TaxTMI 
TaxTMI 
2016 (12) TMI 1248
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....f 2016. Mr. Rajesh Sethi, Mr. Gaurav Kamboj, Mr. Tushar Gera, Mr. Arun Biriwal, Advocates for respondent No. 13 in CWP No. 10021 of 2016 in CWP No. 10036 of 2016. Mr.Sharad Aggarwal, Advocate for JUDGMENT Rajesh Bindal J. 1. This order will dispose of CWP Nos. 10021 and 10036 of 2016, as common questions of law and facts are involved. 2. Inter-alia, the issue raised is regarding illegal detention of the goods imported by the petitioners and demand of detention and demurrage charges from the petitioners. 3. The facts have been taken from CWP No. 10021 of 2016, unless otherwise referred to. Arguments of the petitioner 4. Learned counsel for the petitioner submitted that the petitioner imported defective/secondary cold rolled sheets/coils from South Korea with varied thickness vide commercial invoice dated 27.10.2015. Pre- inspection report was also annexed with the documents showing the goods to be defective/secondary/cold rolled sheets/coils with other details. Preferential certificate of origin was also annexed, which entitled the petitioner to duty free import. It was in terms of Korea-India Comprehensive Partnership Agreement. In the packing list, attached with the invoice....
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.... No. 572 of 2016-M/s Shri Lakshmi Steels v. UOI and others, in which notice of motion was issued for 11.1.2016. Prior thereto, without any intimation to the petitioner, Positive Material Identification test was got done by the customs authorities on 5.1.2016 with reference to bill of entry No. 3480776 dated 4.12.2015. He further submitted that it was only after filing of the writ petition by the petitioner in this court that the goods imported were got inspected from the Chartered Engineer. The inspection report dated 19.1.2016 has been produced on record. The inspection was done only in the presence of the customs officials under their guidance. The petitioner was not present. Despite this fact, the conclusion was that the goods were cold rolled defective sheets/coils, as was declared by the petitioner in the bill of entry. Despite this fact, the goods were not released. 6. The Chartered Engineer appointed by the customs, i.e., Rajendra S. Tambi to confirm the contents of the consignment sent the samples thereof for testing to Perfect Laboratory Services. Vide report dated 16.1.2016, it was opined that the material was cold rolled steel. On the basis of the report from the Labora....
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..... Ltd. 9. Learned counsel for the petitioner referred to order dated 3.2.2016, passed by this court in CWP No. 185 of 2016, in the case of M/s Inder International. Though by that time reports from Chartered Engineer- Rajendra S. Tambi and one from TCR Engineering Services Pvt. Ltd. were produced in court, nothing was pointed out regarding any order of detention having been passed. 10. Though the Commissioner of Customs passed order on 28.1.2016 directing production of PD Bond and bank guarantee for provisional release of goods, however, the copy was not supplied. It was supplied only in court at the time of hearing on 3.2.2016. 11. Letter dated 19.1.2016 from DRI to the Commissioner of Customs (Import), Mumbai was referred, directing release of goods on provisional assessment after drawing representative samples. The letter referred to an earlier letter from the customs authorities dated 14.1.2016 stating that report from the Chartered Engineer was received by the customs, but apparently the same was not communicated to DRI. Despite letter dated 19.1.2016 from DRI to Customs and after receipt of report from Rajendra S. Tambi, the goods were not released. As if the report from Ch....
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....rding its thickness. Order dated 4.4.2016 passed in earlier CWP No. 572 of 2016 was referred to. The aforesaid petition was filed by the petitioner in the earlier round of litigation. In the aforesaid order, the customs authorities were directed to de-stuff the consignment, subject to petitioner's making necessary arrangement within one week. Sampling of the disputed consignments was to be done by the customs authorities in the presence of representatives of the DRI and the petitioner. When the petitioner approached the authorities for de-stuffing the goods, he was man-handled and de-stuffing was not permitted. He referred to affidavit of Shailesh M. Gondhalekar in the earlier round of litigation. The deponent therein was associate of Rajendra S. Tambi, who was Chartered Engineering. He stated on oath that he was pressurized by Santokh Singh, Senior Intelligence Officer and Roopesh Kumar, Intelligence Officer, to sign a statement that earlier samples were handed over to him outside the customs area. As the consignment had not been released by the authorities, to recover the charges, the shipping line notified the cargo for auction. Intimation was received by the petitioner vide....
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....t Trust as well as the Shipping Line. It clearly mentioned that the goods detained vide bills of entry have been finally assessed on 8.8.2016. They were directed that the certificate be considered as per the 2009 Regulations. The certificate was issued with the approval of the Commissioner of Customs (Export-I). Despite the final assessment, the goods were still not released on account of the pending dispute regarding demand of detention and demurrage charges by the Port Trust and Shipping Line. The authorities refused to honour the detention certificate issued by the customs authorities. 16. With reference to the allegations of mala fide alleged against respondents No. 7 and 8, namely, Santokh Singh and Roopesh Kumar, learned counsel for the petitioner referred to the allegations contained in para Nos. 14 to 17 and 29 of the petition and submitted that there is no affidavit filed by them, against whom personal malice has been alleged. The allegations are deemed to be admitted. In fact, the entire fact situation in the case clearly establishes that the petitioner was harassed by the aforesaid two officers for ulterior motive. The petitioner had even made request for change of the ....
