TaxTMI 
TaxTMI 
2017 (7) TMI 977
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....of custom duty. It further directed that the Port Trust was not entitled to charge any demurrage in view of Regulation 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009 (in short '2009 Regulations') since the Customs had issued detention certificate. The detention charges demanded by the Shipping Line were ordered to be borne by the DRI and/or the Customs. The writ petitioners/importers were also held entitled to costs of Rs. 50,000/- each to be paid by the Department. 3. The facts of the case are that the respondent-importers are two sister concerns viz., - (1) Inder International, a partnership firm, and (2) M/s Shri Lakshmi Steels, a proprietorship firm. These firms deal in the import and trading of cold rolled coils and sheets (primary and secondary). Both the importers had imported various consignments of cold rolled coils. We are concerned only with ten consignments imported on three dates. The first batch of consignments of coils was imported vide bills of entry dated 04.12.2015 and the goods imported were declared to be cold rolled sheets/coils. The bills of entry for the second and third consignments were presented on 11.12.2015 and 29.12.2015 respectivel....
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....e of goods and also to furnish bank guarantee of 20% of the provisional duty on the imported goods. Similar letters were written to other importers also, but no bank guarantee was demanded from them and only PD Bonds were sought. All the other importers took advantage of this offer and after furnishing PD Bonds they got the goods released after payment of customs duty. 7. The case of the respondent-importers herein is that they were informed about the letter dated 28.01.2016 only in Court on 03.02.2016 when a copy of the letter was handed over to them. According to the counsel for the respondent-importers, by this time, lakhs of rupees were due as demurrage and detention charges and, hence, they could not take advantage of the offer given by this letter. Moreover, the respondent-importers were asked to furnish bank guarantee whereas the other importers were not asked to do so. 8. It would also be pertinent to mention that DRI was not satisfied with the report of the Chartered Engineer. DRI was also not satisfied with the report of M/s Perfect Laboratory Services; according to DRI the samples sent to this laboratory were not taken in the presence of the officials of DRI and th....
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....owever, on 05.03.2016, DRI sent another letter that provisional release be allowed without waiting for measurement of goods. The fact however is that for one reason or the other the goods were not released. Both the parties blamed each other for the delay in release of the goods. 11. On 04.04.2016, the High Court of Punjab and Haryana passed orders in the writ petition filed by the respondent-importers directing the Customs Authorities to de-stuff the consignments within one week and the respondent-importers undertook to cooperate with the Customs Authorities during this process. According to the respondent-importers, the officials of the DRI with a view to harass them did not permit release of the goods, whereas, according to the Union of India and DRI, the representatives of the respondent-importers did not cooperate and violated the undertaking. Thereafter, on 22.04.2016, the Shipping Line issued notice to the respondent-importers that it proposed to auction the goods to recover the detention charges. On 09.05.2016, the respondent-importers withdrew the writ petitions filed by them with liberty to file fresh writ petitions. 12. Thereafter, fresh writ petitions were filed. ....
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....vices to be provided by the Trust at the Major Ports are set out in Chapter V of the Act. Chapter V-A which was introduced with effect from 09.01.1997 provides for fixation of tariff for Major Port Trusts. The tariff to be charged by the port trust is determined by an independent statutory authority, called the Tariff Authority for Major Ports, under Section 47A of the Act. 16. Shri K.K. Venugopal, learned senior counsel appearing on behalf of the Mumbai Port Trust, submitted that the High Court gravely erred in relying upon Regulation 6(l) of the 2009 Regulations, framed by the Central Board of Excise and Customs. He submitted that this subordinate legislation i.e., regulations framed by the Central Board of Excise and Customs cannot supersede the statutory provisions of the Major Port Trusts Act and the judgments of this Court. The stand of the Mumbai Port Trust is that it is entitled to recover the statutory tariff, including demurrage charges, from the respondent-importers and neither the High Court nor the Union of India, can direct it to release the goods without payment of such statutory charges. The second contention is that the High Court gravely erred in holding ....
