2021 (8) TMI 617 - HC - Customs

Seeking across-the-board amnesty from paying penal charges to CFSs ICDs and Shipping lines during the entire period of lockdown enforced by the Government consequent on the COVID-19 pandemic - Contractual rights between private individuals and the regulation thereof by statutory/Governmental authorities in public interest - justification for Inability to move or transport their export/import goods during the said period - amnesty schem - levy of penal charges by ICDs/CFSs for the period beyond a certain number of free days during which the goods continue to remain in their premises and levied by shipping lines in the event the containers are not returned to them within a fixed number of free days - CBEC Circular 22nd December 1995 - Disaster Management Act - the Major Port Trusts Act - the Merchant Shipping Act - the Customs Act (along with the Handling of Cargo in Customs Areas Regulations 2009 issued thereunder). HELD THAT - The TAMP under Section 48 merely fixes and approves the scales of rates for services to be performed by the Board or other persons. Even in respect of any CFS which may be located within the area of a Major Port and may therefore conceivably be amenable to Section 48 of the Major Port Trusts Act all that the Section regulates are the scales of rates for the services to be performed by the CFSs or ICDs. There is no provision in the Major Port Trusts Act which can regulate the levying charging or recovery by the CFSs or ICDs from their customers of charges payable against storage of goods which would include penal charges in the event of the goods remaining in the premises of the CFSs or the ICDs beyond the free period. There is a fundamental difference in basic fiscal jurisprudence between fixation of a tariff and levy and collection of charges in terms thereof. The TAMP has no concern with the recovery and collection of penal charges whether in the name of ground rent demurrage or detention charges by ICDs CFSs or shipping lines - A conjoint reading of para 3(iii) and 10 of the MOS Circular dated 21st April 2020 would seem to indicate that the Major Ports have been directed to ensure non-recovery of penal charges demurrage and detention charges on any port user including importers and exporters CFSs ICDs and shipping lines. This circular has however been expressly issued under Section 111 of the Major Port Trusts Act. We have already seen that Section 111 empowers the Central Government to issue directives only to the Board or to the TAMP. The direction for non-recovery of penal charges by ICDs CFSs and shipping lines from the importers or exporters obviously has no link with the TAMP as the authority of the TAMP under the Major Port Trusts Act extends only to fixation of the tariff and not to regulation of collection of charges in accordance therewith. The Board too is not invested by the Major Port Trusts Act to regulate much less interdict the levy recovery and collection of charges by the CFSs ICDs or shipping lines from the importers or exporters. Section 53 of the Major Port Trusts Act does authorise the Board to in special cases and for reasons to be recorded in writing exempt either wholly or partially any goods or vessels or class of goods or vessels from the payment of any rate or of any charge leviable in respect thereof according to any scale in force under this Act or remit the whole or any portion of such rate of charge so levied - Directions issued by an executive authority in exercise of the power invested in such authority to do so have necessarily to be such as would be amenable to compliance by the authority to whom the directions are issued. The authority issuing directions in exercise of powers conferred by statute in that regard has also to ensure that the body to whom the directions are issued is empowered to comply with such directions. It is as much folly in law to issue directives in excess of the authority vested in the one as to issue directives to perform acts in excess of the authority vested in the other. Even under the Disaster Management Act the directions contained in paras 3(iii) and 10 of the Circular/order dated 21st April 2020 issued by the MOS could neither be sustained nor enforced by issue of a mandamus - the reliance by the petitioners on the Circulars/Orders dated 31st March 2020 and 21st April 2020 of the MOS cannot support the prayers contained in the petitions. The relationship between shipping lines and their customers was expressly contractual in nature and the prerogative to decide on the charges leviable from the customers for continuing to retain the containers beyond the free period vested in the shipping lines is governed by negotiated contract ad idem. The State has no direct causal connection with these charges. The powers exerciseable under the Disaster Management Act could not therefore be so exercised as to restrain collection thereof by the shipping lines. The aspect of the charges recovered by ICDs of CFSs from importers or exporters was clearly not even remotely in the contemplation of the authorities while issuing the aforesaid Circular dated 8th June 2009. The Circular has been issued for a very specific purpose and to clarify certain specific aspects relating to the functioning of ICDs and CFSs and the distinction between the two and cannot therefore be used as a ground to seek waiver or exception from payment of penal charges to ICDs CFSs or shipping lines beyond the free periods . Nor can this Circular be used to support the contention that all instructions issued by the CBIC are ipso facto binding on ICDs and CFSs. Writ petition dismissed.

