IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:30.11.2010 CORAM: THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN Writ Petition Nos. 8823 to 8825 and 15772 of 2009 and connected miscellaneous petitions 1. Container Shipping Lines Association (CSLA) (India) No.7, Nicholas Road, Chetpet Chennai – 31. 2. MSC Agency (India) Pvt. Ltd., Vakils House, 3rd Floor, 18, Sprott Road, Ballard Estate, Mumbai – 400 001 rep. By Mohan Menon, Branch Manager .... Petitioners in W.P.Nos.8823 to 8825/2009 1. Container Shipping Lines Association (CSLA) (India) 3rd floor, Mackinnon Mackenzie Building, Ballard Estate, Mumbai – 400 001. 2. MSC Agency (India) Pvt. Ltd., MSC House, Andheri Kurla Road, Andheri (E) East Mumbai – 400 059. .... Petitioner in W.P.No.15772/2009 Vs. 1. Union of India, Ministry of Finance Nirman Bhavan, New Delhi. 2. The Chief Commissioner of Customs (Sea), Ministry of Finance, Government of India, Customs House, Rajaji Salai, Chennai – 600 001. 3. Commissioner of Customs, Customs House, No.33, Rajaji Salai, Chennai – 600 001. https://hcservices.ecourts.gov.in/hcservices/ 4 Ministry of Finance, Department of Revenue, Office of the Commissioner of Customs (Import) Chennai – 600 001. 5. The Chennai Customs House Agents Assn, No.40, Moore Street, Chennai – 600 001 rep. By its President Shri P.S.Krishnan 6. Hindustan Chamber of Commerce, rep. By its Secretary, Greams Dugar, 5th Floor, South Wing, 149, Greams Road, Chennai – 6. 7. M/s.SBS Overseas Pvt. Ltd., rep. By its Authorised signatory Mr.Mayank Lath Plot No.1/1 Appartment, Amritha Nagar, Numbal, Thiruverkadu, Chennai. .... Respondents in W.P.Nos.8823 to 8825/2009 (R5 impleaded vide order dated 25.6.2009 R6 impleaded vide order dated 19.10.2009) R7 impleaded vide order dated 30.11.2010 .... Respondent in W.P.No.8823 of 2009 1. The Chief Commissioner of Customs, Ministry of Finance, Government of India, Customs House, Rajaji Salai, Chennai – 600 001. 2. Commissioner of Customs, Customs House, No.33, Rajaji Salai, Chennai – 600 001. 3. Ministry of Finance, Department of Revenue, Office of the Commissioner of Customs (Import) Chennai – 600 001. 4. The Chennai Customs House Agents Assn, No.40, Moore Street, Chennai – 600 001 rep. By its President Shri P.S.Krishnan 5. M/s. Coastal Overseas Trade Corporation, No.24, Narayana Sarang Garden Street, Chennai – 600 001. rep. By its Manager Shri V.Rajasekar Reddy. https://hcservices.ecourts.gov.in/hcservices/ 6. South India Importer's Association, (Steel-Scrap Imports), No.117, 2nd Floor, Trade Centre, Walajah Road, Chennai – 2. rep. By its General Secretary, Mr.Shashi Kumar.M. 7. Hindustan Chamber of Commerce, rep. By its Secretary, Greams Dugar, 5th Floor, South Wing, 149, Greams Road, Chennai – 6. .... Respondents in W.P.No.15772/2009 (R4 to R7 impleaded vide order dated 19.10.2009) W.P.No.8823 of 2009: PETITION under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorari calling for the records of the 3rd respondent relating to the impugned orders being Public Notification No.48/2008 dated 22nd April, 2008 and quash the same and direct the respondents not to alter with the Import General Manifest. W.P.No.8824 of 2009: PETITION under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorari calling for the records of the 3rd respondent relating to the impugned orders being Public Notification No.71/2006 dated 05th June, 2006 and quash the same. W.P.No.8825 of 2009: PETITION under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus calling for the records of the 4th respondent relating to the impugned orders being Public Notification No.45/2007 dated 30th March, 2007 and quash the same and direct the respondents not to alter with the Import General Manifest. W.P.No.15772 of 2009: PETITION under Article 226 of The Constitution of India praying for the issuance of a Writ of Mandamus directing the respondents to permit the petitioners' members to move the containers to the Container Freight Station notified by the ship owners or the Agents in the Import General Manifest as per the provisions of the Customs Act and further forbear the respondents from permitting movement of the containers to a Custom Freight Station not notified by the https://hcservices.ecourts.gov.in/hcservices/ members of the petitioner in the Import General Manifest or contrary to the code numbers given in the Import General Manifest without the consent and concurrence of the members of the petitioner Association either at the instance of the customs clearing house agents or on their own. For