2021-TIOL-1676-HC-DEL-MISC

Polytech Trade Foundation Vs UoI

Miscellaneous - The petitioners in these petitions are concerned with the penal charges levied by ICDs/CFSs, for the period, beyond a certain number of “free days”, during which the goods continue to remain in their premises, and levied by shipping lines, in the event the containers are not returned to them within a fixed number of “free days” - Ordinarily, therefore, after containers are unloaded from the vessel in which they arrive, the containers are required to be returned to the shipping lines within a contractually stipulated number of days - If they are so returned, no additional charge is levied on the importer - If they are not returned to the shipping lines within such “free days”, they suffer detention charges, levied by the shipping lines in accordance with the contract executed between the shipping lines and the importers - Similarly, ICDs and CFSs also permit the imported goods to be stored within their premises for a number of “free days”, on payment of normal charges - If the goods remain in their premises beyond such “free days”, they suffer penal charges, chiefly ground rent at much higher rates than is ordinarily charged - The petitioners, in these petitions, seek a writ of mandamus from this Court, under Article 226 of the Constitution of India, in a situation involving, contractual rights between private individuals and the regulation, thereof, by statutory/Governmental authorities in public interest - The petitioners seek across-the-board amnesty from paying penal charges to CFSs, ICDs and Shipping lines, during the entire period of lockdown enforced by the Government consequent on the COVID-19 pandemic - Inability to move or transport their export/import goods, during the said period, is pleaded as the justification - It is a matter of record that some importers did, in fact, clear their consignments even during this period - Assessment of the extent to which any particular importer or exporter was impacted would, by its very nature, involve, inherently disputed questions of fact. The petitioners' stand is that, irrespective of the individual facts of each case, orders and circulars issued by the Ministry of Shipping (MOS), Directorate General of Shipping (DGS) and Central Board of Indirect Taxes & Customs (CBIC) entitle all importers and exporters to amnesty as sought, across the board - Whether they do, or not, is required to be determined by the Bench in these petitions.

Held:

+ On 22nd March, 2020, the Prime Minister of India announced a “ Janata curfew”, to curb the spread of the COVID-19 pandemic in India. This was followed by an Order, dated 24 th March, 2020, issued by the Ministry of Home Affairs (MHA), consequent on directions issued by the National Disaster Management Authority (NDMA) under Section 6(2)(i) of the Disaster Management Act, 2005. The NDMA directed all Ministries and Departments of the Government of India, Governments of States and Union Territories and Disaster Management Authorities in the States and Union Territories to take effective measures to prevent the spread of the COVID-19 pandemic in the country. In compliance with the said directions, and in the exercise of the powers conferred on him by Section 10(2)(l) of the Disaster Management Act, the Order, dated 24 th March, 2020 was issued by the Home Secretary, in his capacity as Chairperson, National Executive Committee, and guidelines were annexed for strict implementation by Ministries and Departments of the Government of India, Governments of States and Union Territories and Disaster Management Authorities in the States and Union Territories. The Order was to remain in force for 21 days, w.e.f. 25 th March, 2020. As this order effectively imposed a condition of “lockdown” in the country, it is referred to, hereinafter, as the “first lockdown order”.

+ The Annexure to the aforesaid MHA Order dated 24 th March, 2020 enumerated restrictions on the functioning of various establishments and services, many of which were to remain completely suspended or closed.

+ There was no restriction on the movement of cargo, during the lockdown. We may note that the first lockdown was extended, initially, till 3 rd May, 2020, vide MHA Order dated 14th April, 2020 (“the second lockdown”), thereafter, till 17 th May, 2020 vide MHA Order dated 3 rd May, 2020 (“the third lockdown”) and till 31 st May, 2020 vide MHA's order dated 17 th May, 2020 (“the fourth lockdown”). Throughout, however, movement of cargo remained unrestricted.

+ The provisions of the Merchant Shipping Act - under which the DGS purports to have issued its three Orders - do not contain any provision permitting interference with the levy, collection or recovery of penal detention charges, by shipping lines, from their customers, for failure to return containers in time.

