By TIOL News Service

NEW DELHI, APR 11, 2014: THE question before the High Court is whether Celebi Delhi Cargo Terminal Management India (Pvt.) Limited [CELEBI] is entitled to charge demurrage/detention charges from the petitioners for the period the goods were detained by the customs authorities and for which the customs authorities have issued a certificate advising Celebi to waive off demurrage charges in terms of Section 6(1)(l) of the Handling of Cargo under Customs Area Regulations, 2009 (HCCAR)?

Inasmuch as whether the CELEBI is bound by the HCCAR or by the Policy for Waiver of Demurrage Charges notified by the Airports Authority of India in 1999 and further whether the two can be harmoniously construed?

The case of the first petitioner goes thus – they imported mobile phones "Made in China" of different brands of Chinese origin on 06.04.2012. On 17.04.2012, the DRI seized the goods on the ground of misdeclaration in the sense that it was found that the address given in the import documents of the petitioner was incorrect and 2000 pieces of memory cards of 4GB capacity were concealed in the mobile phones. Pursuant to a WP filed by the importer, the DRI requested the Commissioner of Customs (Import & General) to release the goods provisionally. Vide letter dated 05.10.2012 petitioner was informed that the goods would be released provisionally on execution of a provisional duty bond guarantee of Rs.15,00,000/-. Thereafter, the petitioner approached the DRI for issuance of directions to CELEBI to waive off demurrage charges on the detained goods and vide letter dated 06.11.2012, the Commissioner of Customs advised CELEBI to waive of the detention charges in terms of Regulation 6(1)(l) of HCCAR. Despite this, CELEBI refused to waive off the demurrage/detention charges and hence the present petition before the High Court.

In the case of the second petitioner, pursuant to the conclusion of the adjudication proceedings and the appeal proceedings before the Commissioner(A), the petitioner requested the customs authorities to direct CELEBI to release the said consignment without payment of any demurrage charges. By order dated 12.03.2013, the Commissioner of Customs, directed CELEBI not to charge any rent or demurrage in terms of its HCCAR, 2009.However, this request was not acceded to and CELEBI directed the petitioner to pay charges amounting to Rs.71.14 lakhs. Against this demand, the second-referred petition.

It is the stand taken by the CELEBI that they are bound by the policies, instructions, guidelines, circulars, notifications and regulations formulated by Ministry of Civil Aviation or Airport Authority of India or AERA and are not bound by any contrary regulations of the Customs department with respect to waiver of any charges levied by them. And that as per the policy formulated by AAI no waiver of any charges has to be granted in cases any fine/penalty/personal penalty/warning is imposed by the customs authorities.DIAL (who entrusted CELEBI the custody of the said area) has further contended that the regulations framed by the customs authorities stipulate that the same are subjected to any other law for the time being in force and as such are subject to the policy framed by the AAI, which policy was framed in 2003, and Regulations came into force in 2009 and as such in terms of said policy, no waiver can be granted.

The respondent viz. customs authorities, have relied on regulation 6(1)(l) of HCCAR and supported the case of the petitioners and have contended that in a case covered by the said regulations and submitted that no detention/demurrage charges are leviable and more so in view of the fact that there is a direction issued by customs authorities to CELEBI to waive of the said charges.

The High Court adverted to the definitions of the terms "customs area", "warehouse", "warehoused goods" and extracted the provisions of sections 45, 49, 57, 58 & 141 of the Customs Act, 1962.

Thereafter the High Court referred to Regulation 6(1)(l) of the HCCAR Regulations and the provisions of the AAI Act, the Airports Economic Regulatory Authority of India under the Airport Economic Regulatory Authority of India Act, 2008Airports Authority of India (Storage and Processing of Cargo, Courier and Express Goods and Postal Mail) Regulations, 2003 and observed -

+ The Policy framed by the AAI lays down that the authorities specified are authorised to sanction, in consultation with the Finance and Accounts Department, remission/waiver of demurrage charges regarding Cargo Operation. It further lays down that Demurrage charges shall not be waived where any fine/penalty/ personal penalty/warning is imposed by the Customs Authority or where the delay arose by reason of dispute in the assessable value or for revalidating or correcting the license in ordinary course of appraisal.

+ The custom authorities are concerned with the receiving, storing, delivering and handling of cargo in a custom area. The custom authorities are not concerned with the upgradation, modernisation, finances, operation and maintenance and management and provision of services at the Cargo Terminal of the Airport, which is the function of the AAI. The custom authorities are also not concerned with the responsibility of providing and fixing demurrage charges in respect of storage, processing and handling of Cargo at the terminal, which responsibility is of the AERA.

