TaxTMI 
TaxTMI 
2020 (8) TMI 300
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....cleared by the consignees/importers and refused to be destuffed by the Port, on the ground of inadequate storage space, can be imposed on the owners of the vessel/steamer agents beyond the period of 75 days, fixed by the Tariff Authority of Major Ports [TAMP], a statutory body constituted under Section 47-A of the Major Port Trusts Act [MPT Act], 1963. 3. The facts of the case are summarised in the following extract of the judgment of the High Court: "The sequence of events that led to the stalemate refers to the incidents which happened in 1998 when there (sic) imports synthetic woollen rags (in containers) in the Cochin Port Trust premises. The said containers were destuffed to facilitate Customs examination and to return the empty containers to the steamer agents. The destuffed cargo occupied much larger space and was not promptly cleared by the consignees in view of the hurdles placed by the Customs stating that the cargo actually did not constitute old woollen rags as declared, but mostly were brand new clothes which could not have been cleared. The "modus operandi" of the consignees/importers attracted wide attention of all concerned and taking note of the p....
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....clusively on the steamer agent; 23.5. In Rowther-II, it was held that once the goods are handed over to the Port Trust by the steamer and the steamer agents have duly endorsed the bill of lading or issued the delivery order, their obligation to deliver the goods personally to the owner or the endorsee comes to an end. The decision in Rasiklal, which has been delivered after the reference of Forbes-I was disposed of, takes a contrary view that in cases where the consignee does not come to take delivery of goods, the position of law laid down by Rowther-II would result in a situation that the Port Trust would incur expenses without any legal right to recover such amount from the consignor, with whom there was no contractual obligation; and 23.6. The Bench of two Judges in Rasiklal opined that it agrees with the conclusions recorded in Rowther-II and Forbes-II that a Port Trust could recover the rates due, either from the steamer agent or the consignee. However, the holding in Rowther-II finds only the consignee to be liable. 24. Taking note of the above inconsistencies in the judgments which have been delivered after the pronouncement by the Constitution Be....
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....e Kerala High Court. A writ petition, namely, W.P. (C) No. 32191 of 2004, was also disposed of by the impugned judgment, as it raised a similar question of law. The facts involved in these appeals and writ petition were briefly stated in paragraphs 4 and 5 of the impugned High Court judgment as follows: "4. Goods involved in all the cases, imported as 'FCL' (Full Container Loads) mainly consist of 'synthetic woollen rags', except in W.P. (C) No. 32191 of 2004, where it is VCD players. The period of import is during August 1998 to March 1999. All the Containers now stand returned after destuffing, pursuant to common judgment in the Original Petitions and the interim orders passed in the Appeals. 5. Some of the goods imported earlier in the Cochin Port, titled as "woollen rags" were actually found to be "brand new clothes" on inspection by the Customs Department, which attracted heavy duty, penalty and such other charges. The dispute between the Consignees and the Customs went on for an indefinite period and in the said circumstances, the consignees did not turn up to clear the goods in respect of the subsequent transactions as well, presumably knowing the probable ....
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....ore held that because of the lapse on the part of the consignee on the one hand in not lifting the goods, and the Port Trust on the other in not destuffing containers, the shipping agents were caught in between, and were being made "to pay through their nose". This being the case, the impugned judgment went on to construe sections 61 and 62 of the MPT Act, by which a Board "may", after the expiry of two months from the time when any goods passed into its custody, sell such goods under certain circumstances. The impugned judgment went on to hold that the expression "may" in the said provisions must be read as "shall", as a duty is cast on the Port Trust to get rid of the goods as soon as possible in a fact situation where the consignee does not lift such goods. Ultimately, the impugned judgment concluded: "44. In the above facts and circumstances, this Court finds that, there is no rationale on the part of the Port Trust in contending that they are entitled to collect 'Ground Rent' charges in respect of containers indefinitely. The course pursued by them without causing the goods to be destuffed, despite the specific request, on the failure of the Consignee/Importer to have....
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....he bailee's request. He went on to argue that in any case, the sub-bailee in K.H. Enterprise (supra) was entitled to payment for its services from the bailee pursuant to the agreement between them, and not from the bailor/shipper. Analogously, therefore, the Port Trust (sub-bailee) would be entitled to payment for its services from the shipping agent (bailee). He was at pains to argue that the passing of title to the goods is immaterial when it comes to the Port Trust collecting its dues, as the Port Trust has no means of ascertaining when such title has passed. In any event, Shri Rai contended that the correct reading of the MPT Act leads to the conclusion that the passing of title is in any case wholly irrelevant. He stressed the fact that containers belonging to the shipping agents are required to be returned to them upon destuffing, as a result of which they are liable for ground rent. He strongly supported the decision in Rasiklal (supra) which laid this proposition down as a matter of law. He also strongly deprecated the impugned judgment of the Kerala High Court, stating that the discretion that has been given under sections 61 and 62 of the MPT Act to the Port Trust cannot ....
