TaxTMI 
TaxTMI 
2010 (11) TMI 905
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....xport at notified places only. Custodians are appointed under Section 45 of the Customs Act for safe storage of goods till they are cleared for home consumption or for warehousing. Chapter III of the Customs Act (Sections 7 to 10) deals with appointment of Customs ports, airports, warehousing stations, etc. Section 7 of the Customs Act empowers the Central Board of Excise and Customs (hereinafter referred to as the Board) to appoint Customs Ports, Customs Airports, places for Inland Container Depots, Coastal Ports, etc. Section 7(aa) of the Customs Act authorises the Board to appoint Inland Container Depots (ICD) for unloading of imported goods and loading of export goods. Under these provisions, ICDs have been appointed at various places. Under sub-section (b), the Board is empowered to appoint places which shall be land customs stations, for the clearances of goods imported or to be exported and under sub-section (c), the routes by which alone goods or any class of goods specified in the notification may pass by land or inland water into or out of India or to or from any land customs station from or to any land frontier. 3. Section 8 of the Customs Act authorises the Comm....
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.... report of the goods on board, in a report called IGM, in accordance with Section 30 of the Customs Act, 1962. The primary liability to file the IGM is on the person in charge of the vessel or aircraft in accordance with the form provided under the Import-Manifest (Vessels) Regulations, 1971. The import manifest of the vessel is required to be delivered to the Customs Officer in terms of Section 30 of the Customs Act. The shipping lines/steamer agent has to declare in the IGM, general declaration, cargo declaration, ship stores declaration, etc., of particulars of goods to be unloaded for the cargo. As the declaration has legal consequences which bind the carrier, any misdeclaration will attract penal provisions of Sections 111(1) and 112. Section 31 of the Customs Act specifies that only those goods as are mentioned in the import manifest would be unloaded and at the place which is approved for that purpose. 5. Chapter VII of the Customs Act (Sections 44 to 51) contains provisions regarding clearance of imported goods and export goods. 6. Under Section 45 of the Customs Act, it is stated that all imported goods unloaded in a customs area shall remain in the custody....
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....and stacked therein after verification by the Customs Authorities. In respect of import consignments, the CFS allow destuffing of goods and after the formalities of assessment and payment of customs duty are made, the Customs give out-of-charge orders. The custodian releases the goods from the CFS by issuing the gate pass. As provided under Section 46, goods can be cleared by the importer by filing a bill of entry for home consumption or warehousing, pursuant to which, clearance of goods is granted under Section 47 by the Customs Officer. 9. Thus it is clear that unloading of the imported goods can take place only after the Customs Officer permitting entry and after Import Manifest had been delivered. With the obligation on the part of the Customs Officer to consider as to whether the goods are imported or attempted to be imported or brought within the Indian Customs water for the purpose of being imported in accordance with the provisions of the Customs Act, unloading of only those goods are permitted, as are mentioned in the Import Manifest. 10. Section 141 of the Customs Act states that all conveyances and goods in the customs area, for the purpose of enforcing t....
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....rates from time to time in respect of labour rendered idle or not properly utilised and also for working more than one hook simultaneously at the hatch. The steamer agents challenged the amendments that idle labour charges cannot be recovered from the steamer agents. 14. In considering the said issue on the liability of the steamer agents, the Supreme Court held that the Board is not an agent of the consignee for the purpose of taking delivery of the goods, because the delivery to the importer-consignee is to be on the presentation of the bill of lading. Sub-section (3) of Section 39 of the Major Port Trusts Act empowers the Board to take charge of the goods for the purpose of performing certain services, which do not include taking delivery of the goods from the ship owner. The Supreme Court pointed out : "38. ... It is true that on the Board's taking charge of the goods and giving a receipt about it to the ship owner, the master or the owner of the vessel is absolved from liability for any loss or damage which may occur to the goods which had been landed, but this provision by itself does not suffice to convert the receiving of the goods by the Board after they had bee....
