By TIOL News Service

NEW DELHI, NOV 04, 2016: THE petitioner challenges Regulation 6(1)(1) of the Handling of Cargo in Customs Areas Regulations, 2009 as ultra-vires the provisions of Customs Act, 1962 and as being violative of Articles 14 and 19 (1)(g) of the Constitution of India.

The petitioner executed a Concession Agreement dated 24.08.2009 with Celibi Delhi Cargo Terminal Management India Pvt. Ltd. which enabled it to upgrade, modernize, finance, operate, maintain and manage the cargo terminal at IGI Airport. Thereafter, the Commissioner of Customs started issuing directions to DIAL and Celibi, to waive demurrage charges in accordance with the impugned regulation. These directions were not complied with; consequently the third respondent issued show cause notices as to why the impugned regulations were not complied with and as to why action should not be initiated against the petitioner and Celibi.

The petitioner urges that the demurrage is charged under the provisions of AAI Act and that the impugned regulation framed under the Customs Act cannot be extended so as to waive the demurrage charged under the AAI Act. It is submitted that the second respondent has exceeded its powers delegated to it by the Customs Act which contain no provision authorizing the impugned regulation nor can the second respondent decide which norm should apply for waiver of demurrage charges. It is argued that neither the provisions of the Customs Act, nor any provision of the AAI Act, authorize the framing of regulations empowering customs authorities to unilaterally direct waiver of demurrage charges. It is submitted that such power would seriously undermine the commercial and economic viability of operations under the Agreement because in each case, where consignments are disputed or questioned and involve decision on disputes as to valuation and payment of duty, the customs officials can potentially use their powers and direct DIAL not to recover any demurrage charges.

DIAL also argues that in accordance with Section 157 of the Customs Act, the second respondent is authorized to make regulations consistent with the Act to carry out the purposes of the Act, and Section 141(2) of the Customs Act merely empowers the board to prescribe regulations providing for the manner in which the goods are received, stored, delivered, dispatched or otherwise handled in a customs area and the responsibilities of persons engaged in the said activities. The said provisions do not, in any way, empower respondent to frame regulations for waiver of demurrage charges by the custodian of goods.

The respondents argue that the impugned regulations are silent as to what is the nature of directions that can be issued by customs authorities; they were framed in terms of the undoubted powers conferred by Section 142 (2) and cannot be said to be ultra vires. It is submitted that as far as direction to waive charges in individual cases is concerned, in case of any difficulty, the DIAL can approach the authorities and eventually, if it is not resolved satisfactorily, even seek the guidance and directions of the Central Government.

The High Court observed -

+ The Cargo Regulations, which contain the impugned regulation, derives its existence from Section 141(2) read with Section 157 of the Customs Act. Those provisions show that the Central Board of Excise and Customs, the second respondent, is empowered to prescribe the responsibilities of persons engaged in the activities of receiving, storing, delivering dispatching or otherwise handling of imported or export goods in a customs area.

+ However, these decisions (relied by petitioner) were pronounced before introduction of sub-section (2) to Section 141, which later gave way to the notification of the Cargo Regulations. Therefore, the petitioner's argument that the second respondent exceeded the power delegated to it by the Customs Act must fail.

+ The contention that the impugned regulation violates Article 14 of the Constitution of India, as it has no nexus with the object sought to be achieved, is insubstantial because the cargo regulations were enacted for the purpose of prescribing the responsibilities of persons engaged in the activities of receiving, storing, delivering, dispatching or otherwise handling of imported or export goods in a customs area, and the impugned regulation is as such an obligation cast upon the persons involved in the said activities.

+ Investigation being an integral part of working of the Customs Department, the consignments detained by the customs authorities or other investigating agencies, cannot be cleared during investigation particularly if such cases involve trade policy, human safety and security, security of state etc. It is with these considerations that the impugned regulation was included in the Cargo Regulations and it should be viewed in the light of the object with which it has been framed. To this extent, the court is in agreement with the third respondent. Therefore, the allegation that the impugned regulation violates Article 19(1)(g) does not survive.Such restriction is covered under the premise of Article 19 (6), by which reasonable restrictions in the interest of general public may be imposed on the right under Article 19(1)(g).

+ When the subordinate legislation made under a power to carry out the provisions of the Act has reasonable nexus with the object and purpose of the enabling statute, the court is not to concern itself with the wisdom or efficacy of the subordinate legislation or of its underlying policy.

+ The Cargo Regulations is well within the scope and ambit of its parent Act i.e. the Customs Act, and is also consistent with the same, and does not, in any way, violate constitutional provisions. (Ref. Maharashtra State Board of Secondary and Higher Secondary Education v ParitoshBhupesh Kumar (1984) 4 SCC 27)

+ Commissioner of Customs (Import & General)/third respondent a customs officer is bound by Section 151A of the Customs Act and hence, this court cannot issue directions restraining him from following the orders of the Central Board of Excise and Customs/second respondent i.e. constraining the former or any other officer on his behalf from issuing any letter/order/direction/advice/recommendation to the petitioner or its agents or concessionaire to waive the demurrage charges or not to charge the same under the impugned regulation.

+ Court notices that the power to frame regulations is located in Section 42 (1) and (2) of the Airports Authority of India Act, 1994, which, by clause (d) (of sub-section [2]) provides specific regulation for prescribing the rate(s) for storage charges.

+ In the event DIAL is of the view that customs authorities' directions to it to not charge demurrage are unwarranted, it can seek guidance and directions in that regard, from the Central Government. In these circumstances, the grievance that Regulation 6 can potentially render DIAL's functioning unviable and result in losses to it, has to fail.

The Writ Petition was dismissed.

(See 2016-TIOL-2732-HC-DEL-CUS)