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.... the agent of the vessel - can never be said to be the "owner" of goods. He relied strongly on the judgment in Sriyanesh Knitters (supra), stating that the Port Trust is a bailee on behalf of the consignee who is the bailor, on a consideration of section 1 of the Indian Bills of Lading Act, 1856, and submitted that Forbes-II (supra) is wholly incorrect and deserves to be overruled. He dealt with the judgment in Rowther-I (supra) in great detail, and distinguished it from the present case, stating that the judgment does not concern demurrage or storage charges post landing of the goods, and after the Port Trust takes custody of the goods and issues the receipt, and is thus not applicable to the facts of the present case. Further, according to him, Rasiklal (supra), insofar as it agrees with Forbes-II (supra) is incorrect. Insofar as Rasiklal (supra) notes the legal position that the Port Trust is a sub-bailee of the goods bailed by the consignor (bailor) to the ship-owner (bailee), it is absolutely correct and must be followed. So far as Rowther-II (supra) is concerned, the learned Senior Advocate stated that the portion of Rowther-II (supra), which mixes up endorsement by the steam....
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.... various provisions of the MPT Act, and argued that section 48(1)(d) therein does not contemplate any liability on a steamer agent. This section has to be contrasted with section 49(1)(c), which expressly contemplates liability on a steamer agent, but only with respect to land that is taken on lease from the Port Trust by the steamer agent. He relied heavily upon sections 61 to 63 of the MPT Act to argue that when the goods are sold by the public auction, a steamer agent has to be notified only because the vessel owner may have a lien on such goods, which can be enforced in its favour under section 60 of the MPT Act. Further, he argued that it is made clear that if there is a surplus from the sale proceeds, such surplus shall be paid only to the importer, owner or consignee of the goods or their agent, from which list of persons the ship-owner and its agent are conspicuously absent, making it clear that it is the owner of the goods alone, or persons entitled to the goods, that the Port Trust must chase for demurrage charges incurred after landing. He then argued that the passing of title under section 1 of the Indian Bills of Lading Act, 1856 makes it clear that it is either the co....
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....ody, loading or unloading of such goods; and (ii) in relation to any vessel or any aircraft making use of any port, includes any part-owner, charterer, consignee, or mortgagee in possession thereof; xxx xxx xxx (v) "rate" includes any toll, due, rent, rate, fee, or charge leviable under this Act; xxx xxx xxx (z) "vessel" includes anything made for the conveyance, mainly by water, of human beings or of goods and a caisson;" "42. Performance of services by Board or other person.-(1) A Board shall have power to undertake the following services:- (a) landing, shipping or transhipping passengers and goods between vessels in the port and the wharves, piers, quays or docks belonging to or in the possession of the Board; (b) receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises; (c) carrying passengers by rail or by other means within the limits of the port or port approaches, subject to such restrictions and conditions as the Central Government may think fit to impose; (d) receiving and delivering, transporting and booking and despatching goods o....
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....y of Board for loss, etc., of goods.-(1) Subject to the provisions of this Act, the responsibility of any Board for the loss, destruction or deterioration of goods of which it has taken charge shall,- (i) in the case of goods received for carriage by railway, be governed by the provisions of the Indian Railways Act, 1890 (9 of 1890); and (ii) in other cases, be that of a bailee under sections 151, 152 and 161 of the Indian Contract Act, 1872 (9 of 1872), omitting the words "in the absence of any special contract" in section 152 of that Act: Provided that no responsibility under this section shall attach to the Board- (a) until a receipt mentioned in sub-section (2) of section 42 is given by the Board; and (b) after the expiry of such period as may be prescribed by regulations from the date of taking charge of such goods by the Board. (2) A Board shall not be in any way responsible for the loss, destruction or deterioration of, or damage to, goods of which it has taken charge, unless notice of such loss or damage has been given within such period as may be prescribed by regulations made in this behalf from the date of taking charge of suc....
