Cus - Condition 5(3) of Handling of Cargo in Customs Areas Regulations, 2009 is not required to be satisfied by appellant as they are working on behalf of JNPT - appeal allowed: CESTAT
By TIOL News Service
MUMBAI, APR 03, 2013: THE facts of the case are that the appellants maintain and operate the Container Freight Station (CFS) and Buffer Yard (BY) belonging to the JNPT. The appellants received imported and export goods at the CFS and BY and are kept in their custody till the goods are cleared for shipment, home consumption or are warehoused or transported.
By exercising the power u/s 45(1) of the Customs Act, 1962, the Commissioner of Customs, JNPT issued Notification No.16/2005 dated 31.12.2005 notifying the JNPT and the appellants to be the Custodian and Co-Custodian respectively of the imported goods received at the CFS, JNPT until the goods are cleared for home consumption or warehoused or transshipped in accordance with the provisions of Chapter VIII of the Customs Act, 1952.
The Handling of Cargo in Customs Areas Regulations, 2009 came into being by way of Notification No.26/2009-Cus dated 17.3.2009 wherein it is defined that ‘Customs Cargo Service Provider' means any person responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a Custodian as referred to in Section 45 of the Act and persons as referred to in sub-section (2) of Section 141 of the said Act.
As per those Regulations, an applicant, for custody and handling the imported and export cargo in customs area has to fulfill certain conditions. One such condition is that the applicant shall execute a bond equal to the average amount of duty involved on the imported goods and 10% of the value of export goods likely to be stored in the customs area during the period of 30 days and furnish a bank guarantee or cash deposit equivalent to 10% of such duty provided that the condition of furnishing of bank guarantee or cash deposit shall not be applicable to ports notified under the Major Ports Act, 1962 or to the Central government or State governments or their undertakings.
Pursuant to this Regulation, Commissioner of Customs wrote a letter dated 27.6.2011 to the Deputy Chairman, JNPT to comply with the conditions under Regulation 5(3) of Handling of Cargo in Customs Areas Regulations, 2009. The letter was replied by the Chief Manager (Operations), JNPT dated 11.1.2011 saying that as the management, maintenance and operation of CFS and BY are entrusted to the appellants with the approval of the Government under Sec.42(3) of the MPT Act and as a CFS operator, the appellants are required to comply with all the Customs formalities.
After receiving the reply from JNPT, the impugned order has been passed by the Commissioner of Customs (Exports), Raigad directing that the customs formalities like submission of bond etc. are required to be complied by the appellant.
The appellant is challenging the said order before the CESTAT.
It is submitted that as per the Notification No.16/2005 dated 30.12.2005, the appellants were co-custodian appointed by appropriate authority under Sec.45(1) of the Customs Act, 1962. As per the said Notification, they were required to execute bank guarantee and bond before commencing any import/export/transshipment operation from CFS which they complied with. But in 2009, Handling of Cargo in Customs Areas Regulations, 2009 came into existence. Thereafter the concept of co-custodian was taken away and a definition came into existence and as per that definition, JNPT is the custodian of CFS and as per condition 5(3) of the said regulation, the custodian has to execute a bond equal to the average amount of duty involved in the imported goods and 10% of value of export goods likely to be stored in the customs area during a period of 30 days and furnish a bank guarantee or cash deposit equivalent to 10% of such duty, but being the major port, furnishing of bank guarantee or cash deposit is not required for JNPT. A clarification was given by CBEC vide Circular No.13/2009 Customs dated 23.3.2009 that the Customs Cargo Service Providers (CCSPs) shall be the custodian of imported/export cargo and thus handling goods in customs areas. This condition shall not apply to those persons who only provide certain services on their own or on behalf of the custodian referred to above. The appellants are providing services to JNPT who is CCSP. Therefore, they are not required to comply with the condition under Regulation 5(3) of the said Regulations. Therefore, the impugned order is to be set aside.
The Revenue representative submitted that as the appellants were appointed as co-custodian as per Notification No.16/2005 issued by CC(JNPT), therefore, they are still co-custodian and they are required to comply with the Condition No.5(3) of the said Regulations. Therefore, he submitted that the impugned order is to be upheld.
The Bench observed -
“4. … After considering the submissions made, we come to the conclusion that it is no doubt that the appellants were registered as co-custodian as per the Notification No.16/2005 dated 30.12.2005 but by Notification No.26/09-Cus (NT) dated 17.3.2009, Handling of Cargo in Customs Areas Regulations, 2009 came into existence. As per Regulation 2 of the same Regulations, CCSP means any person responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a custodian as referred to in Sec.45 of the Act and persons as referred to in sub-section (2) of Section 141 of the said Act. Therefore, as per the regulation of Handling of Cargo in Customs Areas Regulations, 2009, JNPT is the custodian and is responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods. The appellants are working as CFS on behalf of JNPT and have executed bank guarantee of Rs.24 crores in favour of the JNPT to secure the interest/revenue of JNPT. As per Condition 5(3) of the said Regulation, being a major port, JNPT is not required to furnish Bank guarantee or cash deposit but are required to execute a bond equal to the average amount of duty involved on the imported goods and 10% of the value of export goods likely to be stored in the customs area during a period of 30 days. The appellants are not directly involved with the customs. They are working on behalf of JNPT and JNPT has given licence to the appellants to work as CFS on furnishing the bank guarantee of Rs.24 crores. In those circumstances, by mere denying by JNPT that they are not responsible for the activities of the appellants does not seem to be correct. In fact, the dispute is between the JNPT and the Customs. The Commissioner of Customs (Export) Nhava Sheva was not required to pass this order. We, therefore, set aside the impugned order in the light of the above discussions and allow the appeal with consequential relief.”
In fine, the appeal was allowed.
In passing: Knocking the wrong door!
(See 2013-TIOL-544-CESTAT-MUM)