+ The Regulations of the AAI of which the Policy for Waiver of demurrage charges is a part specifically deals with the Storage and Processing of Cargo, Courier and Express Goods and Postal Mail. The Airport Authority fixes the charges for processing of the Cargo and has thus formulated the Policy for Waiver of such demurrage charges.

+ The custom authorities it appears issues certificate for waiver in every type of case irrespective of the fact whether the importer is at fault or not. The custom authorities have issued certificate for waiver of the demurrage charges in both the cases at hand. In one case the release of the goods are on provisional basis pending adjudication and in the other there is imposition of both fine and penalty. These are not cases where the importer has been held to be not at fault. In one case the Importer has been found to be at fault and penalty and fine imposed. The importer has accepted the said order. In the other case adjudication proceedings are pending and are yet to be finalised.

+ There is an overlap in the Policy for Waiver framed by AAI and the HCCAR. Though initially there appears to be a conflict between the policy and the regulations but on closer scrutiny it is apparent that they can both be harmoniously construed and coexist.

+ The policy makes a distinction between the cases where the importer is innocent but his imported goods are seized and detained pending an enquiry and adjudication and the cases where the importers have indulged in mis-declaration, mis-description, under valuation or concealment and fine, penalty, personal penalty and/or warning is imposed by the customs authorities. Importers who are innocent cannot be equated with the importers who violate the law and be given the same treatment. The AAI policy makes a distinction between the two and in our view rightly so.

+ The HCCAR framed in 2009 themselves stipulate that they are subject to any law for the time being in force and as such the regulations would be applicable in terms of the Policy for Waiver framed by the AAI in 2003.In case the HCCAR were to be made applicable in all cases then the result would be that in no case where there is a fine, penalty, personal penalty and/or warning imposed by the customs authorities CELEBI would be able to charge demurrage charges. Custom authorities are issuing waiver directions even in cases where the importers are clearly at fault and fine, penalty, personal penalty and/or warning has been imposed by the customs authorities. Even in cases of misdeclaration, undervaluation and concealment, the certificates are being issued. This is clearly giving premium to dishonesty. The waiver should be granted in genuine cases where the importers are ultimately found not at fault. It cannot be that all importers honest and dishonest are treated equally.

+ In cases where the importer is found innocent and there is no imposition of any fine, penalty, personal penalty and/or warning by the customs authorities, the Policy for Waiver would be applicable and the importer would be entitled to be considered for its benefit provided a certificate entitling him to be so considered is issued by the custom authorities. The importer would not be automatically exempt but would be covered under the Policy for Waiver and eligible for waiver which would be granted subject to other compliances.

+ Where the importer is clearly at fault and fine, penalty, personal penalty and/or warning is imposed by the customs authorities, making the regulations applicable and granting the benefits of waiver would be clearly unreasonable and would grant benefit of waiver, with the person who has provided space suffering. This was and is not the intention and purpose behind HCCAR. Regulation recognizes and accepts that any other law in force is not abrogated or repealed. The existing provision applicable stands protected.

The High Court summed up its order thus -

(1) In cases where on conclusion of the adjudication proceedings there is no imposition of any fine, penalty, personal penalty and/or warning by the customs authorities:

(i) the Policy for Waiver would be applicable; and

(ii) the importer would be entitled to be considered for its benefit when the goods were seized, detained or earlier confiscated; and

(iii) waiver would be granted subject to other compliances.

(2) In cases where pending the adjudication proceedings, provisional release order is issued and a certificate is issued by the custom authorities, the goods would be released subject to furnishing of bond and/or security as may be prescribed that in case any fine, penalty, personal penalty and/or warning is imposed by the customs authorities, the Importer would pay the demurrage charges.

So, in case of the first Petitioner, since the goods have been directed to be released on provisional basis pending the adjudication proceedings, the High Court held that the petitioner shall be entitled to release of the goods by furnishing a security bond and a Bank Guarantee securing the demurrage charges and undertaking that the Petitioner would pay the demurrage charges in case on conclusion of the adjudication proceedings any fine, penalty, personal penalty and/or warning is imposed by the customs authorities.

As for the second petitioner, since fine and penalty had been imposed, it was held that the Petitioner is not entitled to the benefit of the Policy for Waiver and the goods can only be released on payment of the demurrage charges.

The Writ Petitions were disposed of in the above terms.

(See 2014-TIOL-468-HC-DEL-CUS)