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....sly and accountability fixed. He referred to subsequent circular No. 22/2004-Cus. dated 3.3.2004 issued by the Central Board of Excise & Customs (for short, 'the Board') reiterating the same view and further adding that even disputed or offending consignment should not be held up, unless the import is totally prohibited or banned under any law or where prosecution is contemplated. In other cases, the importer should be given option for provisional clearance/assessment, if the enquiry is going to take time. He further referred to instruction No. 0172006:CCO (D2) dated 22.8.2006 (Annexure P-20). In the aforesaid instructions, while referring to the order passed by this Court in CWP No. 9882 of 2006 regarding undue delay in clearance of goods without any valid justification, comprehensive instructions were issued, prescribing the procedure with regard to examination/assessment of the import goods for the purpose of speedy clearance of cargo under first and second appraisement systems. Any delay was to be taken seriously. If it is found to be necessary to detain the goods, the importer is to be informed in writing to enable him to shift the goods in a bonded warehouse under Sec....
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....d goods in a customs area shall be subject to control of officers of customs. Such goods are to be handled in the manner prescribed. The Board is authorised to issue instructions to the officers for the purpose of implementation of the 1962 Act, under Section 151A. Section 156 thereof enables the Board to make Regulations. Section 159 provides for placing the Rules and the Regulations so framed before each House of the Parliament. 19. Learned counsel for the petitioner referred to Section 2(j) of the Major Port Trusts Act, 1963 (for short, 'the 1963 Act'), which defines that "Indian Ports Act" means Indian Ports Act, 1908. Section 2(aa) of the 1963 Act defines that "Authority" to mean the Tariff Authority for Major Ports constituted under Section 47A of the Act. Section 2(b) of the 1963 Act defines "Board" to mean the Board of Trustees, as constituted under the Act. Chapter VI thereof provides for imposition and recovery of rates at ports. Section 48 of the 1963 Act, inter alia, provides that the authority shall determine the scale of rates chargeable for various services, which include charges for wharfage, storage or demurrage of goods. Section 53 of the 1963 Act grants ....
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....rvice provider shall not be entitled to charge any rent or demurrage on the goods seized or detained or confiscated by the proper officer. Other provisions provide for filing of application for grant or renewal of licence. The explanatory memorandum attached with the above Regulations mentions that the 2009 Regulations have been framed to comply with the recommendations made by the Public Accounts Committee (2005-2006) to the Government to formulate appropriate provisions in this regard. The object is to provide for a comprehensive mechanism for handling of goods in a customs area. It also provides for the conditions and responsibilities of the persons handling consignments and adequate control over them. The 2009 Regulations were notified on 17.3.2009. It was further submitted that Section 159 of the 1962 Act provides that all Rules and 2009 Regulations framed under the 1962 Act are to be placed before both the Houses of Parliament. In the case in hand, the needful was done and there was no change proposed, hence, the same have force of law. 21. Immediately the issue arose as regards fulfilment of certain conditions laid down therein by the major ports, as notified under the 1963....
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.....3.2012 were issued by the Government of India, Ministry of Finance (Department of Revenue) with reference to the 2009 Regulations. It noticed that in large number of cases, the containers detained by DRI etc. are not released even after lapse of considerable time, which resulted in hardship to the importers and all concerned. It was felt that one of the reasons for longer detention can be lack of adequate space for storing such goods in a customs area. It was desired that customs cargo service provider should provide sufficient space for storage of goods after de-stuffing the containers. 23. It was submitted that despite there being enabling provisions under the 1962 Act for de-stuffing of the goods and number of instructions issued by the Government/Department on the issue, the petitioner was not given an opportunity to de-stuff the same and store in a warehouse, which entails small amount of storage charges as compared to demurrage and other charges payable. 24. He further referred to the stand taken by the Customs and DRI before Hon'ble the Supreme Court that Port Trust is bound by the 2009 Regulations, though the Port Trust claims that it is not a customs cargo service p....
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....nt of Delhi High Court in W.P. (C) 374 of 2014-Delhi International Airport Private Limited v. Union of India and others, decided on 27.10.2016 was also cited, where challenge to the vires of the 2009 Regulations was negated. 27. Learned counsel further referred to the following judgments by different courts opining that on account of default on the part of the customs authorities, they were liable to pay demurrage and detention charges etc.: (i) Union of India v. Sanjeev Woollen Mills, 1998 (100) ELT 323 (SC); (ii) Shipping Corpn. of India Ltd. v. C. L. Jain Woollen Mills, 2001 (129) E.L.T. 561 (SC); (iii) Donald & Macarthy (P) Ltd. v. Union of India, 1997 (89) ELT 53 (Cal.); (iv) Sujana Steels Ltd v. Commr. of Cus. & C. Ex. (Appeals), Hyderabad, 2002 (141) ELT 343 (A.P.); (v) Austin Engineering Co. Ltd. v. Commr. of Cus. (Exports), Chennai-I, 2009 (244) ELT 15 (Mad.); (vi) R.K. Enterprises v. Board of Trustees, Chennai Port Trust, 2010 (257)ELT 67 (Mad.); (vii) Ideal Sheet Metal Stampings & Pressings Pvt. Ltd. v. Union of India, 2012 (276) ELT 59 (Guj.); (viii) Champion Photostat Industrial Corporation v. Union of India, 2012 (276) ELT 33 (P&H); (ix) Express Cle....
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....nce of other conditions. Letter dated 27.9.2016 (Annexure R-4/21) from DRI, Ludhiana to customs was referred to, whereby customs was directed to assess the consignment provisionally. Mala-fide 29. Learned counsel for the petitioner referred to a letter dated 26.2.2016 (CM No. 13183 of 2016) addressed to the Chairman of the Board, Director General of Revenue Intelligence and other senior officers for transfer of investigation from Santokh Singh and Roopesh Kumar (respondents No. 7 and 8), who had been harassing the petitioner for ulterior motive. He further referred to letter dated 18.8.2016 from customs to Port Trust and Shipping Line informing that the goods have been finally assessed on 8.8.2016 and that detention/demurrage certificate may be considered as per the 2009 Regulations. He further submitted that as per the 2009 Regulations, Port Trust charges can be waived off as the Port Trust is bound by the directions of the customs, however, there is nothing about the charges of Shipping Line. As DRI, Ludhiana and customs are responsible, they should be burdened to bear those charges. 30. Learned counsel referred to various paragraphs in the writ petition, where specific allega....
