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2017 (6) TMI 309

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....UDGMENT :- (Per S. C. Dharmadhhikari, J.) 1. Heard the learned counsel appearing for the parties. Rule. The respondents waive service. By consent, Rule is made returnable forthwith. 2. By this petition under Article 226 of the Constitution of India, the petitioners are challenging two public notices dated 9th February, 2017 and 6th March, 2017 being Public Notice Nos. 16 and 27 of 2017. 3. The petitioners are also seeking to quash and set aside a prior public notice dated 16th January, 2017 being Public Notice No. 8 of 2017. 4. There are two reliefs sought in relation to Public Notice No. 161 of 2016 dated 28th November, 2016. Unlike the above public notices, which are sought to be quashed in their entirety, as far as this public notice is concerned, the petitioners pray quashing and setting aside of para 4.9 of the same. 5. The petitioners are also seeking quashing and setting aside of appointment of respondent no. 9 as the Designated Container Freight Station (CFS) by the impugned Public Notice No. 161 of 2016 dated 28th November, 2016. 6. The petitioners are also challenging paragraphs 3.7 and 3.8 of the Facility Notice No. 63 of 2008 dated 1st September, 2008, which provi....

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....ent no. 7 acknowledges in Circular No. 4 of 2017-Customs dated 16th February, 2017 that "CFSs are extension of the port. In the over all ecosystem of customs clearance, the CFSs have played an important role in faster clearance of EXIM goods, as a result, bulk of the regulatory activity other than appraising has shifted to CFSs. Copy of Circular No. 4 of 2017 is annexed as Exhibit 'B' to the petition. 12. Accordingly, several CFSs, including the petitioners' have been set up and the registration and functioning of all CFSs is governed by the Handling of Cargo in Customs Area Regulations, 2009 (for short "the HCCA Regulations, 2009"). As on date, there are 34 CFSs operating with respect to Jawaharlal Nehru Port employing directly and indirectly a large local populace. The above CFSs were established pursuant to substantial investments, both, in terms of investment in infrastructure and security standards. A brief summary of the process of setting up of a CFS is outlined as under:- (i) An applicant desirous of obtaining permission to operate a CFS files an application in the prescribed format to the Infrastructure Division at Ministry of Commerce, New Delhi. In order to....

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....nment as sealed containers from the exporter at the port of loading. The vessel with the said containers on board then sails to the Port of Discharge (POD). (ii) Approximately 48 hours before the vessel berths at the POD, an Import General Manifest (IGM) is filed by the shipping line through the ICE Gate System, the eCommerce Portal of respondent no. 7. The petitioners state that an IGM is a document that contains details of the Bill of Lading (BOL) i.e. BOL number, BOL date, the cargo details, the name of the consignee, marks and number on the cargo, number of packages, weight of the cargo, port of loading, port of discharge in India and final destination, container number and size of the container and also whether the containers are Full Container Load (FCL) or less than container load where cargo in the container belongs to several consignees (LCL). The IGM also indicates whether a cargo is to be sent to a CFS or to a particular Inland Container Depot (ICD). Subsequently, on account of the introduction of DPD facility, the IGM also indicates whether a container is meant for DPD (A sample IGM is annexed as Exhibit 'C' to the petition). (iii) About 6 to 8 hours prior to ....

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....rminal, CFS or ICD instructing them to give physical delivery of the cargo to the consignee. The delivery order is then presented to the CFS for taking delivery of the container from the CFS. A sample delivery order is annexed as Exhibit 'F'. (ix) Thereafter, the consignee completes the Customs documentation and requirements after which the Customs authorities give an endorsement 'out of charge' on the bill of entry to the consignee. The CFS thereafter delivers the cargo to the consignee against the delivery order. 15. The petitioners further submit that by a circular dated 24th November, 2005, being Circular No. 42 of 2005-Cus., respondent no. 7 introduced the Accredited Clients Programme (ACP). Under the ACP, respondent no. 7 decided to introduce a system called Risk Management System (RMS). As per the aforesaid circular, the objective of ACP was to grant assured facilitation to importers who have demonstrated capacity and willingness to comply with the laws the Customs Department is required to implement. Under the RMS, bills of entry filed by importers in the Exchange Data Interface (EDI) system of the Indian Customs authorities would be processed for risk and a large....

