TaxTMI 
TaxTMI 
2021 (3) TMI 443
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.... writ petition as Ex.Q. b. For a direction to the respondents to allow, facilitate, oversee and ensure clearance of the imported goods of the petitioner for home consumption by taking appropriate action against respondent Nos.4 and 5. c. For a direction to respondent No.1 to conduct an inquiry into the various acts of omissions and commissions by respondent Nos.6 to 11. d. For a direction to respondent Nos.2 to 11 to compensate the loss sustained by the petitioner for their unlawful action; e. Awarding of cost to the petitioner. 3. According to the petitioner, it is a public limited listed company incorporated under the Indian Companies Act, 1913. It is in the plastic industry with a variety of applications in moulded furniture, storage and material handling products, XF films and products, performance films, industrial moulded products, protective packaging products, composite plastic products, plastic piping system and petrochemicals. In recognition and appreciation of the efforts of the petitioner in securing the international supply chain while complying with the framework of safety standards, Central Board of Indirect Taxes and Customs (b....
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....to the reply affidavit, it was stated that the bill of entry was finally assessed on 9th September, 2020. 11. Later on a copy of the order-in-original was placed before the court showing the date of order in original as 4th September, 2020. 12. On 29th September, 2020 this court noted that the order-in-original dated 4th September, 2020 was issued on 24th September, 2020. It was further noted that the goods had been confiscated though option was given to the petitioner to redeem the goods on payment of redemption fine and penalty. 13. The order-in-original dated 4th September, 2020 was subsequently brought on record by the petitioner. 14. In the proceedings held on 6th October, 2020 this court noted that while the date of the order-in-original was 4th September, 2020, the date of issue was mentioned as 24th September, 2020. Adjudicating authority had signed the order on 24th September, 2020 which prima facie meant that the order was passed on 24th September,2020. Various discrepancies discernible in the reply affidavit was pointed out including query reply given by the petitioner on 9th September, 2020, whereafter final assessment of the bill of entry was made on 9th Se....
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.... into. Joint Commissioner of Customs further observed that request for waiver of demurrage was required to be addressed by the jurisdictional Commissioner of Customs to whom a copy of the order-in-original dated 6th November, 2020 was endorsed for doing the needful. 18. On 6th November, 2020 itself petitioner submitted representation to the Principal Chief Commissioner of Customs, i.e. respondent No.2 requesting the said authority to urgently issue detention certificate(s) in accordance with Regulation 10 of the Sea Cargo Manifest and Transhipment Regulations, 2018 and Regulation 6 of the Handling of Cargo in Customs Areas Regulations, 2009 by directing the shipping line and the container freight station under whose custody the cargo was lying not to charge any rent or demurrage in respect of the goods under consideration for the period from 7th August, 2020 to the date of issuance of the detention certificate(s). 19. On 10th November, 2020 Deputy Commissioner of Customs Group-2G i.e. respondent No.3 issued Detention cum Demurrage Waiver Certificate to respondent Nos.4 and 5. It was mentioned that since the goods were under consideration for adjudication, hence recommendation....
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.... charges for the containers laden with the goods. Specific direction was issued not to charge any rent or detention charges or demurrage charges and thus to facilitate clearance of the goods immediately. In the said certificates it was pointed out that this court in its order dated 27th October, 2020 had directed maintenance of status-quo in respect of the subject goods. It was mentioned that issuance of the said certificates had the approval of Principal Commissioner i.e. respondent No.2. 23. Notwithstanding issuance of the above certificates respondent Nos.4 and 5 did not release the goods of the petitioner which compelled the petitioner to serve upon them pleader's notice dated 23rd November, 2020 whereby the said authorities were called upon to comply with the detention cum demurrage waiver certificates dated 16th November, 2020 and to forthwith issue delivery order for clearance of the goods immediately. Similar pleader's notice was issued to respondent No.2 by the petitioner on 25th November, 2020 but without any effect. 24. Aggrieved, present writ petition has been filed seeking the reliefs as indicated above. 25. Mr.Sanjay Mahendra, Commissioner of Customs (General....