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....g of the goods on the quay and their receipt by the Board. The Supreme Court further pointed out to the decision reported in [1895] 2 Q.B.D. 294, (Peterson v. Freebody & Co.) that the ship owner must put the goods in such a position that the consignee can take delivery of them. It is useful here to repeat and extract the judgment of Lord Esher as quoted in the decision of the Apex Court, which clearly touch on where the ship owner's responsibility ends : "Wherever the delivery is to be, the ship-owner, on the one hand, must give delivery. If he merely puts the goods on the rail of his ship, he does not give delivery : that is not enough. If, on the other hand, the consignee merely stands on the other ship, or on the barge or lighter, or on the quay, and does nothing, he does not take delivery. The ship-owner has performed the principal part of his obligation when he has put the goods over the rail of his ship; but I think he must do something more - he must put the goods in such a position that the consignee can take delivery of them. He must put them so far over the side as that the consignee can begin to act upon them; but the moment the goods are put within the reach of the c....
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....ction of the imported goods from their custody and possession. Since the importer had agreed to pay redemption fine as directed by the Tribunal, the only question therein was the availability of the goods returned to the importer and when the goods, either in whole or in part, are not traceable, the goods, being in the custody of the Customs Department, any loss or damage, hence, has to be met only by the Customs Department. 18. The substance of the decisions of the Apex Court referred to above is that while the unloading charges are to be borne only by the steamer agent and that in the process of unloading, the Port Trust is the bailee and the steamer agent, the bailer, the moment the goods are unloaded, the liability to pay the storage and demurrage charges rested on the consignee. 19. It is no doubt true that in the decision reported in (2008) 4 SCC 87 = 2008 (224) E.L.T. 9 (S.C.) (Forbes Forbes Campbell & Co. Ltd. v. Board of Trustees, Port of Bombay), the Apex Court doubted the correctness of the decision reported in (1997) 10 SCC 285 = 1996 (82) E.L.T. 174 (S.C.) (Trustees of Port of Madras v. K.P.V. Sheik Mohd. Rowther & Co. Pvt. Ltd. and Another), wherein, t....
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....l consequence which binds the carrier, any misdeclaration attracts penal provision under Section 111(f) and Section 112 of the Customs Act. Amendment to the IGM particulars are allowed only on a written request of the Assistant Commissioner or Deputy Commissioner (Imports). Additional entries in the IGM are allowed only in bona fide cases, giving reasons for non-inclusion of entry at the first instance and the reason for delayed submission of additional entry. 22. In the EDI system, the steamer agent gets the manifest filed from the EDI or by using the service centre of the Customs House and the noting aspect is checked by the system itself, which generates the bill of entry number. Thereafter, it is forwarded electronically or manually to the concerned person, grouped in the customs house, dealing with the commodities sought to be cleared. 23. Where the goods are cleared through the EDI system, no formal bill of entry is filed, as it is generated by the computer system. The importer is required to file a cargo declaration having prescribed particulars required for processing of the entry for customs clearance. Under the EDI System, the importer submits declarations....
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....dication. The Board also stated that all amendments to the IGM have to be considered on the basis of the provisions under Section 30(3) of the Customs Act. 28. In Public Notice No. 48 of 2008, it is specifically stated that steamer agents and shipping lines could obtain the IGM well in advance; that even though the IGM at that point may be incomplete, yet, amendments are regularly carried on, prior to the arrival of the vessel and on amendment that is carried on, the ICES system sends the amended IGM messages to the custodians. Considering the auto approval system operating, the Public Notice stated that the IGM messages, henceforth, should be transmitted only after the entry inwards is granted to the vessel, which means, till it processes the entry inwards and ready for an auto approval, an incomplete IGM, wanting in any particulars, which does not go to the root of the content of the IGM, could be amended. 29. Circular No. 13 of 2005, dated 11th March, 2005, issued by the Central Board of Excise and Customs, stated that the incomplete or incorrect filing of IGM should not be treated as proper filing of IGM and that, only on filing the same in the proper format or ....
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....to consideration the said guidelines issued by the Board, it is clear that minor amendments are not viewed seriously for any penal consequence, since the same does not get into the core of the declaration having revenue implication to make them untrue. 32. It is stated that with the growing volume of international trade, the need for expeditious clearance at the port within minimum possible time has been growing in importance. With the ports facing congestion of goods, that are landed at ports, need to be evacuated straightaway without loss of time. Accordingly, the concept of CFS has grown in importance along with the growth and development of ports. CFS are specified as customs area under Section 8(b) of the Customs Act. The goods container landed at ports are immediately taken straight to CFS which are treated as an extension of a customs station set up with the main object of decongesting the ports. An analysis of the provisions of Sections 7 and 8 of the Customs Act reveals that Container Freight Station with a customs area located in the jurisdiction of Commissioner of Customs exercising control over the specified customs port, airport, ICD, by itself, does not have a....