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....nd without giving any opportunity to other CFSs like the petitioners. It is further significant to note that no reasons/grounds whatsoever have been indicated in Public Notice No. 66 of 2008 in support of the appointment of Speedy/respondent no. 9 alone as the designated CFS and for the exclusion of all other CFSs. Copy of Public Notice No. 66 of 2008 is annexed as Exhibit 'I' to the petition. 19. The petitioners further submit that this optional DPD facility, though it included the appointment of Speedy/respondent no. 9 as the designated CFS in the most arbitrary manner, did not cause serious threat to the business and existence of other CFSs like the petitioners at that point of time. 20. The petitioners state that on account of Public Notice No. 161 of 2016, there has been a rise in the volume of DPD container traffic. As a result of this, the business of CFSs, including the petitioners, was significantly impacted since a significant number of containers, which would otherwise hitherto have passed through CFSs such as the petitioners, would no longer come to the petitioners on account of being earmarked as DPD i.e. delivery at the port itself. It is significant to note that on....

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....0 of 2016, the number of DPD containers increased still further, resulting also in a concomitant further increase in the number of DPD containers sent preferentially to Speedy/respondent no. 9 on account of not being cleared in 48 hours from the port. Copy of Public Notice No. 180 of 2016 is annexed as Exhibit 'L' to the petition. 24. On 23rd September, 2016, respondent no. 8 addressed another letter to respondent no. 2 reiterating their concerns and suggestions as set forth in the letter dated 9th December, 2016. Copy of the letter dated 23rd December, 2016 is annexed as Exhibit 'M' to the petition. 25. On 27th December, 2016, respondent no. 5 issued an advisory to all CFSs, including the petitioners with regard to the DPD facility. In the said advisory, respondent no. 5 directed that FCL containers imported by importers who have been accorded the DPD facility as per Public Notice No. 161 of 2016 and Public Notice No. 180 of 2016, which are facilitated by RMS and meant for DPD, shall not be accepted at any CFS. Respondent no. 5 also stated that non-compliance of this by a CFS would be viewed seriously and action shall be initiated as per the Customs Act, 1962. A copy of the advi....

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....sition of DPD facility on all RMS facilitated containers. Public Notice No. 9 of 2017, inter alia, states that importers find it difficult to make the logistical arrangements necessary to evacuate RMS facilitated containers through DPD from the terminal, because of the following reasons. (i) Difficulty in the arrangement of a transporter; (ii) Risk of theft; (iii) Issue of insurance; (iv) Two shift handling charges being charged by private terminal operators. (v) Dealing with non-RMS containers; (vi) Requirement of temporary storage for Customs cleared cargo or warehousing facility, owing to lack of storage space in the importers factory premises; (vii) Cash flow issues due to insufficient funds for payment of Customs duty and delivery order charges; (viii) Occasional requirement to de-stuff/shift containers to other modes of transport; (ix) Requirement to affix RSP/MRP stickers before clearance. 29. The above reasons indicate that importers were finding the compulsory imposition of DPD facility difficult and burdensome, rather than facilitating the ease of business for such importers. A copy of Public Notice No. 9 of 2017 is annexed as Exhibit 'P' to the petition. 30. O....

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....tally failed to appreciate that there are other CFSs, including the petitioners, which are within a comparable distance from the port and, in any event not at such great distance as to exclude them from being eligible to receive DPD traffic that has not been cleared in 48 hours. (iii) That as per Public Notice No. 161 of 2016, a DPD importer has been allowed to ask for a change in CFS subject to the same being allowed by Additional/Joint Commissioner in charge of RMS facilitated centre and therefore, the appointment of a designated CFS is not arbitrary or unfair. The petitioners state that this contention ignores the fact that in reality the said permissions are not granted as a matter of course (in fact, as few as 28 permissions have been granted till date) and in any event, the period of 48 hours is largely insufficient to obtain this permission and therefore, the DPD containers nevertheless end up going to the designated CFS i.e. Speedy/respondent no. 9 at the end of 48 hours. (iv) That no contract has been awarded to any particular entity and therefore, there is no question of tender. The petitioners state that this contention ignores the fact that by appointing Speedy/respon....