+ Petitioner has been unable to draw attention to any provision in the Merchant Shipping Act, which entitles the Central Government to interdict shipping lines from charging penal detention charges from their customer. [para 38.4]

+ No directive restraining shipping lines from charging penal detention charges from their customers for failing to return containers in time, could have been issued by any authority, including the MOS and the DGS. [para 38.5]

+ The relationship between shipping lines and their customers was expressly contractual in nature, and the prerogative to decide on the charges leviable from the customers for continuing to retain the containers beyond the “free period” vested in the shipping lines, is governed by negotiated contract ad idem . The State has no direct casual connection with these charges. The powers exercisable under the Disaster Management Act could not, therefore, be so exercised as to restrain collection thereof, by the shipping lines. [para 38.6]

+ The only “mandate”, if any, is to be found in the concluding para of the Circular [dated 23 rd April, 2020], which merely requires the Chief Commissioners and Principal Chief Commissioners to ensure compliance with the order of the MOS by the ICDs and CFSs in their respective zones. The Circular cannot, therefore, be invested with any compulsive element, in excess of that contained in the Orders of the MOS or the DGS.

+ We have already held that the petitioners are not entitled to capitalise on the Orders of the MOS and the DGS, to maintain a plea for issuance of a mandamus to ICDs, CFSs or shipping lines, not to charge penal charges from exporters and importers beyond the “free period”. Per corollary, no such rights can inure, in favour of the petitioners, even from the circular issued by the CBIC. [para 39.2]

+ CFSs and ICDs are not creatures of the Customs Act, as the petitioners would seek to contend. They are, essentially, in the nature of godown facilities - whether privately owned or managed by governmental agencies such as the Central Warehousing Corporation or the Container Corporation of India (which, as on date, manages all ICDs in the country) - which owe their entitlement to operate as CFSs and ICDs (for the purpose of loading and unloading of export, and imported, goods) to the notifications issued under Section 7 or Section 8 of the Customs Act . That, by itself, cannot render the collection of charges by CFSs or ICDs (for the purpose of loading and unloading of export, and imported, goods) to the notifications issued under section 7 or section 8 of the Customs Act. That, by itself, cannot render the collection of charges by CFSs or ICDs from their customers, penal or otherwise, subject to control by the CBIC. The CBIC, therefore, has wisely not chosen to issue any mandatory directive, on its own accord, to CFSs or ICDs, not to charge penal charges from importers or exporters against storage of containers in their premises beyond the “free period”. [para 39.4]

+ There is no provision in the Customs Act or in the Handling of Cargo in Customs Area Regulations, 2009 (HCCAR) which permits interference with the collection of penal charges from importers or exporters by CFSs or ICDs. No such mandate is to be found even in the Circular dated 23 rd April, 2020, issued by the CBIC. That apart, the obligation under Regulation 6(1)(q) obviously applies only to the extent that the Customs Cargo Services Provider are subject to control by the CBIC, and not beyond that. [para 39.6]

+ Regulation 6(1)(q) obligates CFSs and ICDs (as Customs Cargo Services Provider) only to abide by the provisions of the Customs Act and the Rules, Regulations, Notifications and Orders issued thereunder . Instructions issued by Customs Commissioners cannot be treated as “Rules, Regulations, Notifications” or “Orders” issued under the Customs Act. They are in the nature of administrative directions, issued by Commissioners in exercise of the supervisory jurisdiction over ICDs are CFSs. Moreover, in the present case, the communications by the Commissioner of Customs, JNCH, to ICDs/CFSs within his jurisdiction merely purported to direct compliance with the Circular issued by the CBIC. [para 39.7]

+ Assuming, arguendo , that the CBIC were to issue directives, for compliance, to the Customs Cargo Services Provider, which they are not empowered to issue, such directives cannot be enforced, least of all by a mandamus by the Court. [para 39.8]

+ Shipping lines are not even Customs Cargo Services Provider within the meaning of the HCCAR and are, therefore, entirely outside the purview of the said Regulations. [para 39.9]

+ Our findings, with respect to the sustainability of the Order of the MOS and the DGS, even under the Disaster Management Act, in the wake of the judgement of the Supreme Court in Indian School , would apply, mutatis mutandis , to the Circular of the CBIC. [para 39.10]