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....ber, 2020, respondent No.2 requested the jurisdictional Principal Commissioner of Customs, Nhava Sheva-I vide letter dated 9th November, 2020 to decide the request for waiver of detention and demurrage charges and to submit action taken report immediately. Further, respondent No.2 acting on the petitioner's letter dated 3rd November, 2020 had directed the Customs Intelligence Unit in the office of the Commissioner of Customs (General), Nhava Sheva to investigate into the allegations made by the petitioner. Investigation is in progress. 32. Acting promptly on the second order-in-original dated 6th November, 2020, a letter dated 10th November, 2020 was issued by the Deputy Commissioner of Customs Group-2G for waiver of detention and demurrage charges. However, the shipping line replied to the same vide letter dated 12th November, 2020 stating that petitioner had entered into a contract of carriage with its principal and therefore, it is under contractual obligation to pay all the charges relating to storage of the goods. It was clarified that the request of the department was not binding on the shipping line also stating that any further delay in returning the containers will cont....
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....l averments and allegations made in the writ petition, answering respondents seek dismissal of the writ petition. 36. Respondent No.4 has filed reply affidavit through one Mr. Ashutosh Madhav Purohit. At the outset respondent No.4 has raised preliminary objection as to maintainability of the writ petition. It is contended that petitioner is seeking a writ of mandamus against respondent No.4 which is a private party. That apart, petitioner is seeking enforcement of a writ in a contractual matter binding the petitioner and the principal of which respondent No.4 is only an agent. Since the dispute of the petitioner is with the principal, no relief can be sought for against the agent i.e., respondent No.4. Principal is Ocean Network Express Private Limited (in brief 'Ocean' hereinafter). Ocean has not been arrayed as a respondent in the writ proceeding whereas the agent has been made respondent No.4. Respondent No.4 has no privity of contract with the petitioner. Therefore, in the absence of the principal, writ petition against the agent would not be maintainable. Thus, the writ petition is hit by non-joinder of necessary party i.e., Ocean and by mis-joinder of the agent as a respon....
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....2009 Regulations' hereinafter). It is stated that provisions of the 2009 Regulations are not applicable to respondent No.4 or its principal. 41. Respondent No.4 informed the customs housing agent of the petitioner vide emails dated 10th November, 2020 and 11th November, 2020 that the petitioner was contractually bound to pay the charges levied by respondent No.4. It was further contended that the 2009 Regulations were not applicable to respondent No.4 as it was not a customs cargo service provider defined in the 2009 Regulations. Clarifying that respondent No.4 would be unable to provide waiver of detention charges, respondent No.4 requested clearance of the goods at the earliest after payment of the applicable detention charges. 42. Thereafter respondent No.4 issued a letter to respondent No.3 on 12th November, 2020 to the effect that petitioner was contractually bound to pay the charges levied. 2009 Regulations were not applicable to respondent No.4 as it was not a customs cargo service provider. 43. On 16th November, 2020 respondent No.3 issued another detention cum demurrage waiver certificate to respondent No.4 clarifying that reference to the 2009 Regulations in the ....
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....aid order. This court despite exercising complete restraint could not deprecate the conduct of the adjudicating authority, which clearly suggested unfairness and arbitrariness. The fact that petitioner was subjected to harassment has been buttressed by the subsequent order-in-original dated 6th November, 2020. The new adjudicating authority clearly held that the transaction value was enhanced arbitrarily without any evidence on record whereafter he has held that the declared value of the imported goods as per the bill of entry merited acceptance. 48. Mr.Gopakumar has extensively relied upon sections 45 and 141 of the Customs Act to contend that all imported goods unloaded in a customs area are subject to control of officers of the customs. Therefore, it is the duty of the customs officers to ensure that the imported goods of the petitioner are cleared at the earliest. In the present case, petitioner has suffered huge demurrage and detention charges because of wrongful enhancement of the declared value of the goods. In such circumstances, he submits that it is the duty of the customs authorities to ensure that respondent Nos.4 and 5 duly comply with the detention cum demurrage wa....