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....s served upon the respondents on 17th March, 2017. Immediately, on receipt of the copy of the petition, respondent nos. 1 to 6 issued a limited tender notice dated 17th March, 2017 through respondent no. 10 for inviting bids from all CFSs registered as Customs Cargo Service Provider (CCSP) under the HCCA Regulations, 2009 for being appointed as the designated CFS for delivery of DPD containers from port terminals of JNCH, Nhava Sheva to CFSs, if the importers fail to clear their respective DPD containers from the port terminals within a period of 48 hours of the containers landing in the port terminal. A copy of the limited tender notice dated 17th March, 2017 is annexed as Exhibit 'W'. 37. There is an affidavit in reply filed to this writ petition by the Commissioner of Customs, Nhava Sheva (General). 38. First of all, it is stated that the Public Notice No. 16 of 2017 dated 9th February, 2017 has been issued by the Jawaharlal Nehru Customs House, CFS Management Cell, Nhava Sheva, Taluka Uran, District Raigad, by which, in addition to various other measures undertaken to reduce the dwell time and transaction cost to the importers/trade, additional facility, in terms of direct po....

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....e to regulation 2(b) and regulation 7(2) of the HCCA Regulations, 2009, by which, the Jurisdictional Commissioner of Customs can regulate movement of import/export containers. Thus, in exercise of the powers conferred by section 141(2) of the said Act and Regulation 7(2) of the HCCA Regulations, 2009, Facility Notice No. 63 of 2008 dated 1st September, 2008 was issued. Then, para 3.8 of the facility notice is referred, by which, all concerned were informed that the commissioner of Customs would notify the designated CFS. The Commissioner of Customs, JNCH issued Public Notice No. 66 of 2008 dated 11th September, 2008 notifying Speedy Multimode Ltd. as the designated CFS. 41. The justification for the issuance of these notices is provided in para 11 of this affidavit, which reads as under:- "11. I say that the Commissioner of Customs, JNCH, considering the administrative requirement of nominating a CFS in a transparent manner, decided that it would be appropriate to nominate a CFS closest to the Port Terminal. Therefore, Speedy Multimodes Ltd., CFS, which is located nearest to the Port Terminal was designated as default CFS. Further Commissioner of Customs, JNCH notified Speedy Mul....

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....se for designation of CFS for delivery of DPD Containers from Port Terminals of JNCH, Nhava Sheva to CFS, if not cleared beyond the prescribed period and under certain other circumstances. Hereto annexed and marked as Exhibit 8 is a copy of the Limited Tender Notice. 17. I say that in this regard, the Limited Tender Notice documents have already been received by 27 CFS out of the currently operating 33 CFS including Petitioner Nos. 1, 2, 5, 6, 7, 8, 9, 10 and 13 on 17-03-2017 itself and the last date of submission is 30-03-2017. Hereto annexed and marked as Exhibit 9 is a copy of the sheet showing receipt of Tender documents by 27 CFS. 19. I say that the petition is devoid of merits, and deserves to summarily reject. I say that it is the importers who bear the costs towards logistic expenses. They are not aggrieved. It is the CFS who have approached this Honourable Court. I say that the Petitioners have failed to make out a case for the intervention of this Honourable Court in exercise of its extra ordinary jurisdiction under Article 226 of the Constitution of India. I say that the actions of the Revenue are all aimed at achieving the single object of facilitating all stakeholder....

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....nd protection of public interest. Secondly, respondent no. 9 has been designated due to it is owned by JNPT and which falls under the domain of Tariff Authority under Major Ports. However, these grounds are baseless and without any merits. The issuance of tender notice does not redress the grievance of the petitioners, as set out in the petition nor does it render the petition infructuous. The petitioners do not contend that they should be appointed as a designated CFS or there should be a limited tender. The petitioners are not confining nor restricting their challenge to the appointment of respondent no. 9 as designated CFS. They are aggrieved by the impugned public notices because they override the choice of the importers. If the importers indicate their choice of the preferred CFS and if they wish to send their containers to it, then, such a choice cannot be interfered with. Once the DPD eligible importers have indicated a preferred CFS in their IGM, then, their containers should be sent to the preferred CFS irrespective of whether or not it is "out of charge", namely, cleared for Customs from the port within 48 hours. From the reply, it appears that the respondents are agreeab....

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....ring for the petitioners, invited our attention to all the public notices to submit that it is the importers' choice to select a CFS. However, what the respondents now stipulate is that if the containers are not cleared, failure to do so would result in the same being removed to respondent no. 9. Mr. Dwarkadas would submit that such facilities, as are now sought to be introduced or created, have been so done by issuing an executive fiat. There is no compliance with the statutory requirement. 49. Mr. Dwarkadas then submits that the impugned actions violate the petitioners' fundamental right guaranteed by Article 19(1)(g) of the Constitution of India. Mr. Dwarkadas also submits that there is a violation of the mandate of Article 14 of the Constitution of India, inasmuch as by failure to clear the containers even by the DPD mode within the stipulated time results in no penalty on the importers, but it deprives the petitioners of their rights for all such containers, which are nor cleared, irrespective of the choice of the importers, are then sent to respondent no. 9. This is a clear discrimination in favour of respondent no. 9 and against the petitioners on no rationale or reasonable....