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....o the ship-owner, to an amount to be mentioned in such notice, such goods shall continue to be liable to such lien to such amount. (2) The goods shall be retained in the custody of the Board at the risk and expense of the owners of the goods until such lien is discharged as hereinafter mentioned; and godown or storage rent shall be payable by the party entitled to such goods for the time during which they may be so retained. (3) Upon the production before any officer appointed by the Board in that behalf of a document purporting to be a receipt for, or release from, the amount of such lien, executed by the person by whom or on whose behalf such notice has been given, the Board may permit such goods to be removed without regard to such lien, provided that the Board shall have used reasonable care in respect to the authenticity of such document. 61. Sale of goods after two months if rates or rent are not paid or lien for freight is not discharged.-(1) A Board may, after the expiry of two months from the time when any goods have passed into its custody, or in the case of animals and perishable or hazardous goods after the expiry of such shorter period not be....
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....d in this Act, where any goods placed in the custody of the Board upon the landing thereof are not removed by the owner or other person entitled thereto from the premises of the Board within one month from the date on which such goods were placed in their custody, the Board may, if the address of such owner or person is known, cause a notice to be served upon him by letter delivered at such address or sent by post, or if the notice cannot be so served upon him or his address is not known, cause a notice to be published in the Port Gazette or where there is no Port Gazette, in the Official Gazette and also in at least one of the principal local daily newspapers, requiring him to remove the goods forthwith and stating that in default of compliance therewith the goods are liable to be sold by public auction or by tender, private agreement or in any other manner: Provided that where all the rates and charges payable under this Act in respect of any such goods have been paid, no notice of removal shall be so served or published under this sub-section unless two months have expired from the date on which the goods were placed in the custody of the Board. (2) The notice ....
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....wner or consignee of the goods or to his agent, on an application made by him in this behalf within six months from the date of the sale of the goods. (3) Where no application has been made under sub-section (2), the surplus shall be applied by the Board for the purposes of this Act. 64. Recovery of rates and charges by distraint of vessel.-(1) If the master of any vessel in respect of which any rates or penalties are payable under this Act, or under any regulations or orders made in pursuance thereof, refuses or neglects to pay the same or any part thereof on demand, the Board may distrain or arrest such vessel and the tackle, apparel and furniture belonging thereto, or any part thereof, and detain the same until the amount so due to the Board, together with such further amount as may accrue for any period during which the vessel is under distraint or arrest, is paid. (2) In case any part of the said rates or penalties, or of the cost of the distress or arrest, or of the keeping of the same, remains unpaid for the space of five days next after any such distress or arrest has been so made, the Board may cause the vessel or other things so distrained or ar....
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....x xxx xxx (26) ―"importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner, beneficial owner or any person holding himself out to be the importer;" "29. Arrival of vessels and aircrafts in India.-(1) The person-in-charge of a vessel or an aircraft entering India from any place outside India shall not cause or permit the vessel or aircraft to call or land- (a) for the first time after arrival in India; or (b) at any time while it is carrying passengers or cargo brought in that vessel or aircraft, at any place other than a customs port or a customs airport, as the case may be unless permitted by the Board. 30. Delivery of arrival manifest or import manifest or import report.-(1) The person-in-charge of - (i) a vessel; or (ii) an aircraft; or (iii) a vehicle, carrying imported goods or export goods or any other person as may be specified by the Central Government, by notification in the Official Gazette, in this behalf shall, in the case of a vessel or an aircraft, deliver to the proper officer an arrival man....
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....try for home consumption or warehousing in such form and manner as may be prescribed: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically on the customs automated system, allow an entry to be presented in any other manner: Provided further that if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a public warehouse appointed under section 57 without warehousing the same. (2) Save as otherwise permitted by the proper officer, a bill of entry shall include all the goods mentioned in the bill of lading or other receipt given by the carrier to the consignor. (3) The importer shall present the bill of entry under sub-section (1) before the end of the next day following the day (ex....
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....cer, be sold at any time; (b) arms and ammunition may be sold at such time and place and in such manner as the Central Government may direct. Explanation.- In this section, ― "arms" and "ammunition" have the meanings respectively assigned to them in the Arms Act, 1959 (54 of 1959). 49. Storage of imported goods in warehouse pending clearance or removal.-Where,-- (a) in the case of any imported goods, whether dutiable or not, entered for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time; (b) in the case of any imported dutiable goods, entered for warehousing, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied on the application of the importer that the goods cannot be removed for deposit in a warehouse within a reasonable time, the goods may pending clearance or removal, as the case may be, be permitted to be stored in a public warehouse for a period not exceeding thirty days: Provided that the provisions of Chapter IX shall not apply to goods per....