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....on 47A of the Act and the imposition and recovery of rates at Major Ports are fixed by the Tariff Authority. Section 48(1) of the Act provides that the authority shall, by notification in the Official Gazette, frame a scale of rates and a statement of conditions under which, any of the services specified hereunder shall be performed by a Board in relation to a port. Sub-section (1)(d) of Section 48 deals with wharfage, storage and demurrage of goods. Section 53 of the Act empowers the Board to exempt, either wholly or partially, any goods or vessels or class of goods of vessels from the payment of any rate or of any charge leviable in special case, for the reasons to be recorded in writing. Section 58 deals with time for payment of rates on goods. Section 59 of the Act provides that the Board shall have a lien on the goods which are kept in the port in respect of the amount due to the Board under the provisions of the Act. Sections 48, 53, 58 and 59 of the Act read as follows: "48. Scales of rates for services performed by Board or other person.- (1) The Authority shall from time to time, by notification in the Official Gazette, frame a scale of rates at which, and a st....
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....ime being in force relating to customs, other than by way of penalty or fine." The Union of India relies upon the provisions of Section 128 of the Act, which read as follows: "128. Saving of right of Central Government and municipalities to use wharves, etc., for collecting duties and of power of Customs Officers.- Nothing in this Act shall affect- (1) the right of the Central Government to collect customs duties or of any municipality to collect town duties at any dock, berth, wharf, quay, stage, jetty or pier in the possession of a Board, or (2) any power or authority vested in the customs authorities under any law for the time being in force." As far as the Customs Act is concerned, we may refer to Section 45 and Section 160(9) of the Act, which read as follows: "45. Restrictions on custody and removal of imported goods. - (1) Save as otherwise provided in any law for the time being in force, all imported goods, unloaded in a customs area shall remain in the custody of such person as may be approved by the Principal Commissioner of Customs or Commissioner of Customs until they are cleared for home consumption or are warehoused or are tra....
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.... subject matter of a number of decisions. In the case of Trustees of the Port of Madras v. M/s Aminchand Pyarelal (1976) 3 SCC 167), the Customs Authorities had issued detention certificate of imported goods. There was no fault or negligence on the part of the importer. The Trustees of the Port of Madras waived demurrage charges for the period of detention; the importer paid the balance amount and cleared the goods. Later, the Board wrote to the Customs Authorities that the detention certificate had been wrongly issued. Thereafter, the Board sued the importer for recovery of the balance demurrage charges. It was urged that the Board could not charge demurrage for the period during which the goods had been detained for no fault or negligence of the importer or his agent. This Court, after noticing the provisions of the Madras Port Trust Act, especially Sections 42, 43 and 43A thereof, which are similar to the provisions of the Major Port Trusts Act, 1963 referred to above, held that the Board was entitled to claim the rates as framed under the provisions of the said Act. This Court held that the Port Trusts were public representative bodies entrusted by the Legislature with authorit....
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....re entitled to charge demurrage and other charges from the importer even in respect of those periods during which the importer was unable to clear goods from the premises of the Board, for no fault or negligence on the part of the importer. It was further held that the Boards were entitled to charge demurrage from the importer even when the importer was unable the clear the goods because of the detention thereof by the Customs authorities, which detention may later on have been found to be unjustified. 24. The provisions of the International Airport Authority Act, 1971 are similar in nature and these provisions came up for consideration before this Court in International Airports Authority v. Grand Slam International (1995) 3 SCC 151). In that case, this Court took note of Section 45 of the Customs Act and held as follows: "41. None of these provisions entitles the Collector of Customs to debar the collection of demurrage for the storage of imported goods. They do not entitle him to impose conditions upon the proprietors of ports or airports before they can be approved as Customs ports or Customs airports. Section 45 provides that all imported goods imported in a ....
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....ala, in his concurring judgment, after referring to the various judgments of this Court cited hereinabove, held as follows: "66. From the above decisions of this Court it becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1961, would be entitled to charge demurrages for the imported goods in its custody and make the importer or consignee liable for the same even for periods during which he/it was unable to clear the goods from the customs area, due to fault on the part of the Customs Authorities or of other authorities who might have issued detention certificates owning such fault. xxx xxx xxx 69. Therefore, my answer to the question considered by me is in the negative i.e. the Collector of Customs empowered under sub-section (1) of Section 45 of the Customs Act, 1962 to approve persons to be custodians of imported goods in customs areas until they are cleared as provided for therein, while approving the International Airports Authority of India to be the custodian of such imported goods in the customs area of Indira Gandhi International Airport, New Delhi and Cent....