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....f India. Hence, the writ petition be dismissed. 51. For appreciating these contentions, a reference will have to be made to the Customs Act, 1962. It is an Act to consolidate and amend the law relating to Customs. The Statement of Objects and Reasons to the unamended and amended act would indicate as to how the enactment provides for the levy of duties of Customs. That is to discourage smuggling. Further, the trade has been pressing for certain changes and facilities. It is in these circumstances that the earlier Act was amended and later on, by Amendment Act 55 of 1991, certain provisions relating to warehousing of goods after import, without payment of duty, were proposed to be amended. By the Statement of Objects and Reasons to the Amendment Act 55 of 1991, it is clarified that the imported goods may be stored in bonded warehouses till their actual clearance for home consumption on payment of appropriate duty or their re-export without payment of duty to any foreign port. There is a difficulty because of the existing provisions. Therefore, the Bill seeks to curtail the period of warehousing, prescribe the increased rate of interest on duty leviable on the warehoused goods, ensu....

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....on 61 deals with period for which goods may remain warehoused. Then, there are various aspects which are enumerated in sections 64 to 73-A relating to warehoused goods. Chapter X is titled as "drawback". Chapter XI enacts special provisions regarding baggage, goods imported or exported by post and stores. By Chapter XII, provisions relating to coastal goods and vessels carrying coastal goods are enacted. Chapter XIII deals with searches, seizure and arrest. Chapter XIV deals with confiscation of goods and conveyances and imposition of penalties. We are not concerned with Chapter XIVA dealing with settlement of cases and Chapter XV dealing with appeals and revision so also Chapter XVI dealing with offences and prosecutions. The miscellaneous provisions are contained in Chapter XVII and section 141 falling thereunder reads as under:- 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, dispatched or otherwise handled i....

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....f transhipment, declaration for transhipment, boat note and bill of coastal goods; (ai) the manner of export of goods, relinquishment of title to the goods and abandoning them to customs and destruction or rendering of goods commercially valueless in the presence of the proper officer under clause (d) of sub-section (1) of section 26-A; (aii) the form and manner of making application for refund of duty under sub-section (2) of section 26-A; (aa) the form and manner in which an application for refund shall be made under section 27; (b) the conditions subject to which the transshipment of all or any goods under sub-section (3) of section 54, the transportation of all or any goods under section 56 and the removal of warehoused goods from one warehouse to another under section 67, may be allowed without payment of duty; (c) the conditions subject to which any manufacturing process or other operations may be carried on in a warehouse under section 65; (d) the manner of conducting audit of the assessment of duty of the imported or export goods at the office of the proper officer or the premises of the importer or exporter, as the case may be. 55. Once we have a general power to ma....

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....strative act, the whole legal regime has been altered. There is no power to do so, according to him, nor is the Commissioner conferred with the jurisdiction to do so. We are unable accept his arguments for more than one reason. The Regulation 7(2) enables the Commissioner of Customs to regulate the entry of goods in the customs area for efficient handling of such goods. There is a discretionary power conferred in the commissioner by this regulation. Further, the handling of goods in the customs area is a matter specifically dealt with by sub-section (2) of section 141. Thus, regulations can be made so as to prescribe the manner in which the imported or export goods may be received, stored, delivered, despatched or otherwise handled in the customs area. The regulations can also set out the responsibilities of persons engaged in the aforesaid activities. Once the regulations deal with such matters, then, it is not necessary that separate provisions have to be made for each matter covered by sub-section (2) of section 141. Section 141(2) itself enables the Commissioner to exercise control. The provisions of the Customs Act, 1962 have to be enforced so as to carry out its object and pu....

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....r ensuring early clearance of the goods. 60. Annexure 'H' is a copy of Facility Notice No. 63 of 2008. The subject of this notice is "facility of direct port delivery to select importers". The notice notifies for the information of trade and public that direct port delivery for imported cargo will be permitted for reputed importers having ACP status vide Public Notice No. 64 of 2005 and to 100% EOUs on a selective basis. The DPD permission will be granted by the Commissioner of Customs (Import) JNCH, on the basis of application by individual importers. The facility notice sets out the complete procedure in that behalf. The facility notice is dated 1st September, 2008 and the petitioners, in the petition itself, have referred to these arrangements made. They also refer to Public Notice No. 66 of 2008, whereby, respondent no. 9 was notified as a designated CFS. Thus, it is apparent that on 11th September, 2008 itself the appointment of respondent no. 9 was notified. Beyond alleging that the appointment of respondent no. 9 is arbitrary and that is made without any opportunity to the petitioners or other CFSs, we do not find any challenge raised to these arrangements. The only pleadin....