Petitioners : Mr.A.L.Somayaji, Senior Advocate (in all W.Ps) for M/s.Narmada Sampath For Respondents : Mr.Ravichandra Babu, Senior Panel Counsel – for R1 to R4 in W.P.Nos.8823 to 8825/09 & for R1 to R3 in W.P.No.15772 of 2009) : Mr.Yashod Vardhan, S.C. for M/s. Satish Sundar - R4 to R6 (W.P.No.15772/09) & for R5 in W.P.Nos.8823 to 8825/09) : Mr.Habibullah Badsha, S.C. for Mr.Ilias Ali For R6 in W.P.Nos.8823 to 8825/09 & for R7 in W.P.No.15772 of 2009 : Mr.Abudukumar Rajarathnam for R7 in W.P.Nos.8823 to 8825/2009 C O M M O N O R D E R The Customs Act 1962 and other laws of the country regulate the entry/exit of all goods from the country by way of import or export. The Customs Act, 1962 lays down the procedure by which the goods can enter the country and get cleared for home consumption after fulfilling the requirements of law, as regards payment of the applicable import duties. 2. Under the Customs Act, 1962, goods entering into Indian territory become imported goods, chargeable to duty under Section 12 of the Customs Act, unless they are exempt from payment of duty under any specific provision. Goods are allowed for import or export at notified places only. Custodians are appointed under Section 45 of the Customs Act for safe storage of goods till they are cleared for home consumption or for warehousing. Chapter III of the Customs Act (Sections 7 to 10) deals with appointment of Customs ports, airports, warehousing stations etc. Section 7 of the Customs Act empowers the Central Board of Excise and Customs (hereinafter referred to as the Board) to appoint Customs Ports, Customs Airports, places for Inland Container Depots, Coastal Ports, etc. Section 7(aa) of the Customs Act authorises the Board to appoint Inland Container Depots (ICD) for https://hcservices.ecourts.gov.in/hcservices/ unloading of imported goods and loading of export goods. Under these provisions, ICDs have been appointed at various places. Under Sub Section (b), the Board is empowered to appoint places which shall be land customs stations, for the clearances of goods imported or to be exported and under sub section (c), the routes by which alone goods or any class of goods specified in the notification may pass by land or inland water into or out of India or to or from any land customs station from or to any land frontier. 3. Section 8 of the Customs Act authorises the Commissioner to (a) approve proper places in any customs port or customs airport or coastal port for the loading and unloading of goods or for any class of goods and (b) specify the limits of customs area. Sub Section (11) of Section 2 of the Customs Act defines "customs area" as the area of a customs station and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities. Section 2(12) of the Customs Act defines "customs port" as any port appointed under clause (a) of section 7 to be a customs port and includes a place appointed under clause (aa) of that section to be an inland container depot (ICD). Section 2(13) defines "customs station" as any customs port, customs airport or land customs station. CFSs are specified as customs area under Clause (b) of Section 8. In terms of the aforesaid provisions, ICDs and CFS are appointed at various places and they function like dry ports. They offer all services for customs clearance like any other port facilities for handling temporary shortage of imported/export goods and empty containers. In Circular 69/99 dated 06.10.1999, the Central Board of Excise and Customs has given the detailed procedure on the transporting of imported goods to the CFS. 4. Chapter VI of the Customs Act (Sections 29 to 43) contains provisions relating to conveyances carrying imported or export goods. Section 33 of the Customs Act specifies that "except with the permission of the proper officer, no imported goods shall be unloaded, and no export goods shall be loaded, at any place other than a place approved under clause (a) of section 8 for the unloading or loading of such goods." Section 34 of the Customs Act prescribes that "imported goods shall not be unloaded from, and export goods shall not be loaded on, any conveyance except under the supervision of the proper officer." Section 32 of the Customs Act specifies that "no imported goods required to be mentioned under the regulations in an import manifest or import report shall, except with the permission of the proper officer, be unloaded at any customs station unless they are specified in such manifest or report for being unloaded at that customs station." Every ship