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2016 (11) TMI 464 - DELHI HIGH COURT

2016 (11) TMI 464 - DELHI HIGH COURT - 2017 (346) E.L.T. 65 (Del.) - Constitutional validity of Regulation 6(1)(1) of the Handling of Cargo in Customs Areas Regulations, 2009 - ultra-vires the provisions of Customs Act, 1962 - waiver of demurrage charges - Held that: - the power to frame regulations is located in Section 42 (1) and (2) of the Airports Authority of India Act, 1994. This court has, in its preceding discussion, held that the above power cannot be questioned, as wide and that as lon .....

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stoms or Preventive officer or examining officer, as the case may be."). Interestingly, the duty not to charge – when imposed by any customs official authorized to do so, is specifically subordinated to other laws (“subject to any other law for the time being in force”). Thus the powers under the Airports Authority Act, 1994. - Identical power vests with the Central Government under the AAI Act to issue directions (Section 40). In the event DIAL is of the view that customs authorities’ direc .....

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spondents : Ms. Geeta Malhotra, Advocate ORDER Mr. Justice S. Ravindra Bhat 1. The petitioner ( DIAL hereafter) challenges Regulation 6(1)(1) of the Handling of Cargo in Customs Areas Regulations, 2009 [hereafter Cargo Regulations ] as ultra-vires the provisions of Customs Act, 1962 and furthermore on the ground of arbitrariness and unconstitutionality (as violative of Articles 14 and 19 (1)(g) of the Constitution of India. 2. The Operation, Maintenance and Development Agreement ("the Agree .....

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Airport from AAI and therefore was empowered under the provisions of the agreement to exercise powers under Section 12A(4) of the AAI Act to exercise AAI s statutory powers under the Regulations framed in 2003, with regard to levy of demurrages charges at the IGI Airport. 3. On 17.03.2009, the Central Board of Excise and Custom ( CBEC ), exercising its powers under Section 141(2) read with Section 157 of the Customs Act, notified the Cargo Regulations, which contained the impugned regulation. Th .....

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third respondent issued show cause notices as to why the impugned regulations were not complied with and as to why action should not be initiated against the petitioner and Celibi. 4. DIAL urges that the demurrage is charged under the provisions of AAI Act and that the impugned regulation framed under the Customs Act cannot be extended so as to waive the demurrage charged under the AAI Act. It is submitted that the second respondent has exceeded its powers delegated to it by the Customs Act whic .....

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cause in each case, where consignments are disputed or questioned and involve decision on disputes as to valuation and payment of duty, the customs officials can potentially use their powers and direct DIAL not to recover any demurrage charges. 5. Reliance is placed on the decisions of the Supreme Court in International Airports Authority of India & Ors. V. Grand Slam International & Ors., (1995) 3 SCC 151 and Shipping Corporation of India Ltd. V. C.L. Jain Woolen Mills, 2001 (129) ELT 5 .....

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stom authorities. 6. DIAL also argues that in accordance with Section 157 of the Customs Act, the second respondent is authorized to make regulations consistent with the Act to carry out the purposes of the Act, and Section 141(2) of the Customs Act merely empowers the board to prescribe regulations providing for the manner in which the goods are received, stored, delivered, dispatched or otherwise handled in a customs area and the responsibilities of persons engaged in the said activities. The .....

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re of goods by customs. 7. The respondents argue that the impugned regulations are silent as to what is the nature of directions that can be issued by customs authorities; they were framed in terms of the undoubted powers conferred by Section 142 (2) and cannot be said to be ultra vires. It is submitted that as far as direction to waive charges in individual cases is concerned, in case of any difficulty, the DIAL can approach the authorities and eventually, if it is not resolved satisfactorily, .....

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erms of Regulation 6(2) of the Cargo Regulations and therefore the custodian, while operating under the Regulations, cannot take a stand that they are liable to follow only part of regulations and not follow those regulations which do not fit into their business model. The third respondent further points out that Regulation 6 of the Cargo Regulations provides for the responsibilities of Customs Cargo Service Provider and Regulation 6(1)(l) places an obligation upon the petitioners or their sub-c .....

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trade policy, human safety and security, security of state etc. and hence the impugned regulation was incorporated in the Cargo Regulations. Analysis and conclusions 9. Regulation 6(1)(l) of the Cargo Regulations is reproduced below for ease of reference: 6(1) The Customs Cargo Service provider shall- (a)-( o) - (l) subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the proper officer. 10. Regulation 6 of .....

