TMI Blog2020 (8) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... ive, as stated hereinabove, the non-mention of the ship-owner in the first part of the definition makes no difference, as it would be incongruous to hold that the shipowner s agent is included in the latter part of the definition, but not the ship-owner itself, which would indicate that the maxim noscitur a sociis cannot apply. 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 mass of goods within the country on the facts of these cases. Thus, once destuffing takes place, the container has to be returned either to the ship-owner s agent, or to the person who owns such container. May versus Shall - Held that:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led as well) that the Port Trust has to look to for payment of storage or demurrage charges. A container which has to be returned is only a receptacle by which goods that are imported into India are transported. Considering that the container may belong either to the consignor, shipping agent, ship-owner, or to some person who has leased out the same, it would be the duty of the Port Trust to destuff every container that is entrusted to it, and return destuffed containers to any such person within as short a period as is feasible in cases where the owner/person entitled to the goods does not come forward to take delivery of the goods and destuff such containers. What should be this period is to be determined on the facts of each case, given the activities of the port, the number of vessels which berth at it, together with the volume of goods that are imported. While it does not lie in the mouth of the Port Trust to state that it has no place in which to keep goods after they are destuffed as in the facts in the present case yet a court may, in the facts of an individual case, look into practical difficulties faced by the Port Trust. This may lead to the short period in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the probable extent of liability to be imposed by the Customs Department, and the liability to be satisfied to the Port and others concerned, the consignees did not turn up to clear the goods and they were lying idle in the Port premises for quite long. The Port Trust charged ground rent from the steamer agents/owners of the containers. 2. After then setting out the relevant provisions of the Major Port Trusts Act, 1963 [ MPT Act ] and the relevant portions of five decisions of this Court, namely, Port of Madras v. K.P.V. Sheik Mohamed Rowther Co. 1963 Supp. (2) SCR 915 [ Rowther-I ]; Port of Madras v. K.P.V. Sheik Mohd. Rowther Co. P. Ltd. (1997) 10 SCC 285 [ Rowther-II ]; Port of Bombay v. Sriyanesh Knitters (1999) 7 SCC 228; Forbes Forbes Campbell Co. v. Port of Bombay (2015) 1 SCC 228 [ Forbes-II ] and Rasiklal Kantilal Co. v. Port of Bombay (2017) 11 SCC 1, the Division Bench then stated: 23. Analysing the above judgments, the following position emerges: 23.1. The decisions in Rowther-I, Rowther-II, Sriyanesh Knitters, Forbes-II and Rasiklal do not seem to follow a consistent line about whom the Port Trust has to fasten the liability for pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-I, we are inclined to the view that the following issues need to be resolved by a larger Bench: 24.1. Whether in the interpretation of the provision of Section 2(o) of the MPT Act, the question of title of goods, and the point of time at which title passes to the consignee is relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust; 24.2. Whether a consignor or a steamer agent is absolved of the responsibility to pay charges due to a Port Trust, for its services in respect of goods which are not cleared by the consignee, once the bill of lading is endorsed or the delivery order is issued; 24.3. Whether a steamer agent can be made liable for payment of storage charges/demurrage, etc. in respect of goods which are not cleared by the consignee, where the steamer agent has not issued a delivery order; if so, to what extent; 24.4. What are the principles which determine whether a Port Trust is entitled to recover its dues, from the steamer agent or the consignee; and 24.5. While the Port Trust does have certain statutory obligations with regard to the goods entrusted to it, whether there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied under different heads including the Port charges and other dues because of the delay. So also, no action was taken by the Port Trust to destuff the goods and they retained the containers for their own reasons. 5. The learned Senior Advocate who led the arguments on behalf of the shipping agents before the High Court made one important concession, namely, that the shipping agents do not propose to press the contention as to their liability in satisfying ground rent, except that they ought not to be mulcted with any such liability beyond the period of 75 days, which was set out in the relevant Tariff Authority for Major Ports ( TAMP ) Orders. At the point of time that the Division Bench delivered its judgment, a Division Bench of this Hon ble Court in Forbes Forbes Campbell Co. Ltd. v Board of Trustees, Port of Bombay (2008) 4 SCC 87 [ Forbes-I ], had referred the following three questions to a larger Bench: 9. The questions of law of public importance in this appeal are as follows: 1. Whether a steamer agent can be construed as owner of the goods carried in his principal's vessel within the definition of owner in relation to goods under Section 2(o) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the same to be sold in the public auction, realising the funds, to be apportioned in the manner specified under Section 63, cannot but be deprecated. This Court holds that the respondent Port Trust can demand Ground Rent only to a maximum period of 75 days as specified by the Tariff Authority for Major Ports as per the relevant TAMP Orders discussed above. 