Payment of terminal handling charges and other charges directly to terminal operators instead of the shipping line- Kerala High Court quashed directions issued by the Ministry of Commerce

Section 151A of the Customs Act gives power to board to issue orders, instructions and directions to officers of customs to implement provisions of the Customs Act. These instructions or circulars are clarificatory in nature, and they are binding on the officers only.

It is a settled principle that “A circular cannot override or detract from the provisions of the statute or notifications issued thereunder”. The Hon’ble Apex Court has been upheld this view in many Judgements.

Under Customs Law a Public Notice is an administrative communication issued by the customs authority to inform trade and the public about procedural matters, operational instructions, or implementation of statutory or policy changes. Therefore, we can say that circular or public notice is not law but to clarify or facilitate trade in practical implementation of law.

Considering the above background, in the year 2020 there is one Public Notice No.05/2020 issued by the Commissioner of Customs, Cochin to allow an option to pay terminal handling charges and other charges directly to terminal operators instead of paying through shipping lines. This measure is taken to mitigate the variances of charges collected and paid to terminal operators by shipping lines

The exact para of the public notice is reproduced as follows:

In order to bring transparency, augment “Ease of Doing Business” and to reduce the logistics costs, it is decided that the importers having AEO status or DPD facility for containerized cargo may be allowed the facility of paying terminal handling charges and other charges of the port directly to the terminal operators instead of paying through shipping lines.

However, commerce ministry has misinterpreted the above public notice and issued directions to shipping lines not to collect any charges from shipper/recipient of goods over and above the terminal handling charges which Indian port has prescribed in accordance with Major Port Trust Act, 1963. These communications were challenged by the Container Shipping Line Association (Petitioner) in the Court.

The Hon’ble High Court of Kerala The Container Shipping Lines Association (India), CMA CGM Agencires (India) Pvt. Ltd., MSC Agency India Pvt. Ltd. Versus Union Of India, Commissioner Of Customs, Cochin, Sepcial Secretary Logistics Department Of Commerce, Ministry Of Commerce And Industry New Delhi. - 2025 (3) TMI 1151 - KERALA HIGH COURT held that communications/ directions issued were to be legally flawed and contrary to Public Notice based on below analysis:

• In the absence of regulatory power, traceable to the provisions of any statute or contract, Court is of the view that such a power, that has the potential to interfere with the freedom of contract between parties, cannot be inferred from the terms of a Public Notice.'

• The Public Notice was not intended to alter or interfere with existing contracts but merely offered an option to importers regarding terminal handling charges.

• The Communications interpreting the public notice in a manner that interferes with private contracts is contrary and void and infringes the fundamental rights.

To sum up, the Kerala High Court clarified that a Public Notice, being an administrative tool, cannot override legislation or alter private contracts unless specifically authorized by law. The purpose of Public Notice No.05/2020 was to give importers an additional direct payment choice for terminal handling charges, not to restrict or modify existing contractual terms or fundamental rights. As such, interpreting the notice as granting regulatory power or curbing contract freedom lacks legal foundation and cannot be upheld.

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