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....be required for the sustained growth in the import volume and for customs compliance and ultimately, on a consensus reached, trade notices are issued. Accordingly, Public Notice No. 71 of 2006, dated 5-6-2006, effective from 15-6-2006, was issued on the procedure relating to movement of containers to CFS. The public notice further stated that the circular would be reviewed after 3 months. One of the clauses relevant herein in this case, reads as follows : "(v) All Shipping Lines/Steamer Agents will be required to compulsorily indicate in the IGM against each line, the name/code of the Container Freight Station where the imported cargo is proposed to be delivered. The importers and CHAs are advised to intimate the Shipping Lines about the destination CFS before the departure of the vessel from load Port. For the containers where the CFS Code has not been indicated, the Shipping Lines will be required to declare the name of one Container Freight Station where all such unlisted containers will be transported for delivery. In case such a declaration is not forthcoming up to the point of entry inwards of the vessel, CCTL will be free to choose the Container Freight ....
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....71/2006 and the amended Public Notice No. 45/2007, would be reviewed after 3 months. The said notice further stated that any view or suggestions in this regard would be forwarded to the Commissioner of Customs (Imports). 36. In the background of this Public Notice, the third notice issued on 5-2-2008 in Public Notice No. 14 of 2008 has to be seen. Referring to computerised filing and processing of the IGMs and the movement of containerised import cargo from the sea port to CFS, the notice referred to the need for streamlining the management and monitoring of various aspects of cargo movement and modification to ICES application. Public Notice No. 48 of 2008 deals with the amendment of IGM filing, particularly with reference to the procedure for movement of containerised import cargo from the terminal to CFS. The Public Notice states that in order to streamline and monitor the movement of the containerised cargo, modifications are issued, so that there is smooth functioning of the container movement to the respective Freight Station. 37. The Public Notice further states that the auto approval facility to move the containers from the terminal to CFS is implemented in ....
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....to come into effect from 1-5-2008. The notice listed out as many as 26 CFSs in Chennai. 39. As rightly pointed out by the third respondent in its counter, all the three public notices are the result of the consensus reached among all the stake-holders and are related to customs approval of movement of import containerised cargo from the container terminal within the Chennai Port to various CFS within Chennai where the imported goods would be available to customs examination. The second public notice elucidates the role of each of the stake-holders in declaring the destination CFS. The third one deals with the simplified approval system. It is stated by the Revenue that the system thus agreed upon and notified under the public notices are working successfully as of today. A reading of the abovesaid circulars shows that the naming of the CFS is the primary responsibility of the importer, failing which, first the steamer agent and thereafter with CCTL; that amendment to the IGM by changing the CFS could be made even after auto approval as per the procedure laid down in the Public Notice. 40. A reading of the public notices thus makes two things clear, namely, the filin....
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....t, at present, is stated to have been reduced to a large extent. 42. Given the object of creating these CFSs as a facility to ease out the congestion and as an extension of the Customs Station, the movement of goods from the port to the CFS is like movement from a Customs Area of a Customs Station to a Customs Area of the same Customs Station. The naming of a CFS at the choice of the importer or CHA or by way of an amendment to the named CFS either before the auto approval or even thereafter subject to certain conditions stated therein in the public notice and the failure to mention the CFS in the IGM not having any revenue implication, the aforesaid state of affairs vis-a-vis the IGM, is not viewed seriously in the sense of rendering the IGM given by the steamer agent as not satisfying Section 30 of the Customs Act, to attract penal consequences by treating the IGM an untrue declaration, exhibiting a fraudulent intention; thereby, the truthfulness as to a statement in the IGM and fraudulent intention as regards the details given therein necessarily has its relevance to that part of the declaration viz., as to the goods brought into the country having a bearing on the provi....
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....titioners herein. 46. Learned senior counsel further referred to the provisions of Section 157 of the Customs Act relating to the authority of the Board to prescribe Rules and issue circulars. By amending the IGM, all that the Customs Authority has done herein is to superimpose the contract on the petitioners, which violates the contractual rights and obligations between the petitioners and the other authority. The provisions of Section 30 of the Customs Act do not provide for any amendment to the IGM at the behest of the consignee or any other body. The responsibility of the petitioners as an agent of the consignor extends up to the CFS, as given under the IGM. The amendment on IGM thus resting with the petitioners herein, the unilateral alteration of the IGM, taking refuge under the impugned notices and without notification to the shipping lines, is violative of Article 14 of the Constitution of India. Further, through Public Notices, it is not open to the Customs Authorities to amend the IGM, since the power as regards the amendment to the IGM is traceable to Section 30 of the Customs Act and nothing beyond. 47. In this connection, learned senior counsel placed r....