8. Shri Ritin Rai, learned Senior Advocate appearing on behalf of the Appellant Port Trust, referred to various provisions of the Customs Act, 1962 and the MPT Act, and argued that once responsibility for the goods is taken over by the Port Trust, the Port Trust becomes a bailee of the goods delivered to it by the ship-owner, who in turn is relieved of its liability for loss or damage to the goods during the period when the goods are in the custody of the Port Trust. Thus, the Port Trust is entitled to recover, from the shipping agents, demurrage and other dues for the period until a delivery order is issued by the shipping agent to the consignee, and for this purpose is entitled to exercise a lien over the goods for realisation of such demurrage. He added that where a delivery order is withheld or withdrawn, disabling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be read as may , and not shall . 9. Shri Prashant S. Pratap, learned Senior Advocate appearing on behalf of Respondent No.1, a shipping/steamer agent, was at pains to point out that endorsement on the bill of lading by the shipping agent, and a delivery order being given by the shipping agent, does not pass title to the goods. The endorsement on the bill of lading by the consignor in favour of a notified party or a consignee, when read with section 1 of the Indian Bills of Lading Act, 1856, is the endorsement that passes title to goods, and must not be confused with his client s endorsement on the bill of lading. He relied heavily on the Privy Council judgment in K.H. Enterprise (supra), stating that the decision applied on all fours to the present case, and that therefore the Port Trust as a sub-bailee of the goods steps into the shoes of the bailee, i.e. the ship-owner/ship-owner s agent, and must therefore sue the bailor i.e. the consignor/shipper, and not the original bailee. This was also because implied consent has been given by the consignor to handover the goods to the Port Trust at the port of despatch for delivery to the consignee, the Port Trust being fully awar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be good law. He also contended that the issuance of a delivery order to the consignee is irrelevant, and has no bearing on the liability to pay storage charges. He further argued that to the extent that the judgment states that the vessel and its agent cannot be mulcted with the charges, the judgment is absolutely correct and must be followed. Insofar as goods carried by containers is concerned, Shri Pratap contends that the Port Trust itself states that the charges claimed by the Port Trust are in respect of goods, and not in respect of the container in which the goods are stuffed. Thus, the container cannot be said to be goods as defined which would incur storage charges. He also relied upon the counter affidavit filed by the Port Trust before the High Court, in which the Port Trust admitted that if the goods were imported as bulk cargo, the liability to satisfy demurrage would not be on the steamer agent but on the consignee. The mere fact that they are carried in a container can therefore make no difference. He argued that since all questions were now open before this Court, he was not constrained by the predecessor counsel (including himself) in the High Court, stati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passes) that can alone be made liable for payment of such charges. He also argued that the obligation to clear goods imported which have been stored in a warehouse are that of the importer, and for this he relied heavily on section 49 of the Customs Act, 1962. He argued that this would also make it clear that the steamer agent therefore does not come into the picture. He further argued that the steamer agent has no bailor-bailee relationship with the Port Trust, and joined Shri Pratap in relying upon Sriyanesh Knitters (supra) and overruling of Forbes-II (supra). To the extent that Rasiklal (supra) has made observations against steamer agents, it is incorrect in law and should be overruled to this extent. 11. Shri Kavin Gulati, learned Senior Advocate appearing on behalf of Hapag-Lloyd India Pvt. Ltd., a shipping agent and also an Intervenor in these proceedings, reiterated the submissions made by the predecessor counsel, and further stressed on sections 29, 30, 33, 45, 48 and 150 of the Customs Act. He also argued that once goods have been landed, a ship-owner s agent can never be made liable for demurrage charges, which should be to the account of the owner or the beneficial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... railway administration under the Indian Railways Act, 1890 ( 9 of 1890); (e) piloting, hauling, mooring, remooring, hooking, or measuring of vessels or any other service in respect of vessels; and (f) developing and providing, subject to the previous approval of the Central Government, infrastructure facilities for ports. (2) A Board may, if so requested by the owner, take charge of the goods for the purpose of performing the service or services and shall give a receipt in such form as the Board may specify. (3) Notwithstanding anything contained in this section, the Board may, with the previous sanction of the Central Government, authorise any person to perform any of the services mentioned in sub-section (1) on such terms and conditions as may be agreed upon. (3A) Without prejudice to the provisions of sub-section (3), a Board may, with the previous approval of the Central Government, enter into any agreement or other arrangement (whether by way of partnership, joint venture or in any other manner) with, any body corporate or any other person to perform any of the services and functions assigned to the Board under this Act on such terms and condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) cranage 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. 