. Regulation recognizes and accepts that any other law in force is not abrogated or repealed. The existing provision applicable stands protected. 10. CELEBI, which resists the claim in the present writ petition, urges that even the previous order of this court, i.e. dated 28th July, 2014 requires it to consider the issue of waiver and grant it, in terms of the existing policy. Counsel emphasizes that Trip Communication (supra) relied on by ILFC and cited in the said previous order, was entirely premised upon the fact situation in Para 10.12.1 (a) i.e where penalty or fine or personal penalty is imposed. In that case, the penalty was not justified; thus CELEBI s position that the importer could not claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ILFC, which claims that its action in importing the aircraft engine and exporting it was out of compulsion, even necessity, to safeguard its interests as property owner. The revenue authorities acted unreasonably in detaining the engine; the CESTAT s order vindicated its stand. 14. International Airports Authority v Grand Slam International 1995 (3) SCC 151 is the leading judgment on the rights of bailees and warehousemen, such as CELEBI who are statutorily enjoined to provide services in connection with storage of goods and articles. In that case, the Supreme Court considered Section 45 of the Customs Act and held as follows and analyzed the provisions of the International Airport Authority Act (the predecessor to the Airports Authority Act) and held that: 41. None of these provisions entitles the Collector of Customs to debar the collection of demurrage for the storage of imported goods. They do not entitle him to impose conditions upon the proprietors of ports or airports before they can be approved as Customs ports or Customs airports. Section 45 provides that all imported goods imported in a customs area must remain in the custody of the person who has been approve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1961, would be entitled to charge demurrages for the imported goods in its custody and make the importer or consignee liable for the same even for periods during which he/it was unable to clear the goods from the customs area, due to fault on the part of the Customs Authorities or of other authorities who might have issued detention certificates owning such fault. xxx xxxxxx 69. Therefore, my answer to the question considered by me is in the negative i.e. the Collector of Customs empowered under Sub-section (1) of Section 45 of the Customs Act, 1962 to approve persons to be custodians of imported goods in customs areas until they are cleared as provided for therein, while approving the International Airports Authority of India to be the custodian of such imported goods in the customs area of Indira Gandhi International Airport, New Delhi and Central Warehousing Corporation to be the custodians of such imported goods received at the customs area the Container Freight Station, CWC Complex, Pragati Maidan, New Delhi, by issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds from payment of the same........ All these decisions were cited in the recent ruling in Mumbai Port Trust vs. Shri Lakshmi Steels Ors.(2018) 14 SCC 317 and the principles applied by the Supreme Court. 17. In the opinion of this court the judgments cited previously instruct the courts to not grant a direction stereotypically, but rather consider the circumstances under which the claim for waiver of demurrage can be reviewed under Article 226 of the Constitution. The starting point of courts enquiry is therefore, not to assume that a claim for refund per se exists as a matter of law, but rather, to contextually, determine, if the refusal to grant demurrage waiver is arbitrary or unreasonable. 18. It is important to recollect that in the present case, the penalty and confiscation ordered by the customs lower authorities was no doubt set aside by the CESTAT. However, ILFC s argument about the illegality of detention (of the aircraft engine) was rejected. This is clear from the CESTAT s finding that This is a revenue recovery action permissible under law and not a seizure in terms of Customs Act which is for contemplated punitive action against the goods/im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention was justified. In these circumstances, CELEBI, in the opinion of this court acted within its rights to refuse and turn down the request for demurrage waiver and consequent refund of monies deposited (Rs.5,50,68,516/- [Rupees Five Crore Fifty Lakhs Sixty Eight Thousand Five Hundred and Sixteen Only]). 21. Waiver of demurrage charges cannot be issued for the asking; therefore a court in judicial review cannot issue a direction without considering the reasons if they are apparent, that underlie rejection of a request for exemption or waiver. After all, warehousing and at the behest of the law (the Customs Act) is a commercial activity, for which the warehouseman or service provider (like CELEBI) invests with its resources, deploys manpower and creates infrastructure. The fee or consideration payable are determined by the duration or period for which warehousing is necessary, the kind of storage provided including the safety and security to the goods. Unless the rules or relevant policy clearly mandate waiver from such services, courts cannot issue directions to such service providers. In this case, CELEBI relied on Clause 10.1.10 (b) to say demurrage waiver was preclu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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