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.... learned senior counsel appearing for the contesting respondents, the Chennai Customs House Agents Association; M/s. Coastal Overseas Trade Corporation and South India Importer's Association, (Steel-Scrap Imports), submitted that the mere amendment to the named CFS in the IGM, per se, does not, in any manner, affect the liability of the shipping line operator. In any event, there is no substantive amendment or alteration to the IGM to raise a grievance. More so, when the public notices are the result of a consultative process in which the petitioner association had also taken part, the present allegations made, have no legal substance. Section 30 of the Customs Act does not prohibit any amendment by the consignee, particularly in the matter of choosing the CFS, which has no revenue implications, to make the IGM untrue to attract the penal provisions under Section 30 of the Customs Act. 50. Referring to Sections 33 and 45 of the Customs Act, learned senior counsel pointed out that when the Commissioner has every authority to specify the CFS, taking note of the traffic in the Port Trust, a conscious decision was taken after due consultative process of all the stakeholders, as....
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....mmissioner is empowered to issue guidelines by virtue of the powers conferred under Sections 8(a), 33, 45 and 141 of the Customs Act. In any event, only after assessing the local conditions and after consulting all the stakeholders on an agreement reached, that the public notices were issued. Thus these notices lay down the procedure to resolve a local problem. The public notice issued to resolve the decongestion, hence, does not result in an amendment of IGM in strict sense of the term, since all the material particulars in the IGM for the purposes of the Customs Act application, remain intact. Hence there is no need to look at any provision of the Act to sustain the public notices, quite apart from the fact that the procedure arrived at is the result of the consensus among the various stakeholders. The incorporation of CFS code in the IGM is only a procedural one and does not make a substantial amendment to the IGM, which has an implication on the contents that go for the adjudicatory process under the Customs Act. He pointed out that contrary to assertion of the petitioner, the rights and obligations of the petitioners vis-a-vis the goods have not been taken away under the Trade....
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....ged. The role of the Customs Authorities is only to assess the duty payable thereon; hence, by no stretch of any of the provisions of the Customs Act, could it be said that the Customs authorities took charge of the goods, the moment it reached the CFS. 57. He emphasized that the trade notice issued, has no binding effect herein; that the same cannot be read as a circular for the purpose of any implementation. When once the statute prescribes the format and the same had been filed, without adopting the procedure under Section 30 of the Customs Act, it is not open to the Customs Department to tinker with the statutory format. Having regard to the admitted status of the public notices, learned senior counsel appearing for the petitioners submits that the trade notice be set aside and the writ petitions be allowed. 58. Learned senior counsel appearing for the petitioners pointed out that even though anybody could name the CFS, it is only the shipping line and not anybody else, which includes the importer as well as the Customs Authorities. Considering the liability of the ship owner to deliver the cargo to the consignee in good condition, the duty as regards naming the....
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.... under the Customs Act. 61. Read in the context of the Customs Act and the services rendered by the Port Trust as regards receiving the goods on its unloading, the decision of the Apex Court, as referred to above, has relevance as regards the role of the Port Trust in receiving the goods from the steamer agent only to the extent of unloading on its onward journey for its adjudication by the Customs Authority. Thus, except to the extent of giving its services for unloading the goods in the case of an import or loading in the case of an export, the role of the Port Trust Authorities as regards the movement to the CFS, is not of any importance or relevance in deciding the issue before this Court. Hence, to the limited extent alone, the port is a bailee of a ship owner and nothing beyond. As pointed out by the Apex Court, the Port Trust Authorities are not the bailee of the consignee. 62. As already pointed out in the decision reported in (1963) Supp 2 SCR 915 (The Trustees of the Port of Madras, by its Chairman v. K.P.V. Sheik Mohammed Rowther & Co.) it was pointed out that it is the responsibility of the ship owner or his agent to put the goods in such a position that....