59. Board s lien for rates.-(1) For the amount of all rates leviable under this Act in respect of any goods, and for the rent due to the Board for any buildings, plinths, stacking areas, or other premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be recorded in writing, sell by tender, private agreement or in any other manner such goods or so much thereof as, in the opinion of the Board, may be necessary- (a) if any rates payable to the Board in respect of such goods have not been paid, or (b) if any rent payable to the Board in respect of any place on or in which such goods have been stored has not been paid, or (c) if any lien of any ship-owner for freight or other charge of which notice has been given has not been discharged and if the person claiming such lien for freight or other Charges has made to the Board an application for such sale. (2) Before making such sale, the Board shall give ten days notice of the same by publication thereof 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: Provided that in the case of animals and perishable or hazardous goods, the Board may give such shorter notice and in such manner as, in the opinion of the Board, the urgency of the case admits of. (3) If the address of the owner of the goods has been stated on the manifest of the goods or in any of the docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (1), the Board may, at any time after the expiration of two months from the date on which such goods were placed in its custody, sell the goods by public auction or in such cases as the Board considers it necessary so to do, for reason to be recorded in writing sell by tender, private agreement or in any other manner after giving notice of the sale in the manner specified in sub-sections (2) and (3) of section 61. (4) Notwithstanding anything contained in sub-section (1) or sub-section (3)- (a) the Board may, in the case of animals and perishable or hazardous goods, give notice of removal of such goods although the period of one month or, as the case may be, of two months specified in sub-section (1) has not expired or give such shorter notice of sale and in such manner as, in the opinion of the Board, the urgency of the case requires; (b) arms and ammunition and controlled goods may be sold in accordance with the provisions of sub-section (4) of section 61. (5) The Central Government may, if it deems necessary so to do in the public interest, by notification in the Official Gazette, exempt any goods or classes of goods from the operation of this sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realisation of damages, etc.-If a Board gives to the officer of the Central Government whose duty it is to grant the port-clearance to any vessel at the port, a notice stating,- (i) that an amount specified therein is due in respect of rates, fines, penalties or expenses chargeable under this Act or under any regulations or orders made in pursuance thereof, against such vessel, or by the owner or master of such vessel in respect thereof, or against or in respect of any goods on board such vessel; or (ii) that an amount specified therein is due in respect of any damage referred to in section 116 and such amount together with the cost of the proceedings for the recovery thereof before a Magistrate under that section has not been realised, such officer shall not grant such port-clearance until the amount so chargeable or due has been paid or, as the case may be, the damage and cost have been realised. 123. General power of Board to make regulations.-Without prejudice to any power to make regulations contained elsewhere in this Act, a Board may make regulations consistent with this Act for all or any of the following purposes, namely:- xxx xxx xxx (c) fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any part thereof, is not delivered to the proper officer within the time specified in this sub-section and if the proper officer is satisfied that there was no sufficient cause for such delay, the person-in-charge or any other person referred to in this sub-section, who caused such delay, shall be liable to a penalty not exceeding fifty thousand rupees: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to deliver arrival manifest or import manifest by presenting electronically, allow the same to be delivered in any other manner. (2) The person delivering the arrival manifest or import manifest or import report shall at the foot thereof make and subscribe to a declaration as to the truth of its contents. (3) If the proper officer is satisfied that the arrival manifest or import manifest or import report is in any way incorrect or incomplete, and that there was no fraudulent intention, he may permit it to be amended or supplemented. 33. Unloading and loading of goods at approved places only.