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....ur of the petitioner. The stand of the petitioner was vindicated, which clearly establishes that very initiation of proceedings against the petitioner was bad. He further submitted that against the allegations of mala fide levelled in the petition, there is no specific affidavit filed by any of the respondents impleaded by name, hence, those allegations are established. Arguments of respondents No. 10 and 11-Shipping Line 32. Mr. Rajinder Goyal and Mr. Kapil Arora, learned counsel for respondent No. 10 submitted that there are no allegations made against the Shipping Line in the entire petition except at some places, where generally all the respondents have been referred to. Shipping Line has otherwise nothing to do with the dispute between DRI, customs and the petitioner. It had merely carried the goods of the petitioner from one port to another in terms of a contract entered into between the parties. In fact, no writ petition is maintainable against the Shipping Line. The 2009 Regulations do not apply to the Shipping Line, as it is not a service provider, hence, there cannot be any prayer for waiver of charges of the Shipping Line. In support reliance was placed upon a judgment....
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....1.2016. On the same day, a communication dated 19.1.2016 was received from DRI mentioning that report of the Chartered Engineer has not been received and the samples have not been forwarded to the laboratory for testing and the process may take some time, hence, provisional assessment be made under Section 18 of the 1962 Act, however, before release of the goods, representative samples be drawn, especially the lots which are suspected to be hot rolled. The report was received from TCR Engineering Services Pvt. Ltd. on 28.1.2016. Vide communication dated 28.1.2016, the petitioner was requested to submit PD bond and bank guarantee in order to release the consignment on provisional basis, which was followed by another reminder on 8.2.2016, however, the petitioner did not fulfil the requirements. As the report dated 28.1.2016 did not contain the bill of entry numbers, TCR Engineering Services Pvt. Ltd. was directed to clarify vide letter dated 10.2.2016. Reminder was sent on 16.2.2016. The revised report was received from TCR Engineering Services Pvt. Ltd. on 17.2.2016 mentioning bill of entry number, which was forwarded to DRI, Ludhiana. As per report, eight out of 10 samples were hot....
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....Mr. R. K. Handa, Mr. Pritpal Singh Nijjar and Mr. Aditya Singla, learned counsel appearing for DRI submitted that affidavit dated 4.4.2016 of Shailesh M. Gondhalkar, as is stated to have been filed in CWP No. 4648 of 2016, is in fact not on record in that case, as there is no order for that taking on file. The petitioner herein is a habitual offender, as entire effort was not to cooperate with the authority and delay testing of samples, resulting in delay in payment of duty and evade demurrage charges. The writ petition was filed merely at the stage when the matter was being investigated when even show cause notice had not been issued. When show cause notice is issued, the petitioner would be at liberty to raise all the pleas. He referred to earlier conduct of the petitioner regarding import of material. Learned counsel sought to address arguments on three issues, namely, (i) there was no delay on the part of DRI; (ii) conduct of the petitioner and mis-declaration of import and (iii) interference by the court in investigation. 38. He further contended that DRI got intelligence information that certain parties are trying to import hot rolled steel by declaring the same as cold roll....
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....n this court. The object was to hamper investigation, otherwise the petitioner should have co-operated in the process of investigation. The department was just to ensure that there was no mis- declaration. There was no interim stay granted by this court. Vide letter dated 8.1.2016 (CM No. 14102 of 2016), DRI asked customs to send the samples for testing to find out whether the imported consignment was hot rolled or cold rolled steel. He further referred to letter dated 12.1.2016 from customs to the petitioner that his agent was not co-operating in the process of examination, the statement made by the partner of the firm during search at Ludhiana on 12.1.2016 and also a panchnama, where the partner was found to be recording the proceedings without any authority. On 13.1.2016, DRI wrote to customs regarding mis-declaration. Vide letter dated 19.1.2016, DRI enquired about the status of the report of Chartered Engineer appointed and further directed for release of the goods on provisional basis, which was not accepted by the petitioner. Chartered Engineer-Rajendra S. Tambi had sent the samples for testing to the laboratory himself without any authorisation by customs. It was so informe....
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....ickness. On 5.3.2016, DRI asked customs to pass provisional release order immediately. On 7.3.2016, provisional release order (CM No. 14102 of 2016) for part of the consignment was passed. Immediately on 10.3.2016, the petitioner preferred fresh writ petition. In the aforesaid writ petition, vide order dated 4.4.2016, this court directed de-stuffing of the goods. Despite the order passed by this court, there was no co-operation from the petitioner for inspection. A complaint was made on 7.4.2016 to the police against the petitioner for obstructing departmental officials from discharging their duty. He referred to a panchnama prepared on 22.4.2016 at the time of inspection showing non- cooperation by the petitioner. As the petitioner was not co-operating, even this court had to pass an order on 12.4.2016 directing the petitioner to co-operate in the inspection of goods. He referred to examination report dated 19.4.2016 and a letter from customs to the petitioner on 21.4.2016 requesting the petitioner to co-operate in the process of examination in terms of the order passed by this court. Vide letter dated 5.5.2016, DRI informed customs that the officer was present for drawal of sampl....
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....stoms. In order to determine composition of the material, on request of officers of customs, services of Perfect Laboratory Services were engaged, who personally visited the dockyard and collected the samples. The samples were received by Perfect Laboratories Services, on 11.1.2016. The report was given on 18.1.2016, which was sent to customs by the Chartered Engineer on 19.1.2016. He further submitted that on 19.2.2016, Shailesh M. Gondhalekar was called by the officers of customs on the pretext of examination of some consignment, where he was illegally detained by the officers present there including Roopesh Kumar and Santokh Singh. He was forcibly made to acknowledge a summon and sign the statement to admit that the samples were handed over to Perfect Laboratories Services outside the customs area. He was threatened of removal from panel. On 20.1.2016, he was again detained to force him to re-examine the goods and change his report, however, he refused. If the report submitted by him was wrong, no show cause notice was ever issued to him for anything done wrong. He had given his complete report mentioning even about thickness of the material. In fact, finally the report submitte....