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....d to it. Justifying the initial detention, he has referred to paragraphs 9.1 to 9.5 of the reply affidavit of the official respondents. Besides, he has also referred to petitioner's letter dated 27th August, 2020 addressed to respondent No.3. By the said letter, petitioner while waiving the requirement of show cause notice and personal hearing had requested respondent No.3 to apply the value as per Platt - rate by giving 10% variation as per standing order No.7493 of 1999 dated 3rd December, 1999 and subsequent standing order No.44 of 2016 dated 8th July, 2016. He would, therefore, contend that the initial enhancement of transactional value was to a certain extent on account of request made by the petitioner itself; therefore, it would not be correct to say that the official respondents alone were responsible for the entire period of detention of the goods of the petitioner. His contention is that while petitioner can seek its remedy against respondent Nos.4 and 5, no relief can be claimed against the official respondents. However, on a point of law he has placed reliance on a decision of the Supreme Court in Mumbai Port Trust Vs. Shri Lakshmi Steels, 2017(352) ELT 401, and contend....
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....Ministry of Shipping, Writ Petition No.2973 of 2014 decided on 30.06.2018; and (4) Mumbai Port Trust Vs. Shri Lakshmi Steels, (2018) 14 SCC 317. 52. Mr.Gopakumar in his reply submits that respondents cannot hide behind technicalities and make the petitioner suffer by levying detention and demurrage charges for such period when the detention was on account of wrongful action of the official respondents. He has particularly referred to Regulation 10(1)(l) of the 2018 Regulations to contend that it is one of the responsibilities of the authorized carrier not to demand any container detention charges for the containers laden with goods detained by the customs authorities for the purpose of verifying the entries if the entries are found to be correct which has exactly happened in the present case. Mr.Gopakumar has also refuted the objections raised by respondent No.4 and submits that the customs authority exercises sufficient control over respondent No.4; therefore, it is not open to respondent No.4 to say that it would not comply with the detention cum demurrage waiver certificate of respondent No.3. Since the rights of the petitioner have been infringed, petitioner has rig....
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....ng deeper into the affidavit filed by the said adjudicating authority, court further noted as under :- "21. From the above, we note that the Commissioner concerned has made contradictory statements; on the one hand, he submits that the operative part was recorded on 4th September, 2020 and the typed speaking order with discussion and findings was signed on 24th September, 2020, on the other hand, he says in paragraph 10 that the bill of entry was finally assessed on 9th September, 2020 as per adjudication order. We are unable to comprehend as to how after an order is signed on 24th September, 2020 (sic) that an assessment could be done on 9th September, 2020." 57. Finally it was held as under :- "23.1 * * * * * * * * We would have expected that an officer of the rank of Additional Commissioner who is discharging quasi judicial function under the Customs Act to have atleast read the section before stating what has been stated in paragraph 13 of his affidavit. 24. Despite exercising complete restraint, we cannot help but say that the entire conduct of the officer suggests a complete non-application of mind which to say the least must be deprecated. We fe....
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....the meanwhile, parties to maintain status-quo in respect of the goods under Bill of Entry No.8389492 dated 6th August, 2020." 59. From the above it is evident that this court despite exercising complete restraint could not but set aside the order-in-original in its entirety and directed the Commissioner to depute a new adjudicating officer to pass fresh order-in- original. From the observations made by this court it is quite evident that the officer who had passed the initial order-in- original had done so most mechanically and in a manner which is shocking to the judicial conscience. It was not the discrepancies in the dates which led this court to set aside the order-in-original but the manner in which the said adjudicating authority had conducted himself. It was a clear indictment of the officer. 60. If this was not enough, the new officer who was assigned the task of adjudication of the bill of entry of the petitioner by the Commissioner of Customs post the High Court order passed the fresh order-in-original dated 6th November, 2020 upholding and accepting the value of the imported goods as declared by the petitioner in the bill of entry. In the process he rejected the en....
