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of <h1>Port Trust can levy storage charges on confiscated containers but not ground rent on shipping agents</h1> Gujarat HC dismissed petitioner's appeal challenging container storage charges levied by Kandala Port Trust. The court held that confiscated containers ... Levying Container Storage Charges - ground rent - Storage of confiscated containers to treated as Goods or not - declaration of Custodian at Kandala Port Trust issued from the office of the Commissioner of Customs, the Custom House, Kandala - Section 45(1) of the Customs Act, 1962 - HELD THAT:- The contention of the learned counsel for the petitioner that the Kandala Port Trust could not have charged ground rent from the petitioner as the containers could not have been confiscated by the Customs authorities, as they did not fall within the meaning of ‘goods’, is found to be misconceived. The reference to the decision of the Apex Court in Chairman, Board of Trustees, Cochin Port Trust [2020 (8) TMI 300 - SUPREME COURT] is found to be misplaced. No ground rent can be levied on the petitioner shipping agent, once the Kandala Port Trust became the custodian of the goods with the confiscation by the Customs department. There are inherent fallacy in the arguments of the learned counsel for the petitioner, inasmuch as, the said notification only decides the liability of the Kandala Port Trust for being custodian of the Custom department and Clause 18 of the said notification can only be interpreted to mean that the Kandala Port Trust would not charge any rent/ demurrage on the goods/containers detained from the Customs department. There are no error in the order passed by the learned single Judge in holding that the petitioner has failed to make out a case that there was an error on the part of the Kandala Port Trust in levying container storage charges from the petitioner. Appeal disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether a Port Trust can validly levy container storage charges/ground rent on a shipping agent where imported goods and containers have been confiscated by Customs under Section 111(d) of the Customs Act, 1962. 2. Whether the Supreme Court's holding (that containers do not fall within the meaning of 'goods' for confiscation) precludes a Port Trust from charging storage/ground rent where Customs has purportedly confiscated containers along with goods. 3. Whether a notification declaring the Port Trust to be custodian under Section 45(1) of the Customs Act (and containing a clause that the custodian shall not charge rent/demurrage on goods detained by Customs) bars the Port Trust from levying ground rent/container storage charges on containers and/or goods detained/confiscated by Customs. 4. Temporal scope of liability for container storage charges/ground rent - whether charges are recoverable from date of arrival up to date of de-stuffing/release when de-stuffing occurs during pendency of proceedings, and whether interim bills must be adjusted to reflect subsequent events. 5. Relevance of failure by the shipping agent to challenge the Customs confiscation orders before the appropriate forum in assessing entitlement to port charges. ISSUE-WISE DETAILED ANALYSIS - 1. Validity of Port Trust levying container storage charges where Customs confiscated goods and containers under Section 111(d) Legal framework: Section 111(d) of the Customs Act permits confiscation of goods in certain circumstances; Port Trusts levy container storage charges/ground rent for use/occupation of port premises. Precedent Treatment: The Court considered, but declined to apply wholesale, a Supreme Court decision addressing whether containers constitute 'goods' for the purpose of confiscation. Interpretation and reasoning: The Court proceeded on the factual premise that written confiscation orders (exercising Section 111(d) powers) existed in respect of both goods and containers and that such confiscated items remained physically within Port premises. The Port Trust's charging of ground rent was analyzed as a charge for occupation of Port property where confiscated items physically lay, rather than an independent penalty or claim inconsistent with the Customs confiscation. The Court expressly disclaimed a need to re-examine the legal validity of the Customs confiscation itself; the issue before it was limited to the lawfulness of the Port Trust's levy in light of the confiscation. Ratio vs. Obiter: Ratio - where Customs has issued written confiscation orders resulting in goods/containers remaining on Port premises, the Port Trust may demand storage/ground rent for the period of physical occupation unless an applicable legal bar exists. Obiter - any commentary on the broader validity of Customs' power to confiscate containers was not decided. Conclusions: The levy by the Port Trust of container storage charges against the shipping agent was not found to be erroneous on the ground that Customs had confiscated goods and containers; entitlement to demand such charges arose from the continued presence of confiscated property within Port area. ISSUE-WISE DETAILED ANALYSIS - 2. Applicability of the Supreme Court's holding that containers are not 'goods' and effect on Port charges Legal framework: Interpretation of 'goods' for purposes of confiscation and consequences of such interpretation for ancillary charges by Port authorities. Precedent Treatment: The Court considered the Apex Court's decision that containers do not fall within 'goods' but held that the precedent was inapplicable on the facts. Interpretation and reasoning: The Court found the reliance misplaced because the factual matrix showed that Customs had, by written orders, confiscated containers along with explosive/war material and had imposed redemption fines/penalties and options for redemption. The present controversy therefore turned on the effect of those specific confiscation orders and subsequent events (including de-stuffing/release), not on a generalized abstract question whether containers in all circumstances are 'goods.' The Court declined to traverse or overrule the Supreme Court's ratio, instead distinguishing that authority on the peculiar facts (seizure of explosive/war material; express confiscation of containers; penalties and redemption regime applied). Ratio vs. Obiter: Ratio - where Customs exercises its confiscation power in writing to include containers, the