Airline not liable for delay in receiving transshipment application due to arrest of Officers
IN THE HIGH COURT OF JUDICATURE AT MADRAS
The Relevant Text of the Order as follows :
75. The Court further went on to hold that the importer of the goods was liable to pay the demurrage charges even if the importer was not responsible for any delay, or any fault could be attributed to the importer.
76. In International Airports Authority Vs. Grand Slam International, (1995) 3 SCC 151, the Hon’ble Supreme Court took note of Section 45 of the Customs Act and held as follows:-
“41. None of these provisions entitles the Collector of Customs to debar the collection of demurrage for the storage of imported goods. They do not entitle him to impose conditions 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 therefore. 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 and provide storage facilities and Customs Officers are accommodated therein to facilitate clearance. For the occupation by the imported goods of space in the seaport or airport, the Board or the Authority which is its proprietor is entitled to charge the importer. That until Customs clearance, the Board or the Authority may not 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.
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44. It cannot be gainsaid that, by reason of unjustified detention of his goods by the Customs Authorities, the importer is put to loss by having to pay demurrage charges for the periods of such detention. The Central Government is empowered by Section 35 of the International Airports Authority Act, 1971 and Section 111 of the Major Port Trusts Act, 1963 to issue to the Authority and the Board of Trustees, respectively, directions on questions of policy after giving them an opportunity, as far as practicable, of expressing their views. The Central Government can, if so advised, after giving to the Authority and the Board 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.”
80.Hon’ble Venkatachala, J. as he was then in his concurring judgment, after referring to the various judgments of the Court cited held as follows;-
“66. From the above decisions of this Court it becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1961, would be entitled to charge demurrages for the imported goods in its custody and make the importer or consignee liable for the same even for periods during which he/it was unable to clear the goods from the customs area, due to fault on the part of the Customs Authorities or of other authorities who might have issued detention certificates owning such fault.
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69. Therefore, my answer to the question considered by me is in the negative i.e. the Collector of Customs empowered under sub-section (1) of Section 45 of the Customs Act, 1962 to approve persons to be custodians of imported goods in customs areas until they are cleared as provided for therein, while approving the International 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 delegatee, 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 of the International Airport Authority to collect charges from the importer.
77. In Mumbai Port Trust Vs. Shri Lakshmi Steels, 2017 (352) E.L.T.401 (S.C) : (2018) 14 SCC 317, the Hon’ble Supreme Court held as follows:-
32. 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.
33. As already explained hereinabove, the Mumbai Port Trust has the power and authority to levy rates including demurrage as fixed by the Tariff Authority under Section 47-A of the Act. This right of the Port Trust is not affected either by the provisions of the Customs Act or by the 2009 Regulations. Section 160(9) of the Customs Act clearly lays down that the provisions of the Customs Act shall not in any manner affect the constitution and powers of any Port Authority in a major port. This will include the right of the Major Port Authority that is a Major Port Trust to levy and charge rates and demurrage.
34. [Ed.: Para 34 corrected vide Official Corrigendum No. F.3/Ed.B.J./123/2017 dated 23-3-2018.] As far as the 2009* Regulations are concerned, these are the Regulations framed under the Customs Act. Regulations are in the nature of subordinate legislation. There can be no manner of doubt that subordinate legislation that too a legislation framed by a Board under the Customs Act cannot in any manner affect the power and authority of the Major Port Trust statutorily vested in it.
35. Neither the Regulations nor can the provisions of the Customs Act 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(1)(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 Trusts 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.
36. The next issue which arises is 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.
37. We have already referred to a number of decisions wherein the law has been clearly laid down that even if the importer is not at fault, it is the importer alone who is liable to pay the demurrage charges. As far as detention charges are concerned, this is a private contract between the importer and the carrier i.e. shipping line. The DRI/Customs Authorities can be directed to pay the demurrage/detention charges only when it has proved that the action of the DRI/Customs Authorities is absolutely mala fide or is such a gross abuse of power that the officials of the DRI/Customs should be asked to compensate the importer for the extra burden which he has to bear. Even if an importer feels that it has been unjustly dealt with, it must clear the goods by paying the charges due and then claim reimbursement from the Customs Authority.
* Handling of Cargo in Customs Areas Regulation, 2009.
78. The Hon’ble Supreme Court while giving the above decision has however not considered the provisions of the Airport Authority of India (Storage and Processing of Cargo, Courier and Express Goods and Postal Mail) Regulations, 2003. Perhaps the Hon’ble Supreme Court may have come to a different conclusion if it had considered the 2003 Regulation.