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....o any charges payable to the Port Trust. These are two different enactments operating in their own independent fields. The 2009 Regulations are otherwise also beyond the 1963 Act, as it exceeds the authority delegated for framing the 2009 Regulations. There is no direction given by the Central Government. In support, reliance was placed upon Kurmanchal Inst. of Degree and Diploma and Ors. v. Chancellor, M J. P. Rohilkahdn University and Ors., (2007) 6 SCC 35 and Union of India and others v. S. Srinivasan v. Union of India and others, (2012) 7 SCC 683. 46. He further submitted that the judgments relied upon by learned counsel for the petitioner regarding application of the 2009 Regulations in the case in hand are distinguishable as those are the cases pertaining to the licensees under the 2009 Regulations and not of the Port Trusts, which are independent. As the space of the Port has been used by the party, may be on fault of the importer, customs or DRI, to which the Port Trust has no concern, it is to be re-imbursed of the charges for the same. Even for claiming reduced rates of tariff on account of detention of goods by customs, a certificate has to be produced from custom....
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....main petition. CM Nos. 9623-24 of 2016 dated 9.8.2016 were filed by the petitioner for placing on record Annexures P-39 and P-40 and for a direction to respondent No. 9 for release of the goods. CM Nos. 11845-46 of 2016 dated 19.9.2016 were filed by the petitioner for preponing the date of hearing and for placing on record Annexures P-39 to P-44. CM No. 13183 of 2016 dated 15.10.2016 was filed by the petitioner for placing on record Annexure P-45, a bunch of documents. CM No. 13309 of 2016 dated 17.10.2016 was filed by DRI for placing on record affidavit of Varinder Kaur, Deputy Director, DRI on behalf of respondents No. 1 to 3 and 5 to 8. CM No. 14102 of 2016 dated 27.10.2016 was filed by respondent No. 4 for placing on record Annexures R-4/1 to R-4/20. However, Annexure R-4/21 was also attached with the application. CM No. 14300 of 2016 dated 4.11.2016 was filed by respondent No.7-Santokh Singh for placing on record written statement. CM No. 14201 of 2016 dated 4.11.2016 was filed by respondent No. 8 for placing on record written statement. CM No. 14231 of 2016 dated 5.11.2016 was filed by the petitioner for placing on record additional affidavit along with documents Anne....
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....and customs station; xx xx xx SECTION 7. Appointment of customs ports, airports, etc. - The Board may, by notification in the Official Gazette, appoint- (a) the ports and airports which alone shall be customs ports or customs airports for the unloading of imported goods and the loading of export goods or any class of such goods; (aa) the places which alone shall be inland (container depots or air freight stations) for the unloading of imported goods and the loading of export goods or any class of such goods; (b) the places which alone shall be land customs stations for the clearance of goods imported or to be exported by land or inland water or any class of such goods; (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; (d) the ports which alone shall be coastal ports for the carrying on of trade in coastal goods or any class of such goods with all or any specified ports in India. (2) Every notification issued under this section and in force immediately before the commencement of the Finance Act, 2003 shall, ....
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....riod not exceeding thirty days in a public warehouse, or in a private warehouse if facilities for deposit in a public warehouse are not available; but such goods shall not be deemed to be warehoused goods for the purposes of this Act, and accordingly the provisions of Chapter IX shall not apply to such goods: Provided that the Commissioner of Customs may extend the period of storage for a further period not exceeding thirty days at a time. xx xx xx SECTION 141. Conveyances and goods in a customs area subject to control of officers of customs- (1) All conveyances and goods in a customs area shall, for the purpose of enforcing the provisions of this Act, be subject to the control of officers of customs. (2) The imported or export goods may be received, stored, delivered, despatched or otherwise handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed. xx xx xx SECTION 157. General power to make regulations.- (1) Without prejudice to any power to make regulations contained elsewhere in this Act, the Board may make regulations consistent with this Act and the rule....
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....rule or regulations should not be made or notification or order should not be issued or made, the rule or regulation or notification or order shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation or notification or order. xx xx xx SECTION 160. Repeal and savings.- xx xx xx (9) Nothing in this Act shall affect any law for the time being in force relating to the constitution and powers of any Port authority in a major port as defined in the Indian Ports Act, 1908 (15 of 1908) xx xx xx Major Ports Trusts Act, 1963 2. Definitions xx xx xx (j) "Indian Ports Act" means the Indian Ports Act, 1908; xx xx xx 47A. Constitution and incorporation of Tariff Authority for Major Ports.- (1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint there shall be constituted for the purposes of this Act an Authority to be called the Tariff Authority for Major Ports. (2) The Authority shall be a body corporate by the name aforesaid ha....
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....f such rate or charge so levied. 54. Power of Central Government, to require modification or cancellation of rates.- (1) Whenever the Central Government considers it necessary in the public interest so to do, it may, by order in writing together with a statement of reasons therefor, direct the Authority to cancel any of the scales in force or modify the same, within such period as that Government may specify in the order. (2) If the Authority fails or neglects to comply with the direction under sub-section (1) within the specified period, the Central Government may cancel any of such scales or make such modification therein as it may think fit; Provided that before so cancelling or modifying any scale the Central Government shall consider any objection or suggestion which may be made by the Authority during the specified period. (3) When in pursuance of this section any of the scales has been cancelled or modified, such cancellation or modification, shall be published by the Central Government in the Official Gazette and shall thereupon have effect accordingly. 58. Time for payment of rates on goods.- Rates in respect of goods to be landed shall be payable immediately....