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....p-owner and the ship-owner's agent. However, considering the fact that the definition is an inclusive definition, and that loading or unloading of goods can take place by the steamer's agent, as was held in Rowther-I (supra), it is difficult to accept the contention on behalf of the steamer's agent that such persons would not be included within the definition of "owner" under the MPT Act. 15. For these reasons, it is not possible to apply the doctrine of noscitur a sociis to the definition of "owner" under section 2(o), as was contended by the learned Senior Advocates appearing on behalf of the steamer agents. In Brindavan Bangle Stores and Ors. v. Asst. Commissioner of Commercial Taxes and Anr. (2000) 1 SCC 674, this Court held: "7. The second contention raised on behalf of the appellants related to the clarity and ambiguity of Entry 30 and Entry 54 and application of such construction of noscitur à sociis. In our opinion the learned Division Bench of the Karnataka High Court has rightly held that the said rule of construction has no application to the facts and circumstances of the case. This Court in State of Bombay v. Hospital Mazdoor Sabha [AIR 1960 SC 610] ....
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....n section 42 is perused. Under section 42(1), a Board shall have power to undertake services insofar as landing, shipping or transhipping goods between vessels in the port and the wharves, piers, quays or docks belonging to or in the possession of the Board, referring clearly, therefore, to services rendered to the vessel (see section 42(1)(a)). Insofar as receiving, removing, shifting, or transporting goods is concerned, these could be services to both the vessel as well as the owner/person entitled to the goods. The moot question is, when it comes to "storing" goods brought within the Board's premises, whether such service could be said to be a service rendered to the vessel or its agent (see section 42(1)(b)). Some of the pivotal provisions of the MPT Act, insofar as the present questions are involved, are contained in sections 42(2), 42(7) and 43 of the Act. Under section 42(2), a Board may, if so requested by the "owner", take charge of the goods for the purpose of performing services, and shall give a receipt in such form as the Board may specify. It is obvious that if the ship-owner or its agent are not "owners", the Board cannot take the charge of the goods from the ship-ow....
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.... from services rendered insofar as goods that are landed are concerned. 20. Coming to section 59, it becomes clear that for all rates leviable under the MPT Act, which includes rates leviable for storage of goods, the Board shall have a lien on such goods, and may, after custody of such goods is taken by the Port Trust, then seize and detain the same until such rates are fully paid. 21. Section 60 is also important, in that the ship-owner's lien for freight and other charges is recognised if, at or before the time of landing of any goods from such vessel, such freight or other charges have not been paid. Under section 60(2), the goods shall be retained in the custody of the Board at the risk and expense of the owners of the goods until such lien is discharged. Most importantly, godown or storage rent shall be payable by "the party entitled to such goods" for the time during which they may be so retained. This section is of crucial importance, as it makes it clear that godown or storage rent is payable only by the party entitled to such goods, which can never be the ship-owner or the ship-owner's agent after the goods have been landed, and the vessel has sailed away from the p....
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....or the vessel itself. 23. Section 63 is again very important. When goods have been sold and a surplus exists, the surplus shall be paid to only three persons or their agents, namely, the "importer", "owner" or "consignee" of the goods. In this sub-section, namely, 63(2), as in the case of "owner' under section 61(3), the owner of the goods is obviously not the "owner" as defined under section 2(o), as the context of section 63(2) indicates otherwise. There would have been no need to add "importer" or "consignee" in this sub-section, as they are already subsumed within the wider definition of "owner" in relation to goods under section 2(o). Secondly, what is conspicuous by its absence is mention of the vessel or any agent for loading or unloading goods. As a matter of fact, when it comes to recovery of rates and charges against the vessel, a separate remedy is provided for in sections 64 and 65 of the MPT Act. 24. The statutory scheme of the MPT Act now becomes crystal clear. Until the stage of landing and removal to a place of storage, the steamer's agent or the vessel itself may be made liable for rates payable by the vessel for services performed to the vessel. Post landing....
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....dia from a place outside India are not cleared for home consumption or warehoused or transhipped within 30 days from the date of the unloading, such goods may, after notice to the "importer" and with permission of the proper officer, be sold by the person having the custody thereof. 27. Under section 49, imported goods may, pending clearance or removal, be permitted to be stored in a public warehouse for a period not exceeding 30 days, or such other extended period that the Principal Commissioner or Commissioner of Customs may permit. The Customs Act, therefore, also contains parallel provisions for authorities under that Act to take charge of, store, and sell imported goods, in the circumstances mentioned therein. 28. It was argued that carrying goods in a container would, in any case, make a difference to the position that only the owner of the goods or person entitled to the goods is liable to pay for demurrage. According to the Port Trust, when goods are imported in a container, and the container is then landed without the goods being destuffed, and the container belongs to the ship-owner's agent and has to be returned to the ship-owner's agent, for the duration that the ....