which enters the Indian waters with the intention of discharging cargo, is statutorily bound to deliver the application for entry inward, along with the detailed report of the goods on board, in a report called IGM, in accordance with Section 30 of the Customs Act, 1962. The primary liability to file the IGM is on the person in charge of the Vessel or aircraft in accordance with https://hcservices.ecourts.gov.in/hcservices/ the form provided under the Import-Manifest (Vessels) Regulations, 1971. The import manifest of the Vessel is required to be delivered to the Customs Officer in terms of Section 30 of the Customs Act. The shipping lines/steamer agent has to declare in the IGM, general declaration, cargo declaration, ship stores declaration etc., of particulars of goods to be unloaded for the cargo. As the declaration has legal consequences which bind the carrier, any misdeclaration will attract penal provisions of Sections 111(1) and 112. Section 31 of the Customs Act specifies that only those goods as are mentioned in the Import Manifest would be unloaded and at the place which is approved for that purpose. 5. Chapter VII of the Customs Act (Sections 44 to 51) contains provisions regarding clearance of imported goods and export goods. 6. Under Section 45 of the Customs Act, it is stated that all imported goods unloaded in a customs area shall remain in the custody of the Customs Authorities as are approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. Sub-Section (2) to Section 45 of the Customs Act stipulates that the person having custody of the imported goods in a customs area must keep the record of such goods and send a copy thereon to the proper officer and shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer. If any of the imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1) to Section 45, that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an import manifest or as the case may be, an import report to the proper officer under Section 30 for the arrival of the conveyance in which the said goods were carried. 7. Section 49 of the Customs Act deals with the storage of imported goods in warehouse pending clearance. The storage may be in public warehouse or in a private warehouse. On the adjudication and on clearance by the proper officer of the Customs Department, the goods are allowed for clearance. Hence, till such time the goods are cleared and are in warehouse, be it a public or private warehouse, which is an extension of the customs port, the goods continued to be under the control of the Customs Department, by virtue of the statutory provisions. 8. Going by the provisions in the above Chapters, it is clear that all goods imported by Vessel or Aircraft, entering from any place outside the Country, have to land at the customs port or customs airport with the permission of the Customs Officer (Section 29). Unloading of imported goods can take place only after an order permitting entry toward inwards of the Vessel has been given by the https://hcservices.ecourts.gov.in/hcservices/ Vessel Officer in terms of Section 31 of the Customs Act. Importers desiring to take the consignment to the CFS must name the CFS in the IGM before the Customs Authorities in the Port. After getting the permission from the Assistant Commissioner/Deputy Commissioner, the container moves to CFS under customs escort or under bond and bank guarantee. The goods unloaded at the ports are brought to the CFS and stacked therein after verification by the Customs Authorities. In respect of import consignments, the CFS allow destuffing of goods and after the formalities of assessment and payment of customs duty are made, the Customs give out-of-charge orders. The custodian releases the goods from the CFS by issuing the gate pass. As provided under Section 46, goods can be cleared by the importer by filing a bill of entry for home consumption or warehousing, pursuant to which, clearance of goods is granted under Section 47 by the Customs Officer. 9. Thus it is clear that unloading of the imported goods can take place only after the Customs Officer permitting entry and after Import Manifest had been delivered. With the obligation on the part of the Customs Officer to consider as to whether the goods are imported or attempted to be imported or brought within the Indian Customs water for the purpose of being imported in accordance with the provisions of the Customs Act, unloading of only those goods are permitted, as are mentioned in the Import Manifest. 