Summary

Issues Involved:

1. Financial exactions on imported/exported goods.
2. Waiver of penal charges by ICDs/CFSs and shipping lines during COVID-19 lockdown.
3. Jurisdiction and authority of the Central Government, MOS, DGS, and CBIC under various statutes.
4. Legal validity and enforceability of executive orders and advisories.
5. Discrimination and Article 14 of the Constitution of India.
6. Contractual obligations and private agreements.

Detailed Analysis:

1. Financial Exactions on Imported/Exported Goods:
The court noted that imported/exported goods suffer various financial exactions, both statutory and contractual, during the period they remain in the custody of ICDs/CFSs and shipping lines. These charges include penal charges for storage beyond the "free days" and detention charges for not returning containers within the stipulated period.

2. Waiver of Penal Charges During COVID-19 Lockdown:
The petitioners contended that due to the COVID-19 lockdown, they were unable to remove goods from ICDs/CFSs or return containers to shipping lines within the free period. They sought waiver of penal charges based on instructions from the Ministry of Shipping (MOS), Directorate General of Shipping (DGS), and Central Board of Indirect Taxes and Customs (CBIC).

3. Jurisdiction and Authority:
The court examined the jurisdiction and authority under various statutes:
- Major Port Trusts Act: The court held that the Central Government's power under Section 111 to issue directions is limited to the Board of Trustees of Major Ports and the Tariff Authority for Major Ports (TAMP). It does not extend to CFSs, ICDs, or shipping lines.
- Merchant Shipping Act: The DGS's authority under Section 7 does not include regulating charges by shipping lines for detention of containers.
- Customs Act and HCCAR: The court noted that CFSs and ICDs are notified as customs areas for unloading/loading goods. However, the HCCAR does not regulate the charging of detention or penal charges, except for goods seized or detained by Customs.

4. Legal Validity and Enforceability of Executive Orders and Advisories:
- MOS Orders: The court found that the MOS orders dated 31st March 2020 and 21st April 2020, issued under Section 111 of the Major Port Trusts Act, cannot direct CFSs, ICDs, or shipping lines to waive penal charges.
- DGS Orders: The DGS orders were advisory in nature and did not mandate compliance by shipping lines.
- CBIC Circular: The CBIC circular dated 23rd April 2020 was an inter-departmental communication and not a mandatory directive to CFSs or ICDs.

5. Discrimination and Article 14:
The court rejected the petitioners' contention of discrimination under Article 14, noting that ICDs and CFSs are not identically situated with importers/exporters. The court emphasized that many importers managed to clear goods even during the lockdown, indicating no inherent impossibility.

6. Contractual Obligations and Private Agreements:
The court highlighted that the relationship between CFSs, ICDs, shipping lines, and importers/exporters is contractual. The Disaster Management Act does not empower the government to interfere with private contracts or financial transactions between private parties.

Conclusion:
The court dismissed the petitions seeking waiver of penal charges, holding that:
- The MOS and DGS orders are not enforceable against CFSs, ICDs, or shipping lines.
- The CBIC circular does not create enforceable rights for the petitioners.
- There is no jurisdiction under the relevant statutes to mandate waiver of penal charges.
- The court cannot interfere with private contractual obligations under the guise of the Disaster Management Act.