VBC 1 wp3651.11-5.10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.3651 OF 2011 M/s.CFS Association of India. ..Petitioner versus Union of India & Ors. ..Respondents. ..... Mr.Vikram Nankani with Mr.Nitya Bagaria and Mr.Sushanth Murthy i/b. Mr.Naresh S.Thacker for the Petitioner. Mr.Pradeep S.Jetly for the Respondents. ..... CORAM : DR.D.Y.CHANDRACHUD & A. A. SAYED, JJ. October 5, 2011. ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) : The Petition is filed by an association representing eleven Container Freight Stations, who claim to handle nearly eighty per cent of the local container cargo at Nhava-Sheva. The Petitioner challenges (i) Circular 4/2011; (ii) Public Notice 8/2011; (iii) A check list issued under a letter dated 3 March 2011, as modified by a letter dated 6 April 2011. The Petitioner contends that these are unconstitutional and ultra vires Articles 14 and 19(1)(g) of the Constitution, the Environment (Protection) Act, 1986 and the VBC 2 wp3651.11-5.10 Dangerous Goods (Arrival, Receipt, Transport, Handling and Storage) in Jawaharlal Nehru Port Regulations, 2007. The bone of contention in the present case relates to the prescription of a distance to be maintained between general cargo and hazardous cargo at Container Freight Stations or, as the case may be, Inland Container Depots. 2. Section 45 of the Customs Act, 1962 provides that all imported goods unloaded in a Customs area, shall remain in the custody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or transhipped in accordance with the provisions of Chapter VIII. Section 141(2) provides that imported or export goods may be received, stored, delivered, despatched or otherwise handled in a Customs area in such manner as may be prescribed. The responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed. In exercise of the power conferred by Sub-section (2) of Section 141 and of the general power to make regulations under Section 157 to carry out the purposes of the Act, the Central Board of Excise and Customs VBC 3 wp3651.11-5.10 framed certain Regulations. These Regulations are called the Handling of Cargo in Customs Areas Regulations, 2009. Regulation 5 prescribes the conditions to be fulfilled by an applicant for custody and handling of imported or export goods in a Customs area. Regulation 5(5) requires an applicant to comply with the provisions of the Customs Act, 1962 and the rules, regulations, notifications and orders issued thereunder. Under Regulation 5, any person who intends to be approved as a Customs Cargo Service Provider (CCSP) for custody of imported goods or export goods and for handling such goods, in a Customs area, has to fulfill stipulated conditions. The conditions relate to maintenance of infrastructural and other facilities, to the satisfaction of the Commissioner of Customs. Under clause (n) of Regulation 5(1), the applicant has to maintain such other facilities as the Commissioner of Customs may specify, having regard to the custody and handling of imported and export goods in a Customs area. The applicant has to provide for safe, secure and spacious premises for loading, unloading, handling and storage of cargo for the projected capacity and for examination and other operations as may be required in compliance with any law for the time being in VBC 4 wp3651.11-5.10 force. Regulation 6(q) requires the CCSP to abide by all the provisions of the Act and of the rules, regulations, notifications and orders issued thereunder. 3. The Government of India set up an Inter Ministerial Standing Committee consisting of officials of the Union Ministries of Commerce, Finance (Department of Revenue), Railways and Shipping to act as a single window mechanism to consider proposals for setting up Inland Container Depots (ICD) and Container Freight Stations (CFS). Once a proposal is accepted, a Letter of Intent is issued to an applicant by the Infrastructure Division in the Department of Commerce of the Ministry of Commerce and Industry of the Union Government. Every applicant furnishes an undertaking for compliance with the Handling of Cargo in Customs Areas Regulations, 2009. Container Freight Stations or, as the case may be, Inland Container Depots are notified and regulated by the Customs Act, 1962. Their boundaries are notified under Section 8. Every CCSP is under a mandatory duty to comply with the Regulations. The Regulations, as we have noted earlier, empower the Commissioner to prescribe VBC 5 wp3651.11-5.10 inter alia such other facilities as may be required. The Commissioner is, therefore, duly empowered to prescribe conditions for the safe and secure handling of cargo. This assumes some special significance, particularly in the context of cargo which is of a hazardous nature. The requirements are to be duly spelt out by the Commissioner having regard to the safety and safe working conditions of those who work either in a CFS or ICD. The Commissioner is vested with a power to relax the rigors of the regulations, in Regulation 7. 4. The Central Board of Excise and Customs issued a Circular on 10 January 2011. The background for the circular appears to have been an exercise conducted by the Parliamentary Committee on Subordinate Legislation which dealt with the overall safety and security of imported/export goods and of persons working or residing around notified Customs areas. The circular states that the suggestions made by the Parliamentary Committee were accepted and it was decided that no relaxation or exemption from requirements of safety and security of premises shall be allowed by the Commissioners of Customs to the Custodians or to VBC 6 wp3651.11-5.10 Cargo Service Providers in terms of the provisions of Regulation 7 of the 2009 Regulations. Keeping in view the paramount importance of the overall safety and security of imported/export goods, detailed guidelines are prescribed in order to ensure that suitable arrangements are put in place for safety and security of premises relating to imported and export goods. Commissioners of Customs were directed to ensure that these provisions are complied with strictly at the time of the appointment of a CCSP and that they are monitored thereafter. Commissioners were also directed to undertake a review of CCSPs who were appointed earlier. Guideline 1 of the guidelines which