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....oms area and the importer takes steps towards customs clearance, to which end the goods are kept in the customs station or customs area, the consignor delivers and the consignee takes delivery, in the sense of taking such steps as are necessary to go for clearance of the same. In that, the need for considering the bailer-bailee relationship does not arise at all. In deciding the issue now as to the changing of the CFS from the one mentioned in the IGM, it is not necessary to get into the question as regards the shipping line as a bailer, the Port Trust as a bailee or as regards the consignee on the one hand, giving instructions to the Customs Authorities to have the movement of the containerised cargo to the CFS of his choice and the Customs Department effecting the change. The decision reported in 1988 (35) E.L.T. 244 (S.C.) (Oswal Spinning & Weaving Mills Ltd. v. Collector of Customs and another) and the decision reported in (1963) Supp 2 SCR 915 (The Trustees of the Port of Madras, by its Chairman v. K.P.V. Sheik Mohammed Rowther & Co.) deal with two different situations and both of them have to be read in the context of the facts prevailing therein. At the same time, it must be....
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....k Mohammed Rowther & Co.) to support the case of the petitioners as regards the dispute raised herein, at the same breath, I must point out that it does not, in any manner, offend or improve the case of the petitioners, or for that matter, pronounce the case of the respondents, for the reason that the whole issue has to be approached from the point of importance of the IGM and whether changing the name of the CFS would amount to an amendment at all to result in the IGM being looked at with a suspicious eye as to the truthfulness of the contents of the IGM. 67. Learned senior counsel appearing for the importers referred to Notification 26 of 2009, dated 17-3-2009 made under Section 141(2) read with Section 157 of the Customs Act relating to "Handling of Cargos in Customs Areas Regulations, 2009". A reading of the said Notification reveals that the regulations provide for the manner in which the imported goods/export goods shall be received, stored, delivered or otherwise handled in a customs area. It also deals with the responsibility of persons viz., the Customs Cargo Service providers engaged in the aforesaid activities. 68. The regulations apply to the Customs Aut....
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.... respondents pointed out that in the face of the notification thus issued in exercise of the authority under Section 141(2) of the Customs Act and trade notice issued for the benefit of the trade to remove decongestion in the Port Container Terminal, it is incorrect to state that the public notices are without the authority of law. 70. As already pointed out, going by the very purport of the Customs Act and the Major Port Trusts Act and the facility thus offered to decongest the ports, and the notification thus made as referred to above, on the goods entering into the harbour area and unloaded on the orders of the Customs at the specified customs area, the imported consignments are under the custody of the Customs and CFS, being an extended arm of the customs area, the issue of bailer bailee-relationship between the steamer agent and Port Trust/Customs Department, has to be viewed in a limited sense of discharge of their respective statutory duties and figuratively speaking, the steamer agent continues to be the bailee of the consignor till such time the consignee takes delivery of the goods after fulfilling the statutory formalities under the Customs Act. 71. In th....
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....anging the CFS not being one to be treated as an amendment to the IGM and with the line of contention taken in these writ petitions by the Revenue, that this does not amount to any amendment, then I do not find there exists anything for the petitioners to complain. It is a well settled principle of law that the understanding put forth by the highest statutory body to the provisions of the Act are good guide to the understanding one would have to have, on the scope of the provisions of the Act. In the circumstances, going by the purport of the IGM filing and the declaration as to the content of the goods carried by the vessel to be unloaded, the truthfulness of the declaration and the bona fides or otherwise of the declaration found untrue to attract the penal consequences, has to be seen from the substantive content of the declaration from the angle of the Customs Act provisions and not from the procedural content relating to the movement of the unloaded goods to a customs station like the ICD or the CFS, which is under the effective control of the Customs. If the petitioners can have no objection to the Customs keeping the goods in the custody of the port as a custodian pending cl....
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....ncalled for, given the fact that the unloading from the vessel is made only after the Customs Authority has granted the permission and the further movement to the CFS being under the approval and control of the Customs Official. The responsibility of the steamer agent, thus starting from the port of loading, continues to the port of landing and for a temporary period, the responsibility for a safe custody and delivery gets suspended, in the sense, that it is taken over by the port authorities and thereafter by the Customs Authorities and on the consignee making his endorsement in the Bill of Lading, legally and otherwise, the duty of the steamer agents come to an end. Till the goods are handed over to the consignee, as laid down by the Apex Court in the decisions referred to above, any damage or loss caused to the goods imported while in the custody of the Port Trust or the Customs, is to be met only by those respective authorities, depending on where the goods are at the time when the damage or loss is caused to the goods. On the unloading of the goods, the anxiety to have the clearance of the imported goods at the earliest and on the rates and provisions relied on, rests on the i....