79. Para 34 of the above decision has practically rendered Regulation 6 of the Handling of Cargo in Customs Area Regulations, 2009 otiose by holding that the said Regulation framed under the Customs Act was in the nature of subordinate legislation and there can be no manner of doubt that such subordinate legislation framed by the Board under the Customs Act cannot in any manner affect the power and authority of the Major Port Trust statutorily vested in it.
80. The Court thus followed its earlier decision in International Airport Authority of India vs. Grand Slam International [1995 (77) ELT 753 SC] and Trustees of Port of Madras vs. Nagavedu Lungi & Co., [1995 (80) ELT 241 SC].
81. If one were to go by the decision of the Hon’ble Supreme Court in Mubai Port Trust (cited supra) strictly in the question of issue of “Detention Certificate” which was in vogue prior to Handling of Cargo in Customs Area Regulations, 2009 is of no significance any longer. However, that interpretation would militate in the light of Regulation 6 of the Airport Authority of India (Storage and Processing of Cargo, Courier and Express Goods and Postal Mail) Regulations, 2003. Therefore, this Court is not inclined to hold that such certificate can be issued at all.
82. The authorities under the Airport Authority Act, 1994 require certificate from the Customs for granting waiver from payment of demurrage under the policy framed under Regulation 6 of the Airport Authority of India (Storage and Processing of Cargo, Courier and Express Goods and Postal Mail) Regulations, 2003.
83. In fact, such certificate need not be confined to the circumstances specified in Public Notice No.111 of 1985 dated 29.07.1985 of the Bombay Custom House alone. It can be issued in appropriate case to cover the circumstances specified in the Policy of the Airport Authority as per Regulation 6 of the Airport Authority of India (Storage and Processing of Cargo, Courier and Express Goods and Postal Mail) Regulations, 2003 as was noted in Trip Communication Pvt. Ltd. (cited supra) by the Delhi High Court.
84. As far as the present case is concerned, since none of the circumstances noted by the Delhi High Court in Trip Communication Private Limited Vs. Union of India are attracted, the question of the 1st respondent issuing such certificate to the petitioner for the petitioner to claim waiver does not arise. Therefore, to that extent the 1st respondent was justified in denying “Detention Certificate” to the petitioner.
85. Though, it is not the case of the abuse by the officers of the Customs, there are sufficient indications to show that there was a complete disruption of service at the Air Cargo Complex during the relevant period due to alleged arrest of the officers. In absence of the officers to receive the transshipment application, there could have been total disruption and no application was received which perhaps may have led to the delay.
86. If there were no proper officers or there were only few officers to handle the workload due to alleged arrest and the delay in receiving the transshipment application for being processed by the 1st respondent should not be at the cost of the petitioner. If indeed there was a complete breakdown due to alleged arrest and resulted in disruption of the operations at the Air Cargo Complex, the petitioner should be compensated as such delay cannot be attributed by the petitioner. This would require proper facts being established by the petitioner.
87. Therefore, this aspect would require proper verification. Issue is therefore left open for the petitioner to establish that Customs Department is liable to compensate the petitioner in the light of the observation of the Hon’ble Supreme Court in Mumbai Port Trust Vs. Shri Lakshmi Steels, 2017 (352) E.L.T.401 (S.C) : (2018) 14 SCC 317.
88. The petitioner may therefore establish before the 1st respondent that there was total or near total disruption of work due to alleged arrest of the customs officers and therefore, there was delay in receiving and processing of transshipment application and therefore the petitioner is entitled to compensation.
89. The 1st respondent also will have all the official information and details on this aspect. I am therefore inclined to remit the case back to the 1st respondent to pass appropriate orders after taking all the factors into account. The petitioner may independently substantiate the allegations before the 1st respondent with necessary documents.
90. The 1st respondent may clearly state whether indeed any of its officers stationed at the Air Cargo Complex for the purpose of processing the transshipment application were arrested as was claimed by the petitioner and whether such arrest resulted in disruption of operation at the Air Cargo Complex. If so, the petitioner shall be compensated.
91. The 1st respondent is therefore directed to pass appropriate orders within a period of three months from the date of receipt of a copy of this order. Meanwhile, the petitioner is directed to pay the amounts that are due to the 3rd and the 4th respondents.
92. This Writ Petition stands disposed with the above directions.
No cost. Consequently, connected Miscellaneous Petition is closed.
Tags: Judgement, High Court
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