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....was issued in terms of Regulation 10(1)(l) of the 2018 Regulations which is applicable to an authorized carrier certifying that the goods in storage under respondent No.4 are detained goods. Accordingly, respondent No.4 was directed not to charge any detention charges for the containers laden with the detained goods and to facilitate clearance of the goods immediately. 63. Respondent Nos. 2,3 and 6 to 11 have taken the stand that they have done their part under the law and therefore, they cannot be faulted for non-release of the goods of the petitioner. According to them, customs had already given out of charge to the consignment on 9th November, 2020. Respondent No.5, the container freight station, has assured compliance. Since the shipping line was not complying with the detention cum demurrage waiver certificate dated 16th November, 2020 show cause notice dated 1st January, 2021 was issued to the shipping line i.e. respondent No. 4 to show cause as to why the registration of approval should not be revoked and as to why penalty should not be imposed. 64. On the other hand, respondent No.4 has taken the stand that petitioner had entered into a contract of carriage with its p....
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....e handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed. 68. Before proceeding to the provision providing the power to make regulations, it may be noted that a conjoint reading of sections 45 and 141 of the Customs Act makes it clear that officers of customs have an overall control over the goods unloaded in a customs area or which are in custody of persons approved by the Principal Commissioner or Commissioner. However, as we shall see, such general power cannot be invoked by a customs officer to issue a detention cum demurrage certificate to a customs freight station or to a shipping line. 69. Section 157 of the Customs Act provides the general power to make regulations. In exercise of powers conferred by sub section (2) of section 141 read with section 157 of the Customs Act, Central Board of Excise and Customs, now called Central Board of Indirect Taxes and Customs (already referred to as "the Board" hereinabove) has made a set of regulations called the Handling of Cargo in Customs Areas Regulations, 2009 (already referred to as "the 2009 Regulations" herein-....
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....ation 2(2) clarifies that any reference to a Commissioner of Customs shall also include a reference to Principal Commissioner of Customs for the purposes of the 2018 Regulations. Regulation 3 deals with registration of a person required to deliver arrival manifest or departure manifest. Regulation 10 deals with responsibilities of the authorised carrier under the 2018 Regulations. Sub regulation (1) lays down as many as 13 responsibilities of an authorised carrier. Paragraphs (l) and (m) are relevant. As per paragraph (l), an authorised carrier shall not demand any container detention charges for the containers laden with the goods detained by customs for purpose of verifying the entries under section 46 or section 50 of the Customs Act, if the entries are found to be correct. As per the proviso, the authorised carrier may demand container detention charges for the period commencing after expiry of sixty days. Paragraph (m) makes it clear that an authorised carrier shall abide by all the provisions of the Customs Act and the rules, regulations, notifications and orders issued thereunder. 72. Stand of respondent No.4 is that its principal had entered into a contract with the peti....
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....spect of the imported goods which would absolve the importer from paying the demurrage charges and which would prevent the proprietor of the space from levying any demurrage charges. In the absence of any provision in the Customs Act entitling the customs officer to prohibit the owner of the space where the imported goods have been stored from levying the demurrage charges, levy of demurrage charges for non-release of the goods was held to be in accordance with the terms and conditions of the contract and was as such held to be a valid levy. 75. Supreme Court in All India Power Engineer Federation (supra), was examining amongst others waiver as a legal concept in the context of a power purchase agreement under the Electricity Act, 2003. One of the questions which arose for consideration was when public interest is involved whether waiver can at all take the place of a right in favour of the generator of electricity under a power purchase agreement if the right also has an impact on consumer interest. This judgment delivered on 8th December, 2016 was in the context of infrastructure laws i.e. Electricity Act, 2003. In that case, the power purchase agreement between the parties pr....
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....ame being infringed at the hands of the respondents were brought to its notice to invoke its writ jurisdiction. As noted above, the decision in this case was rendered on 30th June, 2015 much before the 2018 Regulations came into effect and therefore this court had no occasion to examine the impact of the said Regulations. 77. We may now turn our attention to the decision of the Supreme Court in the case of Mumbai Port Trust (supra), on which much emphasis has been placed by both Mr. Singh, learned Additional Solicitor General and Mr. Kamat, learned counsel for respondent No.4. In that case, the High Court of Punjab and Haryana had allowed the writ petition filed by the importer and held that detention of the goods imported by the importer by the customs at the instance of the Directorate of Revenue Intelligence was illegal; therefore, the High Court directed that the goods imported by the importer should be released to it on payment of customs duty, further directing that Mumbai Port Trust was not entitled to charge any demurrage in view of Regulation 6(1) of the 2009 Regulations since customs had issued the detention certificate. Detention charges demanded by the shipping line ....