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....ers the levy does not take place. If the goods are pilfered after they are unloaded or lost or destroyed at any time before clearance for home consumption or deposit in a warehouse, the importer is not liable to pay the duty leviable on such goods. This is for the reason that the import of goods does not take place until they become part of the land mass of India and until the act of importation is complete which under Sections 13 and 23 happens only after an order for clearance for home consumption is made and/or an order permitting the deposit of goods in a warehouse is made. Under Section 23(2) the owner of the imported goods may also at any time before such orders have been made relinquish his title to the goods and shall not be liable to pay any duty thereon. In short, he may abandon the said goods even after they have physically landed at any port in India but before any of the aforesaid orders have been made. This again is for the good reason that the act of importation is only complete when goods are in the hands of the importer after they have been cleared either for home consumption or for deposit in a warehouse. Further, as per Section 47 of the Customs Act, the importer....
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.... of the US Constitution. In addition, any such "impost or duty" would also violate the Commerce clause under section 8(3) of Article I of the said Constitution, which grants power to the Congress to regulate commerce with foreign nations. Thus, a State legislature has no power to impose an "impost or duty" upon the first sale of the commodity so long as it remained in the importer's hands [1 In two later judgments of the US Supreme Court, Michelin Tire Corporation v. Wages 423 U.S. 276 (1976) and Limbach v. Hoover & Allison Company 466 U.S. 353 (1984), judgments following Brown (supra) enunciating the "original package" doctrine were reversed, stating that non-discriminatory taxes which did not fall on imports as such, or interfere with the free flow of imported goods amongst the States, could not be said to be contrary to the Commerce clause or contrary to Section 10(2) of Article I of the US Constitution. A different approach was adopted to Section 10(2) of Article I, ignoring the question whether the goods were imported, and instead analysing the nature of the tax to determine whether it was an "impost or duty".]. 32. This doctrine has been the subject-matter of comment in a ....
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....irect light under the Copyright Act and the various conventions and treaties which have with the subject "copyright" from different angles. We do not also desire to crow our judgment with reference to the history of the copyright and the customs legislations in the United Kingdom and India as we do not think it necessary to do so in this case." Page 691 35. A recent judgment of this Court in State of Kerala & Ors. v. Fr. William Fernandez Etc. 2017 SCC OnLine SC 1291, was concerned with the validity of various State legislations relating to entry tax. As many as eight issues were raised by this Court, in which issue (iv) reads as follows: "44(iv). Whether the importation of goods, imported from a territory outside the India continues till the goods reach in the premises/factory of the importer, during which period State at no point of time is legislative competence to impose any tax." 36. The discussion in answering this question raised in paragraph 44(iv) begins in paragraph 86. After referring to various definitions of the term "import" in different legal situations, this Court noticed various judgments relating to customs in paragraphs 97 to 103. As a matter of fa....
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....ent for levy of customs duty, which is in the domain of the Parliament, is entirely different from that of event of entry tax. The liability to pay State entry tax arises only when goods enter into a local area for consumption, use and sale, which event is entirely different and separate from the levy of a customs duty, which is on import." (emphasis in original) 38. The judgment went on to discuss the "original package" doctrine of Chief Justice Marshall in paragraphs 108 to 120, finding that recent US Supreme Court judgments had abandoned this doctrine, and that therefore, the Federal Court in Boddu Paidanna (supra) and the two judgments of this Court in F.N. Balsara (supra) and Gramophone Company of India Ltd. (supra) were correct in not relying on this doctrine in the context of the cases before them. This doctrine has no place in the customs law of India, the judgments of this Court concentrating on when an import can be said to be complete on an analysis of the Customs Act. 39. Given the aforesaid judgments under the Customs Act, a container, being a receptacle in which goods are imported, cannot be said to be "goods" that are imported as it does not become part of the ....
