TMI Blog2017 (7) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in holding that the law settled by this Court in a catena of judgments referred to above was no longer applicable in view of the 2009 Regulations. Reliance placed by the Union of India on Section 128 of the Major Port Trusts Act is totally misplaced. This provision only deals with the right of the Central Government to collect customs duties. It does not deal with the rights of the Port Trust to collect rates including demurrage. Whether any direction could be issued to the DRI/Customs Authorities to pay the demurrage charges to the Port Trust and the detention charges to the Shipping Line? - Held that: - even though there may be some delay on the part of the DRI and the customs authorities, the respondent-importers have also been guilty of delaying the matter and, therefore, they cannot claim that they are not liable to pay demurrage and detention charges. We may, however, clarify that the respondent-importers are free to approach the Mumbai Port Trust in terms of Section 53 of the Act for exemption and remission of demurrage and other charges and the Board may take a sympathetic view while considering the case of the respondent-importers under Section 53. As far as de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed sheets/coils. The bills of entry for the second and third consignments were presented on 11.12.2015 and 29.12.2015 respectively. 4. On 14.12.2015, DRI wrote a letter to the Commissioner of Customs (Import), Mumbai to place the consignments of the respondent-importers, as well as some other importers, on hold. The DRI was of the view that these consignments required 100% examination before these could be released. On 28.12.2015, another letter was written by the DRI to the Customs in which it was mentioned that specific intelligence had been received that the firms had been importing consignments in violation of notifications issued by the Customs to evade provisional duty imposed on their imports. By this letter, the Customs Authorities were requested to get the goods examined 100% with the assistance of the Chartered Engineer with regard to the nature of the imported goods, including the description thereof, quality, thickness and width, along with supporting safeguards. In the meanwhile, on 18.12.2015, the respondent-importers in respect of the bills of entry dated 04.12.2015 and 11.12.2015 prayed that the duty be assessed under Section 18 of the Customs Act, 1962 (for shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory Services; according to DRI the samples sent to this laboratory were not taken in the presence of the officials of DRI and the reports sent by this laboratory were false. Hence, the Customs Authorities decided to get the consignments checked again from another laboratory. Thereafter, samples of the goods were taken again and sent to another laboratory M/s TCR Engineering Services (for short TCR ) on 20.01.2016. On 28.01.2016, this laboratory submitted its report. It opined that out of the ten consignments, the goods of eight consignments appeared to be hot rolled and goods of two consignments appeared to be cold rolled. However, bill of entry numbers were not mentioned and a fresh report was called from TCR and they were asked to give numbers of the bills of entry. Even the two consignments which were found to be cold rolled were not released. The grievance of the respondent-importers is that there was no provision for carrying out a second test and, in any event, the laboratory in question did not have any facilities to carry out test to distinguish between hot rolled and cold rolled coils. 9. On 01.02.2016, the respondent-importers wrote to the Commissioner of Customs for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ petitions filed by them with liberty to file fresh writ petitions. 12. Thereafter, fresh writ petitions were filed. An order was passed by the High Court on 03.06.2016 directing that samples of the imported goods be sent to the Steel Authority of India Ltd. (for short SAIL ), Bokaro for testing. After testing, it was opined that the goods appeared to be cold rolled coils but there was also a finding that the thickness of the coil was at variance with the declaration given by the respondent-importers in respect of some of the consignments. Thereafter, the High Court, on 12.07.2016, directed that the goods be released on payment of due duty and the issue of detention and demurrage charges would be decided later. The order of the High Court dated 12.07.2016 was challenged before this Court by way of SLP (C) Nos. 23479-80 of 2016, which was allowed on 15.09.2016 setting aside the order dated 12.07.2016 passed by the High Court and the High Court was requested to dispose of the writ petition at an early date and release/auction of the imported goods was stayed pending disposal of the writ petition. 13. Respondent-importers had also levelled allegations of mala fide ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o release the goods without payment of such statutory charges. The second contention is that the High Court gravely erred in holding that the Port Trust is the custodian of the Customs Department under Section 45(1) of the Customs Act, 1962. In the alternative, he submitted, that even if the Port Trust is held to be a custodian, it is still entitled to charge demurrage on goods detained by the customs. Even if the Customs Authorities or DRI are at fault, the Port Trust cannot be barred from claiming the charges which are charged statutorily. It is submitted that Regulation 6(l) is subject to other laws including the Major Port Trust Act and it was also submitted that Section 160(9) of the Customs Act, 1962 provides that nothing in the Customs Act shall affect any law for the time being in force relating to the constitution and powers of any Port authority in a major port as defined in the Indian Ports Act, 1908. 