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.... be deemed to have been done under the corresponding provisions of these regulations. Customs Cargo Service providers already approved on or before the date of coming into force of these regulations shall comply with the conditions of these regulations within a period of three months or such period not exceeding a period of one year as the Commissioner of Customs may allow from the date of coming into force of these Regulations. 5. Conditions to be fulfilled by an applicant for custody and handling of imported or export goods in a customs area.- Any person who intends to be approved as a Customs Cargo Service provider for custody of imported goods or export goods and for handling of such goods, in a customs area, hereinafter referred to as the applicant, shall fulfill the following conditions, namely:- xx xx xx (3) The applicant shall execute a bond equal to the average amount of duty involved on the imported goods and ten per cent. of value of export goods likely to be stored in the customs area during a period of thirty days and furnish a bank guarantee or cash deposit equivalent to ten per cent. of such duty: Provided that the condition of furnishing of bank guarantee or....
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....ate provisions in this regard. [Notification No. 26/2009-Cus. (N.T.),, dated 17.3.2009] Circular dated 23.3.2009 M.F. (D.R.) Circular No. 13/2009-Cus., dated 23.3.2009 F. No. 450/55/2008-Cus. IV Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: "Handling of Cargo in Customs Areas Regulations, 2009"-Regarding. A reference is invited to Notification No. 26/2009- Customs (N.T.), dated 17.3.2009 bringing into effect the "Handling of Cargo in Customs Areas Regulations, 2009" (referred in short as 'regulations'). 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. The regulations also prescribe the responsibilities of persons engaged in the aforesaid activities. It may be recalled that the Public Accounts Committee (2005-06) in its twenty- seventh report had recommended for formulating appropriate legal provisions and guidelines to control the activities of custodians. In pursuance of the recommendations made by the Public Accounts Committee (PAC), the Government had inserted a new sub-section (2....
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....sting custodians approving the facility for a period of five years and its renewal thereafter, as per Regulation 13. 4.2 Further, major ports notified under the Major Port Trusts Act, 1963 and airports notified under the Airports Authority of India Act, 1994 will continue to be authorised to function as custodians under their respective Acts and these regulations shall not impact their approval as a custodian. In this regard, it may be noted that section 45 of the Customs Act, 1962, which provides for approval of custodians makes an exception to these custodians who are otherwise approved under any law for the time being in force. Accordingly, the Port Trusts of the notified major ports and the Airports Authority of India shall not be required to make an application under Regulation 4 or 9 for approval or renewal under these regulations. However, they would be required to discharge the responsibilities cast upon them as specified in Regulation 6. 4.3 It is clarified that the normal time within which the existing custodians are required to comply with the conditions of these regulations has been stipulated as three months from the date of coming into force of these regulations. ....
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....munication dated 5.2.2016 rejecting the petitioner's request for waiver of demurrage and detention charges or for a direction to the respondents to bear those charges, they being at fault. The writ petitions were dismissed as withdrawn on 9.5.2016 with liberty to file a fresh one on the statement made by learned counsel for the petitioner in the light of subsequent events. As the Port Trust was taking action to auction the goods, learned counsel appearing for the Port Trust fairly submitted that the goods shall not be put to auction for one week. M/s Inder International 54. CWP No. 185 of 2016 was filed on 5.1.2016 challenging the action of the respondents of detaining the goods imported by the petitioner and further prayer was for a direction to the respondents to pay demurrage and detention charges on the goods illegally detained. During the pendency of the above petition, the petitioner filed CWP No.4648 of 2016 on 5.3.2016 challenging the seizure memo dated 23.2.2016 with a prayer for release of the goods. Challenge was also made to communication dated 5.2.2016 rejecting the petitioner's request for waiver of demurrage and detention charges or for a direction to the r....
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....(SG) dated 14.9.2015. It was further directed that imported consignments be examined 100% by customs officers with the assistance of local Chartered Engineer and a detailed report be prepared and sent to DRI, Ludhiana. It should be regarding nature of the goods imported including its description, quality, thickness and width. Photographs were also to be sent. It was further mentioned in the aforesaid communication that in case the goods are found to be in violation of notification dated 14.9.2015, the same may be dealt with under the provisions of Section 110 of the 1962 Act. The samples be drawn and got tested from an authorised Government laboratory under intimation to DRI, Ludhiana. On 30.12.2015, the petitioner sent another reminder to DRI, Ludhiana as well as customs informing that shipment has not been examined till date, as a result of which the party is facing heavy detention charges of shipping line and demurrage charges of the Port Trust. The petitioner is not liable to pay the same as the goods have been detained by DRI, Ludhiana and customs. A request was made for early examination of the material and release thereof within 48 hours. Another reminder was sent by the pet....
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....ded over to him outside the customs area. He was threatened of his removal from the panel of Chartered Engineer. However, the counsel appearing for him in court stated that he is still on the panel. 61. Similar process was followed in other two consignments. 62. The inspection report, as submitted by the Chartered Engineer clearly opined that the goods imported by the petitioner were cold rolled sheets/coils, as claimed by the petitioner in the bills of entry. There was some issue raised regarding thickness of part of the consignments which, according to the Chartered Engineer, was only to the extent of about 10%. As the requirement of DRI, Ludhiana for 100% examination of the consignments before release had been satisfied, the same should have been released. Minor variation of thickness in about 10% of the consignments could be expected for the reason that the material was defective/secondary cold rolled sheets/coils. It was defective and there could be various reasons for that and one could be its varied thickness. In any case, as claimed by counsel for the petitioner, the only difference, which could possibly be made out of the thickness of part of the consignments being above....