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.... 43. Rules 2(1)(d) and (f) of these Rules are relevant, and are set out hereinbelow: "2. Definitions.- (1) In these rules, unless the context otherwise requires,- xxx xxx xxx (d) "identical goods" means imported goods- (i) which are same in all respects, including physical characteristics, quality and reputation as the goods being valued except for minor differences in appearance that do not affect the value of the goods; (ii) produced in the country in which the goods being valued were produced; and (iii) produced by the same person who produced the goods, or where no such goods are available, goods produced by a different person, but shall not include imported goods where engineering, development work, art work, design work, plan or sketch undertaken in India were completed directly or indirectly by the buyer on these imported goods free of charge or at a reduced cost for use in connection with the production and sale for export of these imported goods; xxx xxx xxx (f) "similar goods" means imported goods - (i) which although not alike in all respects, have like characteristics and like component materials....
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....oods in question arising from differences in distances and means of transport. (3) In applying this rule, if more than one transaction value of identical goods is found, the lowest such value shall be used to determine the value of imported goods. 5. Transaction value of similar goods.- (1) Subject to the provisions of rule 3, the value of imported goods shall be the transaction value of similar goods sold for export to India and imported at or about the same time as the goods being valued: Provided that such transaction value shall not be the value of the goods provisionally assessed under section 18 of the Customs Act, 1962. (2) The provisions of clauses (b) and (c) of sub-rule (1), sub-rule (2) and sub-rule (3), of rule 4 shall, mutatis mutandis, also apply in respect of similar goods." 45. A perusal of these Rules would show that the value of imported goods shall be the transaction value of identical goods, as defined, or similar goods, as defined - whichever rule applies to the facts of each particular case. It is clear that whether identical goods or similar goods are taken into account, the price of the container never enters, as the only "goods....
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....Exemption to containers of durable nature'[Notification No. 104/94 dated 16.03.1994 as amended by Notification No. 101/95 and 43/17], states as follows: "In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts containers which are of durable nature, falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, from, - (a) the whole of the duty of customs leviable thereon under the said First Schedule; and (b) the whole of the integrated tax leviable thereon under sub-section (7) of section 3 of the said Customs Tariff Act: Provided that the importer, by execution of a bond in such form and for such sum as may be specified by the Assistant Commissioner of Customs or Dy. Commissioner of Customs binds himself to re-export the said containers within six months from the date of their importation and to furnish documentary evidence thereof of the satisfaction of the said Assistant Commissioner and to pay the duty leviable thereon in the event of the i....
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....th the goods if they are of a kind normally used for packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use." 51. This paragraph again clearly differentiates between containers which go along with the goods contained therein "suitable for long-term use", from containers "suitable for repetitive use", thus making it clear that the containers of the latter type cannot be classified with the goods contained therein for payment of customs duty. 52. At this juncture, it is important to examine the judgments of this Court. In Rowther-I (supra), the question before five honourable Judges of this Court arose out of the enforcement of the Scale 'E' rate that was added to the Madras Port Trust Scale of Rates in 1958. The question arose under the pari materia provisions of the Madras Port Trust Act, 1905 ("Madras Act"), which has since been repealed by the MPT Act by section 133(2C) thereof. The respondents in this case were steamer agents. Scale 'E' laid down charges to be paid by Masters, Owners or Agents of vessels in respect of Port Trust labour requisitioned and supplied, but not fully or ....
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....s of the Board makes it clear that it does not act as an agent of the consignee (see page 947). The Court also held that when section 39(3) of the Madras Act speaks of taking of charge of the goods by the Board and giving a receipt to a ship-owner, and the master or owner of the vessel being absolved from liability for any loss or damage which may occur to the goods which had been landed, also does not lead to the conclusion that the Board takes delivery of those goods on behalf of the consignee. The Court then held: "It is clear therefore that when the Board takes charge of the goods from the ship-owner, the ship-owner is the bailor and the Board is the bailee, and the Board's responsibility for the goods thereafter is that of a bailee. The Board does not get the goods from the consignee. It cannot be the bailee of the consignee. It can be the agent of the consignee only if so appointed, which is not alleged to be the case, and even if the Board be an agent, then its liability would be as an agent and not as a bailee. The provisions of ss.39 and 40, therefore, further support the contention that the Board takes charge of the goods on behalf of the ship-owner and not on be....