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....ted because the direct port delivery facility reduces the time and cost of the importers considerably. In order to reduce dwell time and cost associated with import at Nhava Sheva, it has been decided  to extend DPD permission to importers as mentioned in Annexure 'A' enclosed to this public notice subject to the conditions set out in this public notice. It is clarified that this facility has been extended to the said importers on the basis of the volume of transactions and on the basis of assessment made by the office of the Commissioner of Customs, NS-III, Mumbai Customs Zone-II, JNCH, Nhava Sheva regarding their ability to comply with the conditions as specified in this public notice. However, such permission for DPD may be withdrawn by the Jurisdictional Commissioner of Customs at any time in case of failure of adherence to the conditions or any violation. 63. The 8th respondent to the writ petition addressed a letter in representative capacity. Thus, the CFS Association of India complained to the Chief Commissioner of Customs that the association is registered as non-profit making body. It represents the interest of 24 CFSs, who are its members. The designation of Speedy....

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....vkar Corporation Ltd. Somatane on kon - Sarla Road Taluka Panvel, Dist. Raigad Gentlemen, Subject: Advisory in respect of Direct Port Delivery - Reg. Please refer to the facility of 'Direct Port Delivery' extended to many Importers at this Custom House vide Public Notice No. 161/2016 dated 28.11.2016 and Public Notice No. 180/2016 dated 19.12.2016 along with importers who have been granted permission for 'Direct Port Delivery' earlier to the Public Notices mentioned above. In this connection, you are hereby directed that FCL containers imported by Importers who have been accorded 'Direct Port Delivery' as mentioned above and which have been facilitated by RMS and are meant for 'Direct Port Delivery' shall not be accepted at CFS. Non compliance of the above direction will be viewed seriously and action will be initiated as per the provisions of the Customs Act, 1962. (Dhirendra Lal) Addl. Commissioner of Customs (Import) NS - I, III & V 66. Then, what we have on record are two public notices dated 16th January, 2017. They are Public Notice Nos. 8 and 9 of 2017. The copies of these notices are annexed as Exhibit 'O and Exhibit 'P' at pages 133 and 137 of the paper book.....

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....easons it cannot take place, then, there are clear directions in that regard. There is a justification provided, namely, that as an administrative arrangement for nominating a CFS in transparent manner, the CFS closest to the port terminal has been nominated. Hence, Speedy Multimode CFS, which is located nearest to the port terminal was designated as default CFS. This was done considering public interest so that any default evacuation of containers (beyond 48 hours) will avoid congestion at the port. We are satisfied that these clarifications were issued because of the representation of the stakeholders, including respondent no. 8. 69. Then, we have Public Notice No. 16 of 2017, by which, certain clarifications about the DPD facility have been issued, particularly a measure is conceived so as to facilitate trade and it is aimed at ease of doing business. Point wise clarification/procedural requirements set out in this Public Notice No. 16 of 2017 dated 9th February, 2017, therefore, carries the matter further. However, the basic policy decision has already been taken by earlier public notices. This point-wise clarification further elaborately sets out the procedural requirements. ....

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....n. There cannot be any grievance when the public notices ensure transparency and openness in the matter of designation of CFS. Now the concerned and interested CFSs can participate and place their bids. Though it is rightly termed as a limited tender, still, it takes care of the grievance of the association that respondent no. 9 is arbitrarily chosen and to the detriment of the other CFSs. Now other CFSs have an opportunity to participate in the appointment or designation process. Even then they are complaining because they do not want a designation at all. They do not want a designation for they are not interested in early or expeditious clearance of the consignments at the port and reduce the congestion at the port. If there is a confusion, chaos and delay then, that may be advantageous to the petitioners, but it would be certainly detrimental to the public interest. The larger public interest has to be subserved and once that is ensured, then, the same prevails over the commercial or business interests of the petitioners. For their commercial or business motives, a decision taken in public interest cannot be interfered with. The mandate of Articles 14 and 19(1)(g) of the Constit....