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w that the Central Board of Excise and Customs, the second respondent, is empowered to prescribe the responsibilities of persons engaged in the activities of receiving, storing, delivering dispatching or otherwise handling of imported or export goods in a customs area. 11. Undoubtedly DIAL s functions in relation to operating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing of the IGI Airport as conferred by the Agreement, except those functions p .....

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wering the customs authorities to direct the custodian of goods to waive the demurrage charges on the goods. However, these decisions were pronounced before introduction of sub-section (2) to Section 141, which later gave way to the notification of the Cargo Regulations. Therefore, the petitioner s argument that the second respondent exceeded the power delegated to it by the Customs Act must fail. 12. The contention that the impugned regulation violates Article 14 of the Constitution of India, a .....

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uch as it places a blanket ban on the charge of demurrage by the custodian of goods in case of detention, confiscation or seizure of goods by customs. However, such restriction is covered under the premise of Article 19 (6), by which reasonable restrictions in the interest of general public may be imposed on the right under Article 19(1)(g). Investigation being an integral part of working of the Customs Department, the consignments detained by the customs authorities or other investigating agenc .....

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the subordinate legislation made under a power to carry out the provisions of the Act has reasonable nexus with the object and purpose of the enabling statute, the court is not to concern itself with the wisdom or efficacy of the subordinate legislation or of its underlying policy: (Ref. Maharashtra State Board of Secondary and Higher Secondary Education v Paritosh Bhupesh Kumar (1984) 4 SCC 27 where the court upheld the validity of a Regulation made to carry out the provisions of the Act‟ .....

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ffirmative and the second and third tests are answered in the negative, which would imply that the Cargo Regulations is well within the scope and ambit of its parent Act i.e the Customs Act, and is also consistent with the same, and does not, in any way, violate constitutional provisions. 14. This court acknowledges that Section 151A of the Customs Act places an obligation upon the officers of customs to follow the orders, instructions and directions of the Central Board of Excise and Customs/Re .....

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e, insofar as they relate to any prohibition, restriction or procedure for import or export of goods issue such orders, instructions and directions to officers of customs as it may deem fit and such officers of customs and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board… 15. The Commissioner of Customs (Import & General)/ third respondent a customs officer is bound by Section 151A of the Customs Act .....

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compliance would result in commercial unviability, because its autonomy to charge fully or in part might eventually result in losses. In Grand Slam (supra), the Supreme Court had to deal with the same issue, but in the context of absence of Regulation 6 (1) and un-amended Section 142. The court observed as follows: 40. None of these provisions entitles the Collector of Customs to debar the collections of demurrage for the storage of imported goods. They do not entitle him to impose conditions u .....

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that such person not be entitled to recover charges from the importer for such period as the Customs authorities direct. 41. The purpose of the Customs Act on the one hand and the Major Ports Act and the International Airports Authority Act on the other hand are different. The former deals with the collection of Customs duties on imported goods. The latter deals with the maintenance of seaports and airports, the facilities to be provided thereat and the charges to be recovered therefor. An impor .....

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ot permit the importer to remove his goods from its premises does not imply that it may not charge the importer for the space his goods have occupied until their clearance. 42. What is stated in the quoted clause of the said customs public notice would be effective against the Authority only if it were shown that the Authority had, expressly or impliedly, consented to such arrangement; that is not even pleaded. 43. It cannot be gain said that, by reason of unjustified detention of his goods by t .....

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ed, after giving to the Authority and the Boards of Trustees the opportunity of expressing their views, direct them, under the aforementioned provisions, not to levy demurrage charges for periods covered by detention certificates. 44. The goods of the first respondent in this appeal were stored, pending their clearance by the Customs authorities, at the Container Freight Station of the appellant, the Central Warehousing Corporation at Patparganj, Delhi. The Central Warehousing Corporation is est .....

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rports Authority of India Act, 1994, which, by clause (d) (of sub-section [2]) provides the following specific regulation making power: (d) the storage or processing of goods in any warehouse established by the Authority under clause (g) of sub-section (3) of section 12 and the charging of fees for such storage or processing Section 141 (2), - of the Customs Act, inserted by Finance Act 18 of 2008 provides as follows: "(2) The imported or export goods may be received, stored, delivered, dis .....

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specifically obliges service providers not to charge demurrage in certain cases if directed not to do so ( subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as the case may be."). Interestingly, the duty not to charge - when imposed by any customs official authorized to do so, is specifica .....

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