+ What the Circular [18/2009-Cus] seeks to clarify is the distinct role performed by ICDs and CFSs in the matter of clearance of imported consignments in the hinterland. Each of these entities is, as the Circular clearly explains, possessed of requisite infrastructure, to facilitate loading and unloading of goods, filing of Bills of Entry and other related documents, and assessment of the goods to duty. It would be fallacious, in our view, to treat the Circular as subjecting CFSs and ICDs to the control of the CBIC, even in the matter of recovery of detention charges or ground rent from importers or exporters, for storage of goods in their premises. The aspect of the charges recovered, by ICDs of CFSs, from importers or exporters was, clearly, not even remotely in the contemplation of the authorities while issuing the aforesaid Circular dated 8 th June, 2009. The Circular has been issued for a very specific purpose and to clarify certain specific aspects relating to the functioning of ICDs and CFSs and the distinction between the two and cannot, therefore, be used as a ground to seek waiver, or exception, from payment of penal charges to ICDs, CFSs or shipping lines, beyond the “free periods”. Nor can this Circular be used to support the contention that all instructions issued by the CBIC are, ipso factor, binding on ICDs and CFSs.

+ As the Circular issued by the CBIC does not result in any enforceable right in the petitioners' favour, to seek exemption from, or remission of, penal charges levied by ICDs, CFSs or the shipping lines, no such right can be traced to the instructions issued by the Commissioner of Customs, either. [para 40.1]

+ Discrimination, under Article 14, would be invidious only if it is hostile, and among persons identically situated. We are unable to hold that ICDs and CFSs, on the one hand, and importers and exporters, on the other, are identically situated.

+ To expect the ICDs and CFSs to continue in this fashion, without any earnings by way of recovery of the amounts, contractually payable for the periods during which imported or exported goods continued to remain in their premises, is unrealistic as well as oppressive to the ICDs and CFSs. [para 42]

+ The ICDs and CFSs have come on record to state that many importers did actually have the goods released, even during the period of lockdown, at times availing the discounts provided by the ICDs and CFSs. This indicates, that there was no inherent impossibility, even during the lockdown period, in securing the release of the imported goods. The fact that some importers did manage to secure such release indicates that, if other importers were unable to do so, the reason for such inability would have to be assessed on a case-to-case basis. Apart from the fact that the ICDs and CFSs themselves had, in place, a mechanism for such aggrieved importers and exporters to approach them, this exercise cannot be conducted by a writ court, exercising jurisdiction under Article 226 of the Constitution of India. Each case would depend on its own facts, and disputed issues of fact are bound to arise. Even for this reason, it is not possible for this Court to accede to the petitioners' request to, across the board, direct waiver or remission of the penal charges, levied by ICDs and CFSs for continuing to store imported or exported goods beyond the permissible “free period”. [para 44]

+ Were CFSs, ICDs and shipping lines to be directed not to charge any penal charges from the importers and exporters, for the period during which the goods continued to remain stored in their premises during lockdown, it would completely disincentivise the importers and exporters from seeking release of the consignments. Any such direction would also be intrinsically opposed to public interest, as it would result in clogging of the ICDs and CFSs by importers and exporters who, without having to pay any penal charges, would continue to enjoy the facility of storing their goods. This, in turn, would be contrary to the very objective of establishing CFSs, which was to unclog the ports. [para 45]

+ These are all issues involving disputed questions of fact, not amenable to adjudication under Article 226 of the Constitution of India. It is not open to the Court - just as it was not open to the executive authorities - to approach the matter solely from the point of view of the importers or exporters, unmindful of the difficulties which were faced by the ICDs and CFSs during the lockdown, and the constraints under which they operated. Equity inherently inheres in the exercise of jurisdiction under Article 226, and we are not persuaded to hold that the equities of the present case are entirely in favour of the petitioner importers/exporters, and to the prejudice of the respondent ICDs/CFSs/shipping lines, as would warrant our inference under Article 226 of the Constitution of India. [para 46]

Bench regrets, therefore, its inability to accede to the prayers in these petitions (except WP (C) 3649/2021).

- Writ petitions dismissed/disposed of: DELHI HIGH COURT