10. Section 141 of the Customs Act states that all conveyances and goods in the customs area, for the purpose of enforcing the provisions of the Act, are subject to the control of the officers of the Customs. 11. Chapter V of the Major Port Trusts Act, 1963, lists out the services to be provided by the Board of Trustees at the Port. Section 42 of the Major Port Trusts Act, 1963, details the performance of services by Board, one of which, as per sub section (b), is receiving, removing, shifting, storing, transporting or delivering goods brought within the Board's premises. Sub Section (7) states, after any goods have been taken charge of and a receipt given for them under the Section, no liability for any loss or damage which may occur to them, shall attach to any person to whom a receipt has been given or to the Master or Owner of the Vessel from which goods have been landed are transshipped. Section 43 of the Major Port Trusts Act, 1963, deals with the responsibility of the Board for the loss etc. of goods. Provision of Sub Section (1) of Section 43 states, no responsibility under that Section shall attach to the Board until a receipt is given by the Board as contemplated under Section 42(2) of the Act. After the expiry of the period as prescribed in the Regulations from the date of taking charge of such goods by the Board, the Board shall not be, in any manner, liable for the loss or destruction, unless notice of such loss or damage is given within such period as has been prescribed under the Regulations. https://hcservices.ecourts.gov.in/hcservices/ 12. In the decision reported in (1963) Supp 2 SCR 915 (The Trustees of the Port of Madras, by its Chairman V. K.P.V. Sheik Mohammed Rowther & Co.), the Supreme Court had an occasion to consider the issue as regards the services offered by the Port Authorities in unloading the goods from the ship and the status of the Steamer Agent vis-a-vis the Port Trust as bailor and bailee of the goods unloaded. The said issue arose in the context of the liability of the steamer agent to meet the idle labour charges. 13. The facts therein are that, in exercise of its power under Section 42 of the Madras Port Trust Act (II of 1905), the Chennai Port Trust made certain amendments to the Madras Port Trust Scale of rates in 1958, by which, Scale E was added under Chapter V. The modified Labour Requisition Form to be submitted by the steamer- agents contained an undertaking on the part of the steamer-agents for the payment of the charges laid down in the Board's scale of rates from time to time in respect of labour rendered idle or not properly utilised and also for working more than one hook simultaneously at the hatch. The streamer-agents challenged the amendments that idle labour charges cannot be recovered from the steamer agents. 14. In considering the said issue on the liability of the steamer agents, the Supreme Court held that the Board is not an agent of the consignee for the purpose of taking delivery of the goods, because the delivery to the importer - consignee is to be on the presentation of the bill of lading. Sub-section (3) of Section 39 of the Major Port Trusts Act empowers the Board to take charge of the goods for the purpose of performing certain services, which do not include taking delivery of the goods from the ship-owner. The Supreme Court pointed out: "38. ... It is true that on the Board's taking charge of the goods and giving a receipt about it to the ship-owner, the master or the owner of the vessel is absolved from liability for any loss or damage which may occur to the goods which had been landed, but this provision by itself does not suffice to convert the receiving of the goods by the Board after they had been landed by the ship- owner to the Board's taking delivery of those goods on behalf of the consignee. The Board simply takes charge of the goods on being required by the steamer-agent to take charge of it. 39. Section 40 speaks of the responsibility of the Board for the loss, destruction or deterioration of the goods of which it has taken charges as a bailee under Sections 151, 152 and https://hcservices.ecourts.gov.in/hcservices/ 161 of the Indian Contract Act. Section 148 of the Contract Act states that a bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor and the person to whom they are delivered is called the bailee. It is clear therefore that when the Board takes charge of the goods from the ship-owner, the ship-owner is the bailor and the Board is the bailee, and the Board's responsibility for the goods thereafter is