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....ons as to the Board being a sub-bailee were therefore made to counter an argument based on an English judgment, that delivery of the goods to the Board amounts to delivery to the consignee, which would therefore make the consignee liable to pay the aforesaid unloading charges. 56. The second judgment with which we are concerned is Rowther-II (supra). The question that arose before a three-Judge Bench of this Court was whether demurrage charges payable to the Port Trust of Madras were to be recovered from the consignee of the goods, or from the steamer agent. The judgment of this Court, in essence, extracted the judgment of the High Court that was impugned therein, and then agreed with the same. The High Court had held: "It cannot be disputed that neither the shipowner or the steamer agent whose duty it is to deliver the cargo to the consignee as per the contract with the shipper, cannot lay any claim of ownership to the goods. The obligation to deliver the goods to the consignee has been taken over by the Port Trust under the provisions of the statute and the shipowner is relieved of the liability for loss or damage to the goods from the moment the goods are taken charg....
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....ill undertake such a risk and responsibility. We are of the view that the provisions of the Port Trust Act cannot be so construed as imposing an additional liability or obligation on the carrier which was not contemplated by the contract it had entered with the shipper. It is only the customs of or the statutory provisions applicable to the port of discharge that can be taken to be an implied condition of the contract between the shipper and the shipowner. Therefore, the provisions of the Port Trust Act cannot add to the liability of the steamer or its agents which was not contemplated by the shipper or the shipowner at the time of entering into the contract. Having regard to the functions and the obligations which a steamer has undertaken with the shipper under the contract, we cannot say that the steamer has undertaken the responsibility for the safety of the goods till the goods are cleared by the Customs and taken delivery of by the consignee. As earlier referred to, the duty of the steamer is normally to deliver the goods to the consignee on the quay side but that place of delivery has been shifted by the provisions of the Port Trust Act to the warehouse where the Port Trust h....
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.... not direct from the master of the ship, and that therefore the Board acts as the agent of the consignee. We have not been referred to any provision in the Act which supports this contention. Assuming, however, that the consignee cannot take delivery of the goods at the quay from the ship direct, it does not follow that the Board receives the goods as the agent of the consignee. The only reasonable conclusion in the circumstances can be that the place of delivery is shifted from the side of the ship to the warehouses where the Board stores the goods till the consignee appears to take delivery on the basis of the delivery order by the steamer agent which is usually an endorsement on the bill of lading, and the quay be considered a part of the ship." Page 946 59. Rowther-I (supra) clearly lays down that the endorsement of the bill of lading by a steamer agent is for the purpose of delivery of the goods, and, accordingly, cannot be for the transfer of title to the goods. Rowther-II (supra) cannot, therefore, be said to be good in law when it speaks of endorsement on the bill of lading and issuance of delivery order by the steamer agent passing title of the goods to the consignee. O....
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....which in the hands of a rightful owner is intended to unlock the door of the warehouse, floating or fixed, in which the goods may chance to be." Page 861-862 61. Section 1 of the Indian Bills of Lading Act, 1856 is also important, which states: "Rights under bills of lading to vest in consignee or endorsee.-Every consignee of goods named in a bill of lading, and every endorsee of a bill of lading to whom the property in the goods therein mentioned shall pass, upon or by reason of such consignment or endorsement shall have transferred to and vested in him all rights of suit, and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself." 62. Under this section, the "endorsement" referred to is the endorsement made by the consignor or owner of the goods in favour of such endorsee on the bill of lading, so that title to property is then transferred to the endorsee. This endorsement is very far removed, as has been correctly stated in Rowther-I (supra), from the endorsement on the bill of lading by a steamer agent indicating that the goods have been delivered. Therefore, shorn of the confusio....
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....ph 23, stating that a relationship of bailor and bailee comes into existence, when the Board is required to store goods that have been imported, between the Board and the consignee of those goods. Apart from the fact that this is directly contrary to Rowther-I (see page 940), the consignee cannot be considered to be a bailor if the definition of bailor under the Indian Contract Act, 1872 is read. Under section 148 of the Contract Act, a bailor is defined as a person who delivers the goods to the bailee. In this case, the person who delivers the goods to the bailee is the vessel and not the consignee, as has been correctly stated in Rowther-I (supra). Therefore, the observations that the consignee is the bailor of the goods, with the Port Trust being the bailee thereof, made in paragraphs 23 and 25 of Sriyanesh Knitters (supra) cannot be said to state the law correctly, and are accordingly overruled. However, since we are not going into the point of sub-bailment as argued by Shri Pratap, we leave open the question as to whether the Port Trust, as sub-bailee, is entitled to recover its dues from the original bailor - the consignor, and persons claiming through it, given the statutory....