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....0.1.2016, the samples were sent for testing to TCR Engineering Services Pvt. Ltd, stated to be a Government approved laboratory, to test and certify the composition of the material and as to whether it is hot rolled or cold rolled. The petitioner claimed that the samples, which were sent to TCR Engineering Services Pvt. Ltd. were not drawn in his presence. The report dated 28.1.2016 (p. 197) was received from TCR Engineering Services Pvt. Ltd. The samples were received by the laboratory on 22.1.2016. It mentioned CHA No., vide which the samples were sent for testing by customs to the laboratory. The report also mentioned the test method applied and finally remarked that structure appears to be of hot rolled condition. Though the test certificate could very well be linked by customs with the samples sent for testing vide CHA No. mentioned on the requisition letter dated 16.1.2016, but still request was made to the laboratory by customs to send a revised report containing bill of entry number. The revised report dated 17.2.2016 was received. For two bills of entry, the report remarked that "structure appears to be hot rolled condition" and for one bill of entry, it was mentioned that....
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....ate, but still vide letter dated 28.1.2016, the petitioner was directed to furnish PD bonds and bank guarantee for all three consignments. As claimed by the petitioner, the aforesaid letter was not served upon him, rather, handed over in court when the case was listed for hearing on 3.2.2016. 68. As harassment of the petitioner was not to end here, vide letter dated 4.2.2016 from Commissioner of Customs (Export-I), Mumbai to Deputy Commissioner of Customs, Docks (Import), Mumbai giving reference to earlier two letters dated 3.2.2016, it was informed that DRI, Ludhiana had instructed on telephone to draw random samples of all the consignments and send the same for testing as to whether the subjected material is hot rolled or cold rolled, which should be done under the guidance of customs approved Chartered Engineer. The approved laboratory for testing of samples was to be informed after consultation with DRI, Ludhiana. The samples were to be kept in safe custody till further direction. Meaning thereby, the communication regarding furnishing of PD bonds and bank guarantee was merely an eye-wash as the samples were again to be drawn. The contents of the aforesaid letter established o....
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....mported consignments were hot rolled or cold rolled steel sheets/coils, there being two contradictory opinions available with the department, vide order dated 3.6.2016, this court directed to send the samples freshly drawn to Bokaro Steel Plan, Jharkhand for testing. When the case was listed for hearing on 8.7.2016, report from Bokaro Steel Plant was received. Sealed envelope was opened in court. The report opined that the material was cold rolled steel. The report was furnished to counsel for the parties. 74. Vide order dated 12.7.2016, after hearing learned counsel for the parties, taking into consideration the report received from Bokaro Steel Plant and the only pending issue being the effect of thickness of the material imported, which could entail levy of small amount of additional duty on part of the consignments and further the claim of the Port Trust and the Shipping Line regarding detention and demurrage charges, this court directed that the goods be released to the petitioner on payment of duty after adjusting the duty already paid, as the material was found to be cold rolled steel/sheets/coils. The issue regarding detention and demurrage charges was to be considered lat....
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....ngineer, along with test certificate from Perfect Laboratories Services Ltd. was ignored altogether without assigning any justifiable reason. TCR Engineering Services Pvt. Ltd., to which the samples were sent for testing again, did not have the facility for testing as to whether the goods were hot rolled or cold rolled steel. The authorities were expected to take immediate effective steps for testing of samples and even during the pendency thereof if the goods were not prohibited, order release thereof by provisional assessment. 78. The net result of the action/in-action of the authorities is that parties have been involved in avoidable litigation resulting in levy of detention and demurrage charges, part of which may go to Shipping Line, which is a foreign company. The action of the authorities had to be immediate taking into consideration that undue delay does not result in harassment to any party. Even on the other side, as is evident from various documents and communications produced on record, the officers of the department had also been indulging in avoidable correspondence resulting in delayed release of consignments. The time could have been better utilised for other press....
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....gnment should be allowed to be cleared on provisional basis as a matter of right. This will prevent congestion at ports and warehouses. Adequate B.G./security may be taken to safeguard revenue (including possible fine and penalty). In case where it is decided to detain the consignment action should be taken to shift the same to a Customs Warehouse under Section 49 of the Customs Act, 1962 (Board's Circular No. 84/95-Cus., dated 25.7.95 may be referred to - 1995 (79) E.L.T. 12)." [Emphasis supplied] 81. Similar instructions were issued vide circular No. 1/2011-Cus., dated 4.1.2011 (p. 86) with regard to export consignments. Expeditious action was suggested. As the issue cropped up time and again, some of the officers of the department being insensitive, there had been instances where on account of unlawful detention of goods, which resulted into levy of heavy detention and demurrage charges without any fault on the part of the importer, the department was burdened to bear those charges. Taking note of the order passed by this court in CWP No. 9882 of 2006-M/s Sai Sales Corporation v. Union of India and another, where undue delay in clearance of goods was noticed without any v....
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....tion and demurrage charges shall be at their risk. Non-compliance of the instructions was to be viewed seriously and accountability fixed. Relevant part thereof is extracted below: "Kind attention is invited to Board's instructions issued from F. No. 450/82/95-Cus.IV, dated 7th July, 1997, Member (Customs)'s D.O. Letter F. No. 450/82/99-Cus.IV, dated 2nd June, 2001 and Circular No. 42/2001 dated 31st July, 2001 for the time bound Customs clearance and to avoid detention of Cargo from Ports/Land Customs Stations/Air Cargo Complexes, CFSs/ICDs. These instructions, inter-alia, have laid emphasis on measures to avoid unnecessary demurrage and difficulties to importers. These instructions have been issued after taking due note of directions of Hon'ble Supreme Court. 2. Despite clear guidelines issued by the Board and reiterated from time to time, it has come to notice of the Board that these guidelines are not being complied with by the field formation. As a consequence of that goods are being detained on grounds other than that are mentioned in these instructions. These avoidable detention results into mounting demurrage in most of the cases. Recently in a case, departm....