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....fide or is in gross abuse of power. Even if an importer feels that it has been unjustly dealt with, still it must clear the goods by paying the charges due and then claim reimbursement from the customs authority. Therefore, Supreme Court held that the High Court could not have in a writ proceeding directed the Directorate of Revenue Intelligence or the customs to pay the detention charges to the shipping line since these were to be paid on the basis of a contract between the importer and the shipping line. The raison d'etre of the Supreme Court ruling can be found in paragraphs 29 to 32 which we quote hereunder :- "29. Assuming for the purpose of the decision of this case that Mumbai Port Trust is a custodian or cargo service provider, the question that arises is whether these Regulations apply to the Mumbai Port Trust. These Regulations have been framed under Section 157 of the Customs Act. Section 160(9) of the Customs Act clearly lays down that nothing in the Act shall affect the power of the Port Authority in a Major Port, as defined in the Indian Major Port Trusts Act, 1963. It is not disputed before us that the Mumbai Port Trust is a major port. 30. As alrea....
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....d the shipping line is contractual being bound by the bill of lading dated 4th June, 2020, but in this case respondent No.3 has issued two detention cum demurrage waiver certificates dated 10th November, 2020 and 16th November, 2020, one to the container freight station i.e. respondent No.5 and the other to respondent No.4 not to demand any rent or demurrage or detention charges. In the certificate addressed to respondent No.4, it has been clarified that the goods are detained goods and hence as per Regulation 10(1)(l) of the 2018 Regulations, it was directed not to demand any detention charges and to facilitate clearance of the goods immediately. Official respondents in their reply affidavit have stated that the container freight station i.e., respondent No.5 has expressed its willingness to comply with the detention cum demurrage waiver certificate. It is only the shipping line which has raised objection contending that it is not bound to comply with the detention cum demmurage waiver certificate dated 16th November, 2020. Unlike Mumbai Port Trust, shipping line in this case is a private entity espousing its contractual right and not a statutory right. In case of Mumbai Port Trus....
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.... goods immediately. Respondent No.4 has only collaterally questioned the effectiveness of such a certificate as being not bound by it. It has not stated anything in the reply affidavit regarding any independent challenge made by it to the said certificate. Question is whether it is open to respondent No.4 or for that matter a shipping line to contend that it will not comply with the mandate of Regulation 10(1)(l) of the 2018 Regulations, more so when Regulation 10(1)(m) makes it clear that the authorised carrier shall be bound by the provisions of the Customs Act and all the rules, regulations, notifications and orders issued thereunder. 82. In the ultimate analysis, the issue boils down to a conflict between the 2018 Regulations which is a subordinate legislation having the force of law on the one hand and the contractual right of the shipping line on the other hand. 83. The question as to whether in the event of a conflict between provisions of a subordinate legislation and provisions of a contract which one would prevail is no longer res integra. 84. A full bench of the Allahabad High Court in (1968) IILLJ 483 All, S. P. Srivastava Vs. Banaras Electric Light and Power h....
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....ereafter would be illegal and thus unlawful. 88. We may further clarify that it is nobody's case that the 2018 Regulations have not been validly made. It has therefore the full force and effect of a statute. A conjoint reading of Regulations 10(1)(l) and 10(1)(m) makes it abundantly clear that the 2018 Regulations are fully binding on the shipping line and it is not open to the latter relying on a contractual provision to contend that it will not comply with a direction or certificate issued under Regulation 10(1)(l). The private contract between the petitioner and the shipping line must yield to the rigours imposed by the subordinate legislation vis-a-vis the subject matter of conflict i.e, levy of detention charges for the period under consideration. That apart, Supreme Court has held that it is an implied condition of every contract that the parties will act in conformity with the law. In case of repugnancy between provisions of a subordinate legislation and provisions of a private contract, the terms of the contract will have to yield to the provisions of the subordinate legislation to the extent of repungnancy. 89. There is one more aspect which we would like to deal wit....