-Except with the permission of the proper officer, no imported goods shall be unloaded, and no expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or importation into India: Provided further that where the bill of entry is not presented within the time so specified and the proper officer is satisfied that there was no sufficient cause for such delay, the importer shall pay such charges for late presentation of the bill of entry as may be prescribed. (4) The importer while presenting a bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, and such other documents relating to the imported goods as may be prescribed. (4A) The importer who presents a bill of entry shall ensure the following, namely:- (a) the accuracy and completeness of the information given therein; (b) the authenticity and validity of any document supporting it; and (c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force. (5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner. (2) The proceeds of any such sale shall be applied- (a) firstly to the payment of the expenses of the sale, (b) next to the payment of the freight and other charges, if any, payable in respect of the goods sold, to the carrier, if notice of such charges has been given to the person having custody of the goods, (c) next to the payment of the duty, if any, on the goods sold, (d) next to the payment of the charges in respect of the goods sold due to the person having the custody of the goods, (e) next to the payment of any amount due from the owner of the goods to the Central Government under the provisions of this Act or any other law relating to customs, and the balance, if any, shall be paid to the owner of the goods. Provided that where it is not possible to pay the balance of sale proceeds, if any, to the owner of the goods within a period of six months from the date of sale of such goods or such further period as the Commissioner of Customs may allow, such balance of sale proceeds shall be paid to the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service. 8. As stated earlier on reading Entry 30 and Entry 54, we have no manner of doubt that there is neither any ambiguity nor do they lack any clarity. The legislature intended to levy and collect entry tax on the articles mentioned in both these entries. The words used therein are of wider import and clearly indicate that all articles made of glass or made from all kinds of all forms of plastic including articles made of polypropylene, polystyrene and like materials are subjected to payment of entry tax. It cannot be disputed that the articles in question, namely, bangles are made of glass and/or made of plastic etc. The impugned judgment has very succinctly dealt with the contentions raised on behalf of both the parties and also dealt with the various reported decisions of this Court and other H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds have been landed or transhipped. This would again make it clear that the master or owner of the vessel and their agents, from this point on, have been absolved from liability for loss or damage to the goods, as the Board has now taken over the custody of the goods from such master or owner of the vessel. From this point on, therefore, the master or owner of the vessel and their agents cease to have any liability qua the goods, inasmuch as the Port Trust has now taken them over. Concomitantly, under section 43(1)(ii), the responsibility of the Port Trust for loss, destruction or deterioration of goods of which it has taken charge from this point of time onwards now becomes that of a bailee under sections 151, 152 and 161 of the Indian Contract Act, 1872, omitting the words in the absence of any special contract in section 152 of the Contract Act. This responsibility attaches only after a receipt is given by the Board, and notice of loss or damage has been given, after expiry of such period (as may be prescribed) from the crucial date on which the Port Trust takes charge of the goods. 18. At this juncture, it is important to state that arguments have been made based on observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into the hands of the Board, or is otherwise known, notice of such sale must be given to such owner. 22. Section 62 speaks of the disposal of goods that have not been removed from the premises of the Board within time, and speaks of their removal by the owner or other person entitled thereto . Under sub-section (2) of section 62, where such goods are proposed to be removed or sold, a notice may also be served on the agents of the vessel by which such goods were landed . This is for the reason that the vessel s agents may have indicated that the ship-owner has a lien for freight and other charges, which must be satisfied out of the sale of such goods. The important point to be noted is that a clear distinction is made between an owner or other person entitled to goods, and agents of the vessel. Further, under sub-section (3) of section 62, it is only if the owner or person entitled to goods does not comply with the requisition in the notice, that the Board may, at any time after the expiration of two months from the date on which such goods were placed in its custody, then sell the goods in the manner indicated. The scheme of section 62, therefore, is that when it comes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this juncture, the Customs Act, 1962 also becomes relevant. Under section 2(26), importer is defined as including any owner, beneficial owner or any person holding himself out to be the importer. Though this definition does not ipso facto apply to the MPT Act, it is important that the two Acts be read together, as both Acts deal with goods that are imported into the country from abroad, and their storage and disposal thereafter. In any event, the expression importer that occurs in section 63(2) of the MPT Act would certainly include a beneficial owner of the goods. 