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....len Mills (2001) 5 SCC 345) relied upon by the High Court. It would be pertinent to mention that this judgment does not deal with the Major Port Trust Act, nor does it deal with the International Airports Authority of India Act. In that case, the issue before this Court was with regard to demurrage charges levied by the Shipping Corporation of India. This Court in fact affirmed the law laid down in Grand Slam (supra). It would be apposite to make reference to the following portion of the judgment: "7. .............. Having scrutinized the provisions of the Customs Act, we are unable to find out any provision which can be remotely construed to have conferred power on the Customs Authorities to prevent the proprietor of the space from levying the demurrage charges and, thereby absolving the importer of the goods from payment of the same. ......." In that case, this Court gave certain directions in the peculiar facts of the case, but the law laid down in Grand Slam (supra) has not been whittled down. 27. The High Court also placed reliance on certain observations made by this Court in the case of Union of India v. Sanjeev Woolen Mills (1998 (100) ELT 323), wherein th....
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.... It is not disputed before us that the Mumbai Port Trust is a major port. 30. As already explained hereinabove, the Mumbai Port Trust has the power and authority to levy rates including demurrage as fixed by the Tariff Authority under Section 47A of the Act. This right of the Port Trust is not affected either by the provisions of the Customs Act or by the Regulations of 2009. Section 160(9) of the Customs Act clearly lays down that the provisions of the Customs Act shall not in any manner affect the constitution and powers of any port authority in a major port. This will include the right of the major port authority that is a Major Port Trust to levy and charge rates and demurrage. 31. As far as 2009 Regulations are concerned, these are the Regulations framed under the Customs Act. Regulations are in the nature of subordinate legislation. There can be no manner of doubt that subordinate legislation that too a legislation framed by a Board under the Customs Act cannot in many manner affect the power and authority of the Major Port Trust, statutorily vested in it. 32. Neither the regulations nor the provisions of the Customs Act can impinge or in any manner affect the statut....
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....levelled against them. These persons were arrayed as Respondent Nos. 7 and 8 in the writ petition. Initially, a written statement was filed by Respondent Nos.1-3 and 5-8 which was not signed by these two persons. Thereafter, these two persons filed an application for permission to file written statement which was filed on 07.11.2016 probably after arguments have been heard. These written statements have not been taken into consideration by the High Court. Charges of mala fide are serious and these charges were denied in the first written statement and with the second written statement, an affidavit was filed by Respondent Nos. 7 & 8 denying the same charges. Therefore, the second affidavit should not have been brushed aside. In any event, it would be important to note that the High Court itself did not go into this aspect in detail and observed as follows :- "...This Court is not going into much detail on this aspect, but it can safely be opined that the action was not bona fide, if not strictly malafide....." Therefore, there is no specific finding of mala fides. However, the High Court held that the respondent-importers suffered a loss because of delay on the part of ....
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.... respondent-importers allegedly admitted that they had earlier imported certain sheets of secondary and defective nature from ICD, Sonepat, Haryana, thereby violating the Import Licensing Note. 39. On 22.12.2015, the respondent-importers requested that their goods be released by assessing customs duty under Section 18 of the Customs Act. Since the respondent-importers apprehended that the DRI had asked the Shipping Line not to release the goods, a clarification was issued on 23.12.2015 by the DRI to the Shipping Line that it had not instructed the Shipping Line not to issue delivery orders but had only asked that no changes should be made in the Bill of Lading with regard to the description of goods. 40. It would be important to note that the duty was discharged by the importer in respect of Bills of Entry dated 04.12.2015 and 11.12.2015, only on 23.12.2015. Therefore, prior to that date there could not have been any release of goods. In fact, in respect of one of the Bills of Entry dated 04.12.2015, the same was presented to the Customs Authorities and customs duty was paid after 30th December, 2015. 41. Shri Indresh Jain appeared before the DRI on 28.12.2015. On the one ....
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....furnish bank guarantees also. The respondent-importers were required to furnish bank guarantee only to the extent of 20% of the provisional assessment and the bank guarantee demanded was only Rs. 18.71 lakhs. It is thus obvious that importers even at this stage could have got the goods released only by furnishing the bank guarantee for Rs. 18.71 lakhs and furnishing PD Bonds. All other importers took benefit of this offer given by the DRI/Customs and got their goods released but the respondent-importers for the reasons best known to them did not take the benefit of this offer. We may also add that if they had taken the benefit of this offer there could have a reduction of the demurrage as was done in the case of other importers. 45. As far as the period after the first week of February is concerned, from the record it is apparent that the revenue sent samples of the goods imported to M/s. TCR. As per the reports of TCR eight of these consignments were hot rolled coils and not cold rolled coils. The allegation of the petitioner is that the report of Mr. Tambi was not accepted and the goods sent to M/s. TCR for analysis even though M/s. TCR did not have the requisite facilities to....