17. Shri Maninder Singh, learned Additional Solicitor General appearing for the Union of India submits that the High Court erred in directing the customs authorities and the DRI to pay the demurrage and the detention charges. He submits that the officials did not act mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son. - ( 1) The Authority shall from time to time, by notification in the Official Gazette, frame a scale of rates at which, and a statement of conditions under which, any of the services specified hereunder shall be performed by a Board or any other person authorised under section 42 at or in relation to the port or port approaches- ( a) transhipping of passengers or goods between vessels in the port or port approaches; ( b) landing and shipping of passengers or goods from or to such vessels to or from any wharf, quay, jetty, pier, dock, berth, mooring, stage or erection, land or building in the possession or occupation of the Board or at any place within the limits of the port or port approaches; ( c) carnage or porterage of goods on any such place; ( d) wharfage, storage or demurrage of goods on any such place; ( e) any other service in respect of vessels, passengers or goods, ( 2) Different scales and conditions may be framed for different classes of goods and vessels. 53. Exemption from, and remission of, rates or charges.- A Board may, in special cases and for reasons to be recorded in writing, exempt either wholly or partially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal Commissioner of Customs or Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. ( 2) The person having custody of any imported goods in a customs area , whether under the provisions of sub-section (1) or under any law for the time being in force, - ( a) shall keep a record of such goods and send a copy thereof to the proper officer; ( b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer. ( 3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried. 160. Repeal and savings.- xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of the said Act. This Court held that the Port Trusts were public representative bodies entrusted by the Legislature with authority to frame the scale of rates and the conditions subject to which these rates and services were to be rendered. These rates were approved by the Central Government and, thereafter, the rates had the force of the law. It was held that the Port Trusts were under a statutory obligation to render services of various kinds in the larger public and national interest. In case there is congestion in the port it would affect the free movement of ships and of essential goods. Therefore, the scale of rates had to be framed in such a manner that it worked both as an incentive to the importers to remove the goods as expeditiously as possible from the transit areas and also acted as a disincentive to keep the goods in the premises of the Board for a long time, thereby increasing the demurrage charges substantially with passage of time. This Court held that the High Court was in error in holding that the Board s power to charge demurrage was limited to cases where the goods were not removed from its premises due to some fault or negligence on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the proprietors of ports or airports before they can be approved as Customs ports or Customs airports. Section 45 provides that all imported goods imported in a customs area must remain in the custody of the person who has been approved by the Collector of Customs until they are cleared and such person is obliged not to permit them to be removed from the customs area or otherwise dealt with except under and in accordance with the permission of the Customs Officer. Section 45 does not state that such person shall not be entitled to recover charges from the importer for such period as the Customs Authorities direct. 42. The purpose of the Customs Act on the one hand and the Major Port Trusts 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 importer must land the imported goods at a seaport or airport. He can clear them only after completion of customs formalities. For this purpose, the seaports and airports are approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Airports Authority of India to be the custodian of such imported goods in the customs area of Indira Gandhi International Airport, New Delhi and Central Warehousing Corporation to be the custodians of such imported goods received at the customs area - the Container Freight Station, CWC Complex, Pragati Maidan, New Delhi, by issue of public notice or otherwise in that regard, if by such notice or otherwise directs such custodians not to collect custody charges from the consignees of such goods - the Cargo , because of detention certificates issued by him or his delegates, will not be acting within the powers conferred upon him under the Act, its Rules or its Regulations and hence directions given by the Customs Collector or his delegatees to release the goods of importers or consignees without collecting demurrage charges from them cannot be enforced by courts either against IAAI or CWC. This Court clearly held that Section 45 of the Customs Act did not, in any manner, affect the rights to the International Airport Authority to collect charges from the importer. 