26. Under section 29 of the Customs Act, the person-in-charge of a vessel when it carries cargo can land only at a customs port (as defined), unless otherwise permitted by the Central Board of Excise. Under section 30, the person-in-charge of a vessel carrying imported goods shall deliver to the proper officer , i.e. a customs officer, an import manifest of the vessel within the time prescribed, which would indicate the nature of the goods carried by the vessel, and the consignee or other owner of the goods. Under section 33, no such imported goods can be unloaded at any place other than the place approved for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the mass of goods within India. This is the law laid down by this Court in Garden Silk Mills Ltd. and Anr v. Union of India and Ors. (1999) 8 SCC 744, as follows: 17. It was further submitted that in the case of Apar (P) Ltd. [(1999) 6 SCC 117] this Court was concerned with Sections 14 and 15 but here we have to construe the word imported occurring in Section 12 and this can only mean that the moment goods have entered the territorial waters the import is complete. We do not agree with the submission. This Court in its opinion in Bill to Amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, Re observed as follows: Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers, i.e., before they form part of the mass of goods within the country. 18. It would appear to us that the import of goods into India would commence when the same cross into the territorial waters but continues and is completed when the goods become part of the mass of goods within the country; the taxable event being reached at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly be on imported goods, that is, on goods brought into India from a place outside of India. Till that is done, there is no charge to tax. This Court in Garden Silk Mills Ltd. v. Union of India, stated that this takes place, as follows: 17. It was further submitted that in Apar (P) Ltd. [Union of India v. Apar (P) Ltd., (1999) 6 SCC 117] this Court was concerned with Sections 14 and 15 but here we have to construe the word imported occurring in Section 12 and this can only mean that the moment goods have entered the territorial waters the import is complete. We do not agree with the submission. This Court in its opinion in Sea Customs Act, 1878, S. 20(2), In re [Sea Customs Act, 1878, S. 20(2), In re, AIR 1963 SC 1760] SCR at p. 823 observed as follows: 26. Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers i.e. before they form part of the mass of goods within the country. 18. It would appear to us that the import of goods into India would commence when the same cross into the territorial waters but continues and is completed when the goods be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Anr. v. F.N. Balsara 1951 SCR 682, in the context of a law passed by the Legislature of the Province of Bombay relating to prohibition of intoxicating liquors, an argument based on Chief Justice Marshall s dictum in Brown (supra) was made, stating that in pith and substance such law would relate to import and export of intoxicating liquors, and therefore be void. This was turned down, referring to Boddu Paidanna (supra), stating that in the American judgment the widest meaning could be given to the Commerce clause as there was no question of reconciling that clause with another clause containing the legislative power of the State see pages 696 to 700. 33. In Central India Spinning and Weaving and Manufacturing Company, Ltd. v. The Municipal Committee, Wardha 1958 SCR 1102, this Court, in the context of a terminal tax, relied upon the dictum of Chief Justice Marshall in Brown (supra) in order to answer the question before it, namely, whether a terminal tax can be levied on goods which are in transit. The question was answered in the negative see pages 1114 and 1121. 34. In Gramophone Company of India Ltd. v. Birendra Bahadur Pandey Ors. (1984) 2 SCR 664, Central Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed. 37. These judgments were then distinguished by the Court as follows: 104. The law relating to customs has been consolidated by the Customs Act, 1962. The definitions of import , imported goods and importer have already been noticed above. The definition of imported goods as given in Section 2(25) is-any goods brought into India from the place outside India but does not include goods, which have been cleared for home consumption. The provision clearly contemplates that once the goods are released for home consumption, the character of imported goods is lost and thereafter no longer the goods could be called as imported goods. The import transit is only till the goods are released for home consumption. The taxing event for entry tax under Entry 52 List II is entirely different and has nothing to do with the customs duty. The State by imposing entry tax in any manner is not entrenching in the power of the Parliament to impose customs duty. The goods are released for home consumption only after payment of the customs duty due to the Central Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bill of Entry.- The Bill of Entry to be presented by an importer of any goods for home consumption or for warehousing or for ex-bond clearance for home consumption shall be in Form I or Form II or Form III as the case may be. Explanation - In this regulation, goods does not include those goods which are intended for transit or transshipment. 