are annexed to the circular inter alia stipulates that imported goods or export goods which are hazardous in nature, shall be stored at the approved premises of the CCSP in an isolated place duly separated from other general cargo depending upon classification of its hazardous nature such as explosives, gases, flammable liquids or solids. Clause 5 of the Guidelines stipulates as follows : “(5) The space allocated for storage of hazardous cargo within the premises should be of proper construction including appropriate heat or fire resistant wall, RCC roofing, flooring. Such area shall be situated at a minimum distance of 200 meters away from main office, VBC 7 wp3651.11-5.10 administrative, customs office building so that the storage of hazardous cargo is in such a manner that it does not endanger the people working in the premises. Further, the open space, provided for movement, total covered area for storage of containers shall be in such manner that they do not hinder movement of persons, evacuation of goods in case of emergency. The premises used by CCSP for storage of hazardous cargo shall also fulfill the standards or norms prescribed, in National Building Code of India (part 4 – Fire and Life safety specify the requirements for fire prevention, life safety in relation to fire and fire protection of buildings necessary to minimize danger to life and property from fire) or by the concerned State/Centre Governments for fire safety.” 5. On 4 February 2011, a public notice was issued (Public Notice 8/2011) by the Commissioner of Customs (Export) at the Jawaharlal Nehru Customs House, Sheva. The public notice drew attention to the Regulations of 2009 and to the Guidelines that were issued by the Central Board of Excise and Customs. Accordingly, CCSPs who intended to store, receive, despatch or handle hazardous cargo or hazardous cargo along with general cargo were required to apply to the Commissioner of Customs together with requisite particulars so that compliance could be verified in terms of Regulation 10(2). VBC 8 wp3651.11-5.10 6. On 3 March 2011, the Deputy Commissioner of Customs issued a communication stating that all CFSs who wish to store, handle, despatch or receive hazardous goods should comply with the guidelines as stipulated in the public notice dated 4 February 2011 and with a check list annexed to the communication. Item 1 of the check list is as follows : “(1) Whether the CCSP has demarcated an isolated area for hazardous goods duly separated from other cargo, depending upon classification of its hazardous nature? Whether there are minimum distance of 100 meters between storage place of hazardous cargo and general cargo? YES/NO (If yes, please mention the total area and distance of the demarcated area from general cargo and from administration building, customs office or other offices. Further, if the demarcated area is demarked near the boundary then whether there is any residential area or other offices outside).” As a result of this communication, a minimum distance came to be prescribed of a hundred meters between the storage place of hazardous and general cargo. Time for compliance was extended subsequently on the request of the Association. 7. The Petitioner submitted a representation to the Central Board of Excise and Customs on 15 March 2011. A meeting was VBC 9 wp3651.11-5.10 held by the Commissioner of Customs (Export) on 21 March 2011 to consider the representation of the Association who wanted the distance of a hundred meters between the storage space of hazardous and general cargo to be minimised due to a lack of space in their yards. The Commissioner stated that the issue related to the safety and security of the cargo as well as of the persons working in the area and that no compromise could be allowed. Following the representation submitted by the Association, a reference appears to have been made by the Commissioner of Customs (Export) to the Central Board of Excise and Customs. By a letter dated 6 April 2011, the Board informed the Commissioner that the issue was being examined, and as the safety related measures were endorsed by a Parliamentary Committee, no local variations by individual Commissionerates was permissible. Hence, the Commissioner was informed that though the reduction in distance from 200 meters to 100 meters between hazardous and general cargo may facilitate trade and may be a pragmatic response to space constraints, this was not acceptable. Consequently, a direction was issued that the status quo as per Guideline 5 of the circular dated 10 January 2011 should be VBC 10 wp3651.11-5.10 maintained. In the meantime, it was stated, the matter has been referred to the Union Ministries of Environment and Forests and of Shipping. On 11 April 2011, the Commissioner issued a circular stating that the distance of 100 meters between general cargo and hazardous cargo should be read as 200 meters in the circular dated 3 March 2011. 8. The Petitioner has during the course of these proceedings assailed the restriction which was imposed by the Commissionerate of Customs requiring the maintenance of a minimum distance initially prescribed at 100 meters between hazardous and general cargo and subsequently enhanced to 200 meters. On behalf of the Petitioner it has been submitted that (i) There is no scientific basis for prescribing a minimum distance; (ii) In respect of the Jawaharlal Nehru Port, Regulations have been framed in 2007, prescribing the minimum distance for segregation of hazardous cargo and that there was no reason to depart from those Regulations in the case of CFSs and ICDs; (iii) The Central Board of Excise and Customs had by its Guidelines dated 10 January 2011 only required the maintenance of a safe distance of VBC 11 wp3651.11-5.10 200 meters between the main office and the Administrative and Customs Building and hazardous cargo. No requirement of segregation between general and hazardous cargo was spelt out. There was no justification, it was urged, for the Commissionerate of Customs to prescribe a segregational requirement between general cargo and hazardous cargo. 9. An affidavit in reply has been filed by the Deputy Commissioner of Customs in these proceedings. The affidavit contains a narration of the statutory framework for the regulation of Container Freight Stations