DECEMBER 06, 2013

By Ashwani Kumar

DDT 2215 23.10.2013 had carried the following report -

GOVERNMENT had constituted a Working Group comprising of Commissioner, Directorate of Logistics, Additional Commissioner, Delhi Customs (Preventive) and Additional Director, DGRI, New Delhi with the mandate to put up Draft Disposal Manual.

A Draft Disposal Manual has been prepared, which is based on the provisions contained in Customs Act, 1962 and rules made thereunder and instructions issued by the Board from time to time. It has also incorporated some time frames/ procedures for disposal of such goods, though they are not specifically mentioned in the Customs Act. 1962 or the regulations made thereunder or instructions issued by the Board.

Directorate of Logistics has now requested the Commissioners to give comments to improve the manual further.

I sincerely hope that this time the Board is serious in coming out with the Disposal Manual. The earlier draft disposal manuals 2005 and 2010 never saw the light of the day and have apparently are languishing in some dusty files. The Working Group constituted with the mandate to put up the Draft Disposal Manual-2013 has prepared it, as usual on the basis of the provisions contained in the Customs Act, 1962 and rules made thereunder and instructions issued by the Board from time to time. Any cosmetic changes brought about hurriedly in the Manual without adequate inputs from the field formations and approved custodians of CFSs, ICDs, ports, ACCs and all concerned, will result in a half baked disposal manual.We need to suitably amend the relevant provisions of the Customs Act and illuminate the dark and elusive areas.

Perusal of the present draft manual indicates that the working group has focused entirely on the issues related to seized and confiscated cargo. Nonetheless, the major issue of disposal of unclaimed/uncleared cargo has not been touched. I had in my earlier article on Demurrage charges & Detention certificate [carried on this site on 6^th September, 2013] projected the alarming statistics of abandoned containerised cargo and other uncleared cargo lying with the custodians. The saga of uncleared cargo continues. The problem lies in the indifferent attitude of the Department in seriously addressing the issues related to uncleared cargo.

Chapter 4 of the manual is devoted to Special provision regarding UCC (Uncleared Cargo). Well, there is nothing special in the chapter. The contents are straight from the Board's Circular nos. 07/2004 dated 28-01-2004, 50/2005 dated 01-12-2005 and 52/2005 dated 09-12-2005 copy paste. In that case a mere reference giving hyperlink to the Circulars would suffice. The introductory Para under CHAPTER 4 says that the Department is very much concerned about the expeditious disposal of unclaimed/uncleared cargo lying with the custodians. However, it appears that the Board is just content with issuing Circulars and instructions on expeditious disposal of uncleared cargo to field formations. Over a dozen Circulars and instructions have been issued in the past few years with no tangible results visible.

Let me discuss a few points and I request the authorities for their kind consideration:

Section 48 of the Customs Act, 1962 on disposal of uncleared cargo, says that such goods may, after notice to the importer and  with the permission of the proper officer , be sold by the custodian. The CBEC Circular 50/2005 Para 3(iii) and as referred to in the Draft Disposal Manual, 2013,(CHP 4 Para 4.1.12(iii)says that the custodian can go ahead with the disposal of uncleared cargo if no approval/permission is received from Customs authorities within 15 days. The Act and the Circular are not in harmony. The permission which is given in the form of a NOC to Custodians of CFSs/ICDs, ports etc., to go ahead with the auction of goods practicallytakes a few months in some Commissionerates.Well, nothing moves withoutCustoms permission. Admittedly, there may be some functional difficulties of the Department, but why should the custodian be made to wait for months together for a simple NOC. The simple solution in settling the ambiguity lies in adding a proviso to Section 48 stating that if no permission is received within 15 days(even30 days is not a big deal), the Custodian can go ahead with auctioning the uncleared goods.

Section 48 of the Act deals with disposal of uncleared cargo imported into India. There is no express provision in the Act regarding disposal of uncleared export cargo. There are many instances of goods under claim of Drawback brought into CFSs, ICDs and other customs stations by fraudulent IEC holders and abandoned sensing trouble from the enforcement agencies. Eg.2.Cargo meant for export, not in compliance with certain statutory provisions like the Drugs & Cosmetic Act, 1940, etc., is left abandoned at times. The Customs authorities are uninterested in seizing and taking over such consignments since the goods have practically no realistic sale value. The cargo exposed to the vagaries of nature deteriorates and the custodian only waits for an Act of God to destroy the goods.The Working Group on the Disposal Manual may consider laying down the process of disposal of abandoned export cargo as well and if necessary, recommend suitable amendment of Section 48 of the Act.

Cargoes are rampantly abandoned by consignees and even shippers in India. Is the issue of abandonment of cargo properly addressed? The chlorine gas leak incident in Mumbai Port on 13-07-2010 morning left 70 people hospitalized when they inhaled the gas and 8 were reported in critical condition. The chlorine gas cylinders were left abandoned in the port premises for more than 15 years and after the mishap the blame game started.

CBEC Circular 07/2004 dated 28-01-2004 on "Procedure for disposal of uncleared/unclaimed cargo under Section 48 of the Customs Act, 1962 lying with the custodians" states that the custodian shall fix a reserve pricearrived by a panel of approved valuers appointed by the custodian. Circular 50/2005 dated 01-12-2005 which supersedes Circular 07/2004, states that the custodian shall fix a reserve price arrived by a panel of Government approved valuers appointed by the custodian. The Board may kindly clarify the parameters/ qualifications of a Government approved valuer to clear the doubts of the field formations and custodians.

Procedure needs to laid down in respect of destruction of all categories of uncleared goods not found fit for sale viz. perishable cargo, chemicals, medicines, electronic goods, machinery and goods delisted by Customs authorities for sale(excluding goods required for investigation/adjudication or court proceedings). The vigilance directions should also be incorporated so that the full material is available at one source in the manual. Procedure needs to be devised in respect of abandoned/uncleared/unclaimed cargo lying with the custodians for years and for which no records are available either with Customs or custodian.

Divergent practices are followed in different Commissionerates and every Commissionerate has its own way of interpretation and style of functioning. CBEC has placed the Draft Disposal Manual-2013 on its website and requested the Commissioners to give comments before 04-11-2013.Hope the comments have been received by now.

The need of the hour is to set out clear guidelines on disposal of uncleared/unclaimed cargo and before finalizing the Draft Disposal Manual it would be better to invite suggestions from custodians of ports, air cargo complex, CFSs, ICDs etc who have been entrusted with the exclusive responsibility of disposal of uncleared, unclaimed and abandoned cargo.