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.... that consignments be put on hold for 100% examination and one month had passed after first bill of entry was submitted on 4.12.2015, the sampling process started only on 5.1.2016, which was completed on 11.1.2016. 85. The petitioner cannot be said to be at fault for this delay. Thereafter, Chartered Engineer was appointed as directed by DRI, Ludhiana, who submitted his report dated 19.1.2016 along with the test report from a Government approved laboratory, but the same was ignored. The report of the Chartered Engineer clearly suggested that the goods imported were cold rolled sheets/coils and not hot rolled, as was suspected. There was some difference in thickness in 10% of the consignment. The stand taken by the department was that testing of samples got done by Rajendra S. Tambi, Chartered Engineer, was not authorized by customs. Be that as it may, if the Chartered Engineer was not authorized to get the samples tested from a laboratory, the fact remains that though the samples were drawn from 5.1.2016 to 11.1.2016, these were sent for testing to a laboratory, namely, TCR Engineering Services Pvt. Ltd. on 20.1.2016, which was received by the laboratory on 22.1.2016. It has also ....
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....the goods were not released. DRI, Ludhiana had been communicating with customs even on telephone. It is so noticed in letter dated 4.2.2016 (p. 72). The instructions were to draw samples to find out whether the goods imported were hot rolled or cold rolled. Apparently, the earlier opinion from Rajendra S. Tambi, Chartered Engineer, was concealed from DRI by customs. The offer of de-stuffing made to the petitioner at a later stage could not materialise for the reason that the department failed to issue detention certificate and in the absence thereof, the Port Trust and the Shipping Line were requiring payment of detention and demurrage charges before release of goods. The charges had accumulated to the tune of more than the value of the goods by that time. 87. The action/in-action of the respondents has briefly been reiterated above. For the period subsequent thereto, it has been noticed in the portion of the judgment noticing the facts of the case in paras No. 55 to 60. The star point to be considered is that the goods were sought to be detained only to ascertain as to whether the material imported was hot rolled or cold rolled steel. Second issue sought to be raised subsequently....
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....d in their custody. De-stuffing was not offered and allowed immediately, as a result of which detention and demurrage charges have accumulated, which are much more than even the value of the goods. 90. The case in hand is not in isolation, where the conduct of the department in delaying the process of release of goods despite the same being not prohibited has been commented upon. The issue earlier came up for consideration before a Division Bench of this Court in Om Udyog v. Union of India, 2010(254) ELT 547 (P&H), wherein it was observed that the goods should be cleared without delay unless these are prohibited goods. Non-clearance of goods can be justified for minimum period required for assessment. Delay of months together cannot be justified, as non-clearance seriously affects rights of lawful importer and no authority can be permitted to plead unlimited power for delaying clearance for its own incompetence as a justification beyond reasonable period. Relevant paras thereof are extracted below: "10. We called upon learned counsel for the respondents to show the provision of law under which the goods were detained. It is not the case of the respondents in the reply or otherwi....
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....ustoms that they had power to direct Central Warehousing Corporation not to collect the storage and demurrage charges on the goods detained by customs. 92. In Austin Engineering Co. Ltd.'s case (supra), Madras High Court had the same view and put the liability on customs for the period the goods were found to be illegally detained. Customs Department was given liberty to apply to the Port Trust for refund/waiver of the charges under Section 53 of the 1963 Act. Import of the 2009 Regulations was not under consideration in the aforesaid case as the period pertained was prior to that. 93. In R. K. Enterprises and Donald & Macarthy (P) Ltd.'s cases (supra), Madras and Calcutta High Courts, finding that detention of goods was not on account of any fault of the importer, customs department was held liable to bear the demurrage charges. 94. In a recent judgment in Worldline Tradex Pvt. Ltd. v. Commissioner of Customs (Import), 2016 (340) ELT 174 (Del.), a Division Bench of Delhi High Court finding that detention of goods was illegal, directed that the petitioner therein cannot be saddled with warehouse charges. The responsibility was put on DRI. For future, it was directed that....
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....ing in force, the Custom cargo service provider shall not charge any rent or demurrage on the goods assessed or detained or confiscated by the Customs department. 22. In the light of the aforesaid provisions, the contention of the learned counsel for the petitioner that the Customs Act does not provide any provision to levy any demurrage charges and, therefore, custodian, namely, Respondent No. 4 has no authority of law to levy demurrage charges under Section 45 (2) of the Act is patently misconceived. We are of the opinion that in view of the provision of Section 45 of the Act read with the Regulation 2(b), 5 and 6 of the Regulations of 2009 the Customs cargo service provider is responsible for providing storage facilities for the purpose of unloading imported goods and, consequently, is entitled to charge demurrage charges. 23. However, we are of the opinion that the custodian, namely, the service provider-respondent No. 4 is not entitled to charge demurrage charges where the goods have been detained, seized or confiscated by the Customs department, in view of the terms of condition of the appointment order of Respondent No. 4 read with Regulation 6(1) of the Regulations of ....
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....uses of Parliament and there was no change proposed. 102. In Sanjeev Woolen Mills' case (supra), Hon'ble the Supreme Court dismissed an appeal filed by the department against the judgment of Delhi High Court, opining the detention of goods to be unjustified, had directed that no demurrage charges were payable by the importer. The liability was put on the department. 103. In C. L. Jain Wollen Mills' case (supra), Hon'ble the Supreme Court opined that there is no inconsistency between the two earlier judgments of Hon'ble the Supreme Court in Grandslam and Sanjeev Woolen Mills' cases (supra), as the facts in the case of Sanjeev Woolen Mills' case were similar. In this case, Hon'ble the Supreme Court gave liberty to the department to move application to the Shipping Corporation and Container Corporation for waiver of the charges as the liability put by the High Court was not challenged any further. 104. The prayer of the petitioner before Madras High Court in Express Clearing Agency's case (supra) was for release of goods without payment of demurrage charges. The goods were detained therein for verification and testing. Part of the goods, which we....