that of a bailee. The Board does not get the goods from the consignee. It cannot be the bailee of the consignee. It can be the agent of the consignee only if so appointed, which is not alleged to be the case, and even if the Board be an agent, then its liability would be as an agent and not as a bailee. The provisions of Sections 39 and 40, therefore, further support the contention that the Board takes charge of the goods on behalf of the ship- owner and not on behalf of the consignee, and whatever services it performs at the time of the landing of the goods or on their removal thereafter, are services rendered to the ship. The Supreme Court held that, the ship-owner is the bailor and the Port Trust is the bailee. Whatever services it performs at the time of landing of the goods or on their removal thereafter, are services rendered to the ship. 15. Thus the Supreme Court held that the charges for labour rendered idle and for labour working more hooks simultaneously, are not charges for services rendered subsequent to the landing of the goods. These are charges which are incurred at the last stage of the process of landing of the goods and therefore prior to the actual landing of the goods. The Supreme Court held that they are for services rendered to the Master of the ship whose liability for loss or damage continues upto the placing of the goods on the quay and their receipt by the Board. The Supreme Court further pointed out to the decision reported in [1895] 2 Q.B.D. 294,(Peterson v. Freebody & Co.) that the ship owner must put the goods in such a position that the consignee can take delivery of them. It is useful here to repeat and extract the judgment of Lord Esher as quoted in the decision of the Apex Court, which clearly touch on where the ship owner's responsibility ends: https://hcservices.ecourts.gov.in/hcservices/ "Wherever the delivery is to be, the shipowner, on the one hand, must give delivery. If he merely puts the goods on the rail of his ship, he does not give delivery : that is not enough. If, on the other hand, the consignee merely stands on the other ship, or on the barge or lighter, or on the quay, and does nothing, he does not take delivery. The shipowner has performed the principal part of his obligation when he has put the goods over the rail of his ship; but I think he must do something more - he must put the goods in such a position that the consignee can take delivery of them. He must put them so far over the side as that the consignee can begin to act upon them; but the moment the goods are put within the reach of the consignee he must take his part in the operation. At one moment of time the ship-owner and the consignee are both acting - the one in giving and the other in taking delivery; at another moment the joint act is finished." The Board stores the goods till the consignee appears to take delivery on the basis of the delivery order by the steamer-agent, which is usually an endorsement on the bill of lading, and the quay be considered a part of the ship. The only reasonable conclusion in the circumstances can be, charges for that are levied from the person, who required that labour, is responsible for its remaining idle. 16. In considering the question of liability of the Customs Authorities as well as the Port Authorities as regards the loss or damage in respect of the goods, which are taken charge of by the Board and thereafter under the control of the Officers of the Customs, in the decision reported in 1988 (35) ELT 244 (Oswal Spinning and Weaving Mills v. CCE), the Apex Court pointed out that once the goods are unloaded from the ship in the customs area and were not handed over to the custody of the Port Trust for its handling, it is the Customs Authorities, who are in possession and control of the goods in question; the loss or damage of the goods, while in the control of the Customs Department, are entirely under the responsibility of the Customs Department to pay the value of the goods as damages in order to compensate the importer. It is only when the goods have been taken charge of and receipt given by the Port Trust under Section 42(7) of the Major Port Trusts Act, the liability for any loss or damages accrues to the Port Trust. The Supreme Court pointed out that the Port Trust is not liable for the loss or damage to the goods while they are under the custody of the Customs Authorities. 17. Thus reading Sections 42 and 43 of the Major Port Trusts Act along with Sections 126 and 141 of the Customs Act, the Supreme Court held that