25. In Union of India v. R.C. Fabrics (P) Ltd. (2002) 1 SCC 71) , this Court followed the law laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n whittled down. 27. The High Court also placed reliance on certain observations made by this Court in the case of Union of India v. Sanjeev Woolen Mills (1998 (100) ELT 323) , wherein the directions were given by the Delhi High Court that the demurrage and container detention charges should be borne fully by the Customs Department. It would be pertinent to mention that the matter before this Court arose out of the Contempt Proceedings and no challenge had been made to the earlier judgment of the Delhi High Court directing the Customs Authorities to pay the demurrage and container detention charges. That order had become final and it was under these circumstances that this Court refused to interfere with the orders passed in contempt proceedings. This case has no bearing on the facts of the present case. 28 . The High Court has mainly relied upon Section 45 of the Indian Customs Act read with Regulation 2(l) of the 2009 Regulations while issuing directions to the Mumbai Port Trust not to collect demurrage from the importers. The first contention on behalf of the Trust is that the Port Trust is not a custodian of the Customs Department under Section 45(1) of the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r affect the power and authority of the Major Port Trust, statutorily vested in it. 32. Neither the regulations nor the provisions of the Customs Act can impinge or in any manner affect the statutory power of the Major Port Trusts to levy rates under the Act. In fact, the Authority that framed the Regulations was itself aware of this because Regulation 6(l) itself begins with the words subject to any other law for the time being in force . It is, therefore, obvious that the Regulations are subject to any other law including the Major Port Trust Act. Therefore, these Regulations cannot in any manner affect the right of the Port Trust. We are, therefore, of the view that the High Court erred in holding that the law settled by this Court in a catena of judgments referred to above was no longer applicable in view of the 2009 Regulations. Reliance placed by the Union of India on Section 128 of the Major Port Trusts Act is totally misplaced. This provision only deals with the right of the Central Government to collect customs duties. It does not deal with the rights of the Port Trust to collect rates including demurrage. 33. The next issue which arises is whether any direction co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fide, if not strictly malafide .. Therefore, there is no specific finding of mala fides. However, the High Court held that the respondent-importers suffered a loss because of delay on the part of Revenue staff to clear the goods and the executive instructions of the Department were violated. 36. We are not in agreement with the judgment of the High Court. Both the respondent-importers imported consignments on 04.12.2015, 11.12.2015 and 29.12.2015. The case of the Revenue is that it had prior information that the respondent-importers along with other importers of Ludhiana were evading safeguard duty imposed on hot rolled steel products by mis-declaring their goods to be cold rolled products. They were also allegedly using the method of pickling and oiling to make the products appear like hot rolled products. The Revenue also had intelligence reports that in respect of previous transactions the importers had declared the goods to be cold rolled to the Customs Authorities but hot rolled before the Excise Authorities. On 14.12.2015 search was carried out in the business premises of one of the importers namely M/s Inder International and cash amounting to ₹ 63,30,000/- w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Entry dated 04.12.2015, the same was presented to the Customs Authorities and customs duty was paid after 30th December, 2015. 41. Shri Indresh Jain appeared before the DRI on 28.12.2015. On the one hand the respondent-importers were praying for the release of goods and on the other hand their representative was not appearing before the Authorities. Here it would be important to note that the third consignment was received only on 29.12.2015 and, thereafter, the goods were examined from 05.01.2016 to 11.01.2016. In the meantime, the importer filed writ petitions in the Punjab and Haryana High Court. 42. The Customs Authorities drew the samples of the goods from 05.01.2016 to 11.01.2016 . These were sent to Mr. Tambi, Chartered Engineer. Shri Tambi also procured the test report from M/s Perfect Laboratories and issued a certificate on 19.01.2016. According to him the goods were cold rolled coils as declared by the respondent-importers. Therefore, we are of the opinion till this stage there was no unnecessary delay on the part of the DRI. 43. After 19.01.2016, there are allegations and counter allegations made by both the parties against each other. It is however clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not cold rolled coils. The allegation of the petitioner is that the report of Mr. Tambi was not accepted and the goods sent to M/s. TCR for analysis even though M/s. TCR did not have the requisite facilities to carry out the tests. The revenue cannot be barred from asking for a second test. Whether M/s. TCR were competent to carry out the test or not is not for us to decide. However, in these tests, eight of the consignments were found to be violating the import guidelines. Even thereafter, offer were given to the assessee to de-stuff the goods and also to get the goods released for provisional assessment which offer was not accepted by the assessee. 46. We are, therefore, clearly of the view that even though there may be some delay on the part of the DRI and the customs authorities, the respondent-importers have also been guilty of delaying the matter and, therefore, they cannot claim that they are not liable to pay demurrage and detention charges. We may, however, clarify that the respondent-importers are free to approach the Mumbai Port Trust in terms of Section 53 of the Act for exemption and remission of demurrage and other charges and the Board may take a sympathetic ..... 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