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....At the time of ordering release, customs had issued detention certificate to the petitioner. 110. Section 2(11) of the 1962 Act defines 'customs area', to mean an area of a customs station and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities. 'Customs port' has been defined in Section 2(12) of the 1962 Act, to mean any port appointed under clause (a) of Section 7 of the 1962 Act to be a 'customs port'. 'Customs station' has been defined in Section 2 (13) of the 1962 Act, to mean any customs port, customs airport or customs station. Section 7(a) of the 1962 Act gives power to the Board to notify any port or airport to be customs port or airport for unloading of imported goods and loading of export goods. Section 45 of the 1962 Act provides for certain restrictions on custody and removal of goods. All imported goods are to remain in custody of such person, as may be approved by Principal Commissioner of customs until cleared for home consumption. The person, who has been given custody of the goods, is liable for any pilferage etc. 111. Section 49 of the 1962 Act provides that where ....
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....harges payable under the Act for the reasons to be recorded in writing. Section 54 of the 1963 Act gives power to the Government to direct the authorities to cancel any of the scales in force or modify the same. Section 58 of the 1963 Act provides that the rates so fixed are to be paid immediately on landing thereof and the Board has lien on the goods for the rates leviable under the Act in terms of Section 59 of the Act. Section 111 of the 1963 Act gives power to the Central Government to issue any instructions to the Board. Any decision of the Central Government is final. 115. In exercise of powers conferred under Section 141(2) read with Section 157 of the 1962 Act, the Board framed the 2009 Regulations. Regulation 2(b) defines 'Customs Cargo Service provider', to mean any person responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a custodian, as referred to in Section 45 of the 1962 Act and the person as referred to in Section 141(2) of the 1962 Act. The 2009 Regulations are applicable for handling of imported and export goods in customs area as specified in Section 8 of the 1962 Act. The 2009 Regul....
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....ty of India Act, 1994 will continue to be authorised to function as custodians under their respective Acts and the 2009 Regulations shall not have any impact on their approval as custodian, as even Section 45 of the 1962 Act provides for an exception to the approval of such person. Accordingly, the Port Trusts of the notified Major Ports and Airport Authority of India were not required to file application for approval under the 2009 Regulations, however, they were required to discharge the responsibilities cast upon them as specified in Regulation 6 of the 2009 Regulations. The responsibilities, as prescribed in Regulation 6, are in tune with what is provided in Section 45 of the 1962 Act. 119. The definite stand of customs and DRI before this court and Hon'ble the Supreme Court was that Port Trust is a Customs Cargo Service provider, though it has been exempted from obtaining any approval by filing application, being a Government entity. Reference can be made to counter affidavit dated 26.8.2016 filed by DRI in SLP (C) No. 23479-480 of 2016- Mumbai Port Trust v. M/s Inder Internationl and others in para 8T thereof, wherein it is stated that the "Board vide circular No. 13/200....
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....overnments or their undertakings have specifically been exempted from furnishing of bank guarantees or cash deposit. Regulation 6(l) clearly provides that Customs Cargo Service provider shall, subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the proper officer. Section 111 of the 1963 Act gives power to the Central Government to issue any direction on questions of policy, which is binding on the Port Trust. No doubt, the 2009 Regulations have been framed by the Board, however, vide circular dated 23.3.2009 issued by the Government of India, Ministry of Finance (Department of Revenue), it is specifically provided that major ports, as notified under the 1963 Act and the airports constituted under the Airports Authority of India Act, 1994 will continue to be authorised as custodian under their respective Acts and the 2009 Regulations shall not impact their approval as a custodian. These authorities will be required to discharge responsibilities cast upon them in terms of Regulation 6 of the 2009 Regulations. Non-charging of rent or demurrage charges for the period the goods are detained by cu....
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....litigation between the parties. There also, the department was found to be at fault. As Hon'ble the Supreme Court had desired for expeditious disposal of the petition vide order dated 15.9.2016, the case being in motion list, the hearing commenced on 4.11.2016. Whatever time was available on day-to-day basis, was utilised. 124. Learned counsel submitted that specific allegations of mala fide having not been denied by respondents No. 7 and 8 by filing affidavit, these are deemed to be admitted, hence, the action being mala fide, the petitioner deserves to be granted the relief prayed for. The common written statement dated 30.5.2016 was filed by respondents No. 1 to 3 and 5 to 8, which has been signed by Varinder Kaur, Deputy Director, DRI, Ludhiana. He further submitted that along with CM Nos. 14300 of 2016 and 14201 of 2016 filed by the counsel, written statement of respondents No. 7 and 8, respectively, are sought to be filed. The same were listed in court on 7.11.2016 after the petitioner had already addressed arguments regarding mala fide of respondents No. 7 and 8. This fact is even admitted in the application for placing on record the written statement. He further submit....
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....ed for payment of freight and other charges. 126. No doubt, the 2009 Regulations are not applicable on the Shipping Line, however, once it is found that detention of goods for inordinate period was not on account of any fault on the part of the petitioner, he is not liable to be burdened with that cost. It is only the DRI and customs, who should bear the cost, demanded by the Shipping Line. It was so opined in Sanjeev Woollen Mills' case (supra). The DRI or customs may get those charges waived off or reduced from the Shipping Line, however, whatever is payable in addition to the freight agreed between the importer and the Shipping Line shall be borne by DRI or customs. 127. It was pointed out at the time of hearing that detention charges demanded by the Shipping Line has run into crores of rupees, which are even more than the value of the goods imported and may be even more the value of the container itself, which has been detained along with goods. The Department should examine the issue whereby the containers of the Shipping Line can be made free immediately by de-stuffing and the goods are shifted to other containers locally available in cases where the goods cannot be de-....