Authorised carrier registration revocation overturned for compliance with SCMTR 2018 Regulation 10 requirements

CESTAT Ahmedabad allowed the appeal against revocation of authorised carrier registration under SCMTR 2018. The appellant was charged with violating Regulation 10(1)(l) and 10(1)(m) for allegedly not complying with waiver letter regarding rent/demurrage charges during SIIB detention period. CESTAT found the appellant acted per SCMTR 2018 regulations and did not violate the provisions. The tribunal held that SIIB's direction not to charge rent/demurrage till customs clearance was improper given additional delays beyond detention period. Both revocation of registration and penalty were set aside as unjustified.

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The core legal questions considered by the Tribunal in this appeal are:

1. Whether the appellant violated Regulation 10(1)(l) and 10(1)(m) of the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMTR) by demanding container detention charges contrary to the waiver directions issued by the Customs authorities.

2. Whether the issuance of the show cause notice and subsequent revocation of the appellant's authorised carrier registration under Regulations 11 and 12 of SCMTR, 2018 was justified.

3. The scope and applicability of the waiver of container detention charges under Regulation 10(1)(l), particularly the extent of the authorised carrier's discretion to demand charges beyond the 60-day period.

4. The procedural propriety and legal validity of the departmental actions, including reliance on a complaint by a warehousing unit not being the importer.

Issue-wise Detailed Analysis

Issue 1: Violation of Regulation 10(1)(l) and 10(1)(m) of SCMTR, 2018

Legal Framework and Precedents: Regulation 10(1)(l) mandates that an authorised carrier shall not demand container detention charges for containers laden with goods detained by Customs for verification under Section 46 or 50 of the Customs Act if the entries are found correct. The proviso permits the carrier to demand charges after expiry of 60 days. Regulation 10(1)(m) requires compliance with all provisions of the Act and related rules and regulations.

Relevant judicial precedents cited include two Madras High Court decisions: one holding that demurrage and detention charges waiver is permissible only up to 60 days under the proviso to Regulation 10(1)(i) of SCMTR, 2018; and another ruling goods cannot be released without payment or adjudication of detention charges.

Court's Interpretation and Reasoning: The Tribunal examined the timeline and detention periods of four specific containers subject to Customs hold and scrutiny. It found that the Customs authorities detained the containers for periods ranging from 14 to 26 days, after which a No Objection Certificate (NOC) was issued. However, there was an additional delay of 43 to 49 days from issuance of NOC to transfer permission.

The Tribunal noted that the letter dated 30.09.2024 from SIIB, Mundra Customs, directing waiver of detention charges until Customs clearance, was addressed to a third party (Saurashtra CFS) and merely copied to the appellant, thus lacking direct enforceability. Further, the appellant initially agreed to waive detention charges for the SIIB hold period but not beyond, consistent with Regulation 10(1)(l).

Key Evidence and Findings: The detention and clearance timeline table demonstrated that the appellant waived charges for the Customs detention period but sought charges for the extended delay post-NOC. The appellant's communications showed some inconsistency but generally adhered to the 60-day waiver limit.

Application of Law to Facts: The Tribunal held that the appellant did not violate Regulation 10(1)(l) as they waived charges for the Customs detention period and retained the discretion to demand charges beyond 60 days, as explicitly allowed by the proviso. The direction of SIIB to waive charges until Customs clearance was found to be improper and not binding on the appellant.

Treatment of Competing Arguments: The Department argued that the appellant's responses were vague and contradictory, and that SCMTR, 2018 was fully in force since 2018. The appellant contended that the waiver was limited to the SIIB detention period and that the complaint triggering the proceedings was baseless. The Tribunal found the appellant's position substantially compliant with the Regulations and rejected the Department's contention that the appellant violated the provisions.

Conclusion: No violation of Regulation 10(1)(l) and 10(1)(m) was established against the appellant.

Issue 2: Justification for Revocation of Authorised Carrier Registration and Imposition of Penalty

Legal Framework: Regulations 11 and 12 of SCMTR, 2018 empower Customs authorities to revoke authorised carrier registration for violations, and Regulation 13 permits imposition of penalties for contraventions.

Court's Reasoning: The adjudicating authority revoked the appellant's registration and imposed penalty based on an inquiry report that found violations of SCMTR, 2018, particularly failure to waive detention charges as directed by SIIB. The Tribunal scrutinized the inquiry process and found the complaint triggering the inquiry was filed by a warehousing unit not the importer, raising procedural and factual issues.

Findings: The Tribunal observed that the appellant had responded to the inquiry and that the evidence did not conclusively show violation of the Regulations. The appellant's conduct was found to be in line with the statutory provisions, and the directions relied upon by the Department were improper.

Application: Given the absence of proven violation, the Tribunal held that the revocation and penalty were unjustified.

Conclusion: The impugned order revoking registration and imposing penalty was set aside.

Issue 3: Scope of Waiver of Detention Charges and Discretion of Authorised Carrier

Legal Framework: Regulation 10(1)(l) provides for mandatory waiver of detention charges during Customs detention if entries are correct, with a proviso allowing carriers discretion to demand charges beyond 60 days.

Court's Interpretation: The Tribunal emphasized that the proviso grants the authorised carrier discretion to waive or demand charges after 60 days, which is a commercial/business decision. It cautioned the Department against issuing directions that infringe this discretion.

Findings: The appellant exercised this discretion by waiving charges during the Customs detention period but not for the extended delay post-NOC. The Tribunal noted that the appellant's responses were sometimes unclear, but the core principle of discretionary waiver after 60 days was respected.

Conclusion: The discretion under the proviso is a key principle, and the Department cannot override it by administrative directions.

Issue 4: Procedural Validity of Departmental Actions

Analysis: The complaint initiating the inquiry was filed by a warehousing unit, not the importer, raising questions about locus standi and procedural propriety. The Tribunal noted this as a factor undermining the Department's case.

Conclusion: The procedural irregularity contributed to setting aside the impugned order.

Significant Holdings

"Regulation 10(1)(l) clearly stipulates that an authorised carrier shall not demand any container detention charges for the container laden with goods detained by customs for the purpose of verifying the entries made under Section 46 or 50 of the Act, if the entries are found to be correct. Proviso to this Regulation further mentions that the authorized carrier may demand, container detention charges for the period, commencing after expiry of sixty days."

"The direction dated 30.09.2024 of SIIB for not charging any rent or demurrage till the date of customs clearance is improper."

"The findings of the Learned Adjudicating authority in the impugned order are not correct as the appellant seems to have acted as per the SCMTR, 2018 Regulations."

"The Department should also note that proviso to Regulation 10(1)(l) gives discretion to authorized carrier to demand or not to demand charges after 60 days and therefore, the Department should not issue any directions/order in derogation of above discretion."

"We therefore set aside the impugned order dated 25.03.2025 and allow appeal."

Core principles established include:

• Mandatory waiver of detention charges during Customs detention if entries are correct.
• Discretion vested in authorised carriers to demand or waive detention charges beyond 60 days.
• Administrative directions cannot override the statutory discretion granted to authorised carriers.
• Procedural propriety and locus of complainants are material to the validity of departmental actions.

Final determinations:

• The appellant did not violate Regulation 10(1)(l) and 10(1)(m) of SCMTR, 2018.
• The revocation of authorised carrier registration and penalty imposed were unjustified and are set aside.
• The appellant's appeal is allowed, and the miscellaneous application for stay is disposed of accordingly.

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