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....) of the 1963 Act, as has been sought to be urged on behalf of the appellant though going by the language of Section 2(o) and the other provisions of the Act especially Section 42, an owner would include a shipowner or his agent. Otherwise it is difficult to reconcile how custody of the goods for the purpose of rendering services under Section 42 can be entrusted to the Port Trust Authority by the owner as provided therein under Section 42(2). At that stage the goods may still be in the custody of the shipowner under a separate bailment with the shipper or the consignor, as may be. Even dehors the above question the liability to pay demurrage charges and port rent would accrue to the account of the steamer agent if a contract of bailment between the steamer agent and the Port Trust Authority can be held to come into existence under Section 42(2) read with Section 43(1)(ii) of the 1963 Act. 11. For the reasons already indicated the decision in Sriyanesh Knitters with regard to existence of a relationship of bailor and bailee between the consignee and the Port Trust Authority instead of the steamer agent and the Port Trust Authority cannot be understood to be a restatement o....
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.... steamer agent for such charges till such time that the bill of lading is endorsed or delivery order is issued by the steamer agent. 13. In the orders of the Calcutta High Court under challenge, it is mentioned that Section 60 of the Act provides a remedy to the steamer agent to recover the dues from the consignee. Section 60 of the 1963 Act confers a limited lien on the shipowner "for freight and other charges payable to the shipowner" which expression does not extend to demurrage and other port charges. The High Court, therefore, does not appear to be correct in its conclusions. However, the said error would not be fundamental to the final conclusion reached by the High Court. In this regard we cannot help noticing the special provisions of Sections 61 and 62 of the Act which enable the Port Trust Authority to proceed against the goods within its custody to recover the charges which may be payable to the Port Trust Authority. Ordinarily and in the normal course if resort is made to the enabling provisions in the 1963 Act to proceed against the goods for recovery of the charges payable to the Port Trust Authority there may not be any occasion for the said authority to sus....
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....is "State" within the meaning of Article 12 of the Constitution, and is therefore bound by the constraints of Article 14 of the Constitution of India (see Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay (1989) 3 SCC 293 at paragraph 22). Therefore while it may not be correct to say that "may" has to be read as "shall" in sections 61 and 62 of the MPT Act, yet in all future cases the Board is under a constitutional duty to sell the goods in its custody within a reasonable time from which it takes custody of those goods. Ordinarily, the time of four months from the date of landing of the goods mentioned in section 63(1)(c) of the MPT Act should be the outer-limit within which such goods should be put up for sale. If not put up for sale within such time, the Board must explain as to why, in its opinion, this could not be done, which explanation can then be tested by the Courts. If the explanation is found to be reasonable, and the owner or person entitled to the goods does not remove the goods thereafter, penal demurrage may then be levied and collected by the Board. To this extent, therefore, while overruling the impugned judgment of the Kerala High Court on th....
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.... (supra), and arrived at the following conclusion in paragraph 47: "47. With respect, we agree with the conclusions recorded by this Court in Rowther-2 and Forbes that a Board could recover the rates due, either from the steamer agent or the consignee but we are of the humble opinion that enquiry into the question as to when the property in the goods passes to the consignee is not relevant." 77. The Court then went on to examine various provisions with regard to bailment, and stated that passing of title in goods is irrelevant conceptually to bailment, which concerns itself with delivery and not title of goods. It then framed the question in paragraph 51, thus: "The only question is: from whom can the board recover - we emphasise the question is not who is liable." 78. From paragraphs 52 to 60, the Court then went on to consider the observations made in Rowther-I (supra) that the first respondent, i.e. the Port Trust, is a sub-bailee of the goods bailed by the consignor to the ship-owner. This being so, it is the consignor to whom the Port Trust has to look for payment of these charges, and since in this case Rasiklal is a consignee claiming through the cons....
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....ier, the Port Trust shows concession to the party concerned in certain types of cases." 80. As a matter of fact, the Division Bench in Rasiklal (supra) seems to have put the cart before the horse, on a ground based in equity. The Court stated: "60...Denying such a right on the ground that the person claiming delivery of the goods acquired title to the goods only towards the end of the period of the bailment of the goods with the first respondent would result in driving the first respondent to recover the amount due to it from the bailor or his agent who may or may not be within the jurisdiction of the municipal courts of this country (by resorting to a cumbersome procedure of litigation). The first submission is, therefore, rejected." 81. As has been pointed out by us, no such right has been denied on a correct reading of the MPT Act. The importer, the consignee and the consignor, or their agents, can all be held liable to pay demurrage charges. However, since Rasiklal (supra) does not involve either the owner of the vessel or its agent, we leave open the question as to whether the Port Trust, as sub-bailee, is entitled to recover its dues from the original bailor - ....