Port Trust's subsequent charging for storage cannot be negated by an inapposite general rule about the classification of containers as 'goods.' Obiter - no general pronouncement altering the Supreme Court's position was made. Conclusions: The Supreme Court precedent was distinguished on facts; it did not assist the shipping agent in negating the Port Trust's claim for storage/ground rent in the present circumstances. ISSUE-WISE DETAILED ANALYSIS - 3. Effect of custodian notification (Section 45(1)) and Clause 18 (no rent/demurrage on goods detained by Customs) on Port's right to charge Legal framework: Section 45(1) empowers appointment of custodians for goods detained by Customs; contractual/administrative notifications may regulate liabilities of custodian authorities. Precedent Treatment: The Court examined the notification's language and scope but did not rely on external precedents to construe Clause 18. Interpretation and reasoning: The Court construed Clause 18 as limiting the Port Trust's right to charge rent/demurrage on goods/containers formally detained and held by the Customs Department (i.e., indicating the Port Trust's non-liability to charge for goods held on behalf of Customs). However, the notification was interpreted as addressing the Port Trust's liability as custodian - it does not operate to absolve a shipping agent of obligations to pay storage/ground rent where the containers and goods remained lying in Port area under circumstances that permitted the Port Trust to levy such charges. In short, Clause 18 was not read as an absolute bar on the Port Trust's charging power in all circumstances; its scope relates to custodian liability vis-à-vis Customs rather than a third-party shipping agent's obligations. Ratio vs. Obiter: Ratio - Clause 18 of the custodian notification limits the Port Trust's liability as custodian to Customs but does not automatically extinguish the Port Trust's entitlement to charge storage/ground rent to the shipping agent for occupation of Port premises by confiscated items. Obiter - finer distinctions about when a custodian notification would operate to bar any charge in every factual permutation were not decided. Conclusions: The notification did not preclude the Port Trust from levying container storage charges against the shipping agent in the facts before the Court. ISSUE-WISE DETAILED ANALYSIS - 4. Period of liability for storage charges and effect of de-stuffing/release during pendency (modification of interim bills) Legal framework: Port authorities may claim ground rent/storage for period of occupation; subsequent events affecting physical custody can alter quantum of charges already levied. Precedent Treatment: Court relied on documentary timeline and subsequent communications rather than authority. Interpretation and reasoning: Documentary evidence produced during the appeal showed Customs-supervised de-stuffing of containers occurred on 24-25 January 2007 and that empty containers were delivered to the line agent thereafter. Arrival date was 30.12.2004. The Court treated the Port Trust as entitled to demand charges from arrival until de-stuffing dates. Recognizing that the writ Court had dealt with interim bills prepared while confiscation was extant, the Court directed modification of bills to reflect events which occurred during the appeal (i.e., de-stuffing/release), and ordered the Port Trust to issue revised bills within two weeks and the shipping agent to pay within the time provided, failing which appropriate lawful steps could be taken. Ratio vs. Obiter: Ratio - where events during suit/appeal (e.g., de-stuffing/release) affect the period of occupation, interim bills must be recalculated to reflect actual period of liability; Port Trust entitled to charge from arrival until de-stuffing/release. Obiter - procedural modalities for calculation beyond these facts not exhaustively delineated. Conclusions: The bills challenged as interim had to be modified to cover the period up to de-stuffing (24-25 January 2007); Port Trust required to furnish revised bills and shipping agent required to make payment as per revised bills. ISSUE-WISE DETAILED ANALYSIS - 5. Effect of shipping agent's failure to challenge Customs confiscation orders before appropriate forum Legal framework: Availability of remedies and duty to challenge administrative/Customs orders through prescribed fora to preserve rights. Precedent Treatment: Court noted absence of challenge to confiscation orders and treated that fact as relevant to the relief sought in writ petition. Interpretation and reasoning: The Court observed that penalties/redemption fines had been imposed by Customs and there was no record that the shipping agent had challenged those confiscation orders before the appropriate forum. This omission undermined the shipping agent's contention that the Port Trust's charging was erroneous because, insofar as the validity of confiscation was central to the relief, the proper course was to contest the confiscation. The Court therefore refused to entertain an attack on the Port Trust's levy grounded on an unchallenged confiscation in which the agent had not availed available remedies. Ratio vs. Obiter: Ratio - failure to challenge Customs confiscation orders before appropriate forum is material and weakens reliance on the invalidity of such orders to resist port charges; relief disputing effects of confiscation is not appropriately entertained when the confiscation itself remains unchallenged. Obiter - the extent to which such failure is decisive in other fact patterns was not explored. Conclusions: The shipping agent's failure to contest the Customs orders was a factor in rejecting the challenge to the Port Trust's levy. DISPOSITIONAL CONCLUSION (interconnected with above issues) The Court held that there was no error in the Single Judge's conclusion that the Port Trust lawfully levied container storage charges in the facts before it; the Supreme Court authority on containers-as-goods was distinguished; the custodian notification did not bar the Port Trust's levy on the shipping agent; interim bills must be revised to account for de-stuffing/release dates (arrival 30.12.2004 to de-stuffing 24-25.01.2007); the Port Trust to issue revised bills within two weeks and the shipping agent to pay as per the revised bills, failing which the Port Trust may take lawful action.
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