41. Form I, which speaks of a Bill of Entry for home consumption, contains a declaration to be signed by an importer, clause 6(b) of which is important and is set out hereunder: 6(b) I/We declare that there are the following payments actually paid or payable for the imported goods by way of cost and services other than those declared in the invoice^ [^please refer to Rule 10 (1) (a) (b) of the Customs Valuation Rules, 2007] Sl. No. Particulars Amount or expressed as % of the unit price i. Brokerage and Commissions, except buying commission [Rule 10(1)(a)(i) of the Customs Valuation Rules, 2007]: ii. Cost of containers [Rule 10(1)(a)(ii)]: iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch 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; 44. Rule 4 deals with the transaction value of identical goods , and Rule 5 deals with the transaction value of similar goods , and are set out hereinbelow: 4. Transaction value of identical goods. (1)(a) Subject to the provisions of rule 3, the value of imported goods shall be the transaction value of identical 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. (b) In applying this rule, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials and fabrication or other processing employed in producing the imported goods; (b) an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to India; (c) the cost or value of all other expenses under sub-rule (2) of rule 10. 46. Rule 10, which deals with costs and services then states: 10. Costs and services.- (1) In determining the transaction value, there shall be added to the price actually paid or payable for the imported goods, - (a) the following to the extent they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods, namely:- xxx xxx xxx (ii) the cost of containers which are treated as being one for customs purposes with the goods in question; 47. A reading of Rule 10(1)(a)(ii) would lead to the same result, as imported goods are differentiated from containers . Further, for the purposes of customs valuation, addition to the transaction value of the imported goods is made only when the cost of containers is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of durable nature as follows: Notification No.104/94-Cus., exempts containers which are of durable nature from the whole of the duty of customs and additional duty subject to the condition that such containers are re-exported within 6 months from the date of importation and documentary evidence is furnished to the satisfaction of the Assistant Commissioner. As per the meanings assigned to the words durable and container in various Dictionaries, it would appear that any goods (containers) used for packaging or transporting other goods, and capable of being used several times, would fall in the category of containers of durable nature . A reading of the aforesaid also goes to buttress the conclusion reached in the previous paragraph of this judgment. 49. The Customs Tariff Act, 1975 also throws considerable light on containers fit for repetitive use. Section 2 of the said Act states as follows: 2. Duties specified in the Schedules to be levied.-The rates at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), are specified in the First and Second Schedules. 50. The First Schedule deals with general rules for interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Madras Act, the by-laws, and the Manual of Instructions framed and issued by the Board, the first proposition of law laid down in the said judgment is that it is not obligatory on behalf of the Board to undertake the various services mentioned in section 39 of the Madras Act (which is pari materia with section 42 of the MPT Act). It is only if such services are required by the owner as defined that such services are undertaken by the Board. It was then held that it was the steamer agent who was in a position to require the Board to undertake such services in respect of the cargo that the ship is to unload (see pages 935 to 936). The question for determination was then set out as follows: The question for determination, in the case, then is whether the law making the steamer-agent liable to pay these charges is good law. Page 937 53. These charges , as has been stated earlier, were on account of payment of labour dues for labour remaining idle, such labour being of the Port Trust which was used in the unloading of goods from the vessel. It was then mentioned that these charges were for the benefit of the vessel so that it completes its task of landing the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f landing of the goods, or on their removal thereafter are services rendered to the ship, must be understood in the context of the facts of that case. A perusal of the Board s counter affidavit, which is reflected at page no.921, would show that the Harbour dues on the import of cargo speaks, inter alia, of charges involved in moving the goods from the landing point to the storage point. The expression on their removal thereafter , on the facts of this case, would therefore only mean services performed by the Board from landing point to storage point, and not thereafter. This is in fact made even clearer by the following passage in the said judgment: The charges for labour rendered idle and for labour working more hooks simultaneously, are not charges for services rendered subsequent to the landing of the goods. These are charges which are incurred at the last stage of the process of landing of the goods and therefore prior to the actual landing of the goods. They are, even under the general law, for services rendered to the master of the ship whose liability for loss or of damage to the goods continues up to the placing of the goods on the quay and their receipt by the Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the benefit of the steamer agents. Generally, if there is a delay in taking delivery of the goods by the consignee within a reasonable time, the steamer or its agent can warehouse the goods. In such an event the warehouseman has an independent claim against the consignee or endorsee for the demurrage charges. The position cannot be different merely because the Customs authorities have intervened. The position of the Port Trust is the same as that of a warehouseman whose responsibility to the goods is also said to be a bailee. It cannot be said that the steamer or its agents have undertaken any responsibility for the custody of the goods after the transit has come to an end and after the bill of lading has been duly endorsed or a delivery order issued. By the endorsement of the bill of lading or the issue of a delivery order by the steamer agents, the property in the goods vests on such consignee or endorsee, and thus it appears to be clear that the steamer or the steamer agents are not responsible for the custody of the goods after the property in the goods passes to the consignee or endorsee till the Customs authorities actually give a clearance. It should also be remembered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service charges from the steamer or its agent. We are, however, satisfied that the above decision cannot be taken to lay down that the Port Trust can at no time proceed against the consignee for demurrage charges and can only look to the steamer agent. We are, here, concerned with the demurrage charges after the goods have been landed and taken charge of by the Board and after the steamer agent had endorsed the bill of lading or issued a delivery order for effecting delivery to the consignee that is after the property in the goods had passed to him. As already stated, the goods have remained in the custody of the Port Trust on the default of the consignee to satisfy the Customs authorities that the import was authorised. Even though the consignee is not a party to the contract of carriage once the property in the goods had passed to him, he becomes liable to pay the storage or demurrage charges as owner of the goods to the shipowner. Page 287 58. Rowther-II (supra) has made it clear that Rowther-I (supra) concerned itself with Port Trust dues at the time of landing of the goods, and their removal thereafter to custody of the Port Trust. These were charges wholly distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. This has been set out by a five Judge Bench of this Court in J.V. Gokal and Co. (Pvt.) Ltd. v. Asst. Collector of Sales-Tax (Inspection) and Ors. (1960) 2 SCR 852, as follows: A bill of lading is a writing, signed on behalf of the owner of the ship in which goods are embarked, acknowledging the receipt of the goods, and undertaking to deliver them at the end of the voyage subject to such conditions as may be mentioned in the bill of lading . It is well-settled in commercial world that a bill of lading represents the goods and the transfer of it operates as a transfer of the goods. The legal effect of the transfer of a bill of lading has been enunciated by Bowen, L.J., in Sanders Brothers v. Maclean Co. [(1883) II QBD 327] thus at p. 341: The law as to the indorsement of bills of lading is as clear as in my opinion the practice of all European merchants is thoroughly understood. A cargo at sea while in the hands of the carrier is necessarily incapable of physical delivery. During this period of transit and voyage, the bill of lading by the law merchant is universally recognised as its symbol, and the indorsement and delivery of the bill of lading operates as a sym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia v. Grand Slam International (1995) 3 SCC 151, by which it was made clear that demurrage charges are to be paid by the importer or consignee liable for the same (and not the vessel or the steamer agent thereof). 64. Sriyanesh Knitters (supra) is the next judgment that has to be dealt with in chronological sequence. This was a judgment of two learned judges of this Court, in which the question that arose before the Court was stated thus: 1. The common question involved in these appeals is whether the appellant Board of Trustees of the Port Trust constituted under the Major Port Trusts Act, 1963 (for short the MPT Act ) have a general lien for their dues over the present or future consignments imported by the importers at the Bombay Port when the said dues are in respect of the past imports made by the said importers. 65. The Court first found that a reading of sections 59 and 61(1) of the MPT Act made it clear that the lien spoken of is a lien qua the particular goods that are imported, and cannot extend to previous imports of similar goods made by the same party. The Court then went on to hold that the MPT Act is not a comprehensive code, and has to be read togethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree Judges held: We have gone through the order whereby the matter has been referred to this Bench. We have noted the fact that no reason for not agreeing with the Judgment delivered by a three-Judge Bench has been assigned in the said order. Moreover, upon going through the Judgment delivered in 1997 (10) SCC 285, we see no reason to disagree with the ratio laid down in the said Judgment. In these circumstances, we refer the matter back to the regular bench for further hearing as we do not see any inconsistency in the said Judgment. 69. The matter then came back to a Bench of two Hon ble Judges of this Court, which delivered the judgment in Forbes-II (supra). In Forbes-II, the Court set out the question of law that arose before it as follows: 1 The common question of law that arises in these appeals, though in different facts and circumstances, is with regard to the liability of the agent of a shipowner (hereinafter referred to as the steamer agent ) to pay demurrage and port charges to the Board of Trustees of a Port (hereinafter referred to as the Port Trust Authority ) in respect of goods brought into the port and warehoused by the said authority. Before procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 940) Section 40 speaks of the responsibility of the Board for the loss, destruction or deterioration of the goods of which it has taken charge as a bailee under Sections 151, 152 and 161 of the Contract Act, 1872. Section 148 of the Contract Act states that a bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor and the person to whom they are delivered is called the bailee. It is clear therefore that when the Board takes charge of the goods from the shipowner, the shipowner 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 Sections 39 and 40, therefore, further suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finition clause, which shows that this statement of the law is correct. However, the statement in this paragraph that even de hors the above question, the liability to pay demurrage charges and port rent would accrue to the account of the steamer agent because of the statutory bailment that comes into existence under section 42(2) read with section 43(1)(ii), is plainly incorrect, in view of our finding that after the Port Trust takes charge of the goods and issues a receipt therefor (at which point of time the statutory bailment comes into force), the vessel or the steamer agent cannot be held liable. 72. Insofar as paragraph 11 is concerned, we have already made it clear that Sriyanesh Knitters (supra) cannot be said to reflect the correct position in law, insofar as a bailment between the consignee and the Port Trust is concerned, and thus Sriyanesh Knitters (supra) has been overruled by us to this extent. 73. Paragraph 12 of the said judgment contains the same confusion that is contained in Rowther-II (supra), and cannot therefore be said to lay down the law correctly. The correct position in law is, as has been stated hereinabove, that after the Port Trust takes charge o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany , who was a person interested in purchasing goods, and did not at the time have title to the goods, would be liable to pay demurrage charges for a period of roughly six months, which began with the date on which he applied to the customs authorities to have bills of entries substituted in his name. On the facts in that case, during the period from November, 1991 to January, 1992, 78 shipments of goods were imported by 5 different consignees from a UK company, one M/s Metal Distributors (UK) Ltd; these consignments were landed at Bombay Port. The consignees filed bills of entry for 37 out of 78 consignments, but subsequently failed to lift the consignments, as a result of which they came to be stored at the Port of Bombay. The consignments were shipped on a CAD basis , i.e. cash against documents, in which title would remain with the UK company till such time that an importer would retire the documents against payment. 76. This Court held that despite Rasiklal not being an owner of the goods, he was liable to pay demurrage for the aforesaid period. Strictly speaking, this judgment does not apply to the facts of the cases before us, in that Rasiklal was neither the owner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would amount to delivery to the consignee, which proposition was turned down by the Court. The question whether section 158 of the Contract Act can apply to a statutory bailment under the MPT Act is left open, given that the Port Trust is not limited only to recovering necessary expenses to be payable by the bailor, but is statutorily is entitled to recover, by way of levy of rates and expenses incurred for storage of the goods, together with something more the something more being rates of storage higher than warehousing rates as a deterrent against keeping these goods in the Port Trust premises. This Court in Board of Trustees of the Port of Bombay v. Jai Hind Oil Mills Co. and Ors. (1987) 1 SCC 648 has observed: 10. The power of a Port Trust to fix rates of demurrage and to recover the same from an importer or exporter (although the question of an exporter paying demurrage arises rarely) under law and to show concession as regards demurrage charges in certain specified cases is recognised by this Court in the Trustees of the Port of Madras v. Aminchand Pyarelal [(1976) 3 SCC 167] and in the Board of Trustees of the Port of Bombay v. Indian Goods Supplying Co. [(1977 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amer agent is different from the bill of lading being endorsed by the owner of the goods. In the first case, the endorsement leads to delivery; in the second case, the endorsement leads to passing of title. For the reasons mentioned in the judgment, both stages are irrelevant in determining who is to pay storage charges we have held that upto the point that the Port Trust takes charge of the goods, and gives receipt therefor, the steamer agent may be held liable for Port Trust dues in connection with services rendered qua unloading of goods, but that thereafter, the importer, owner, consignee or their agent is liable to pay demurrage charges for storage of goods; 4. As per paragraph 24 of our judgment; 5. The answer to question number 5 is really in two parts: first, as to whether carrying goods in a container would make any difference to the position that only the owner of the goods or person entitled to the goods is liable to pay for demurrage; and second, as to whether the Port Trust is obliged to destuff containers that are entrusted to it and return empty containers to the shipping agent. The answer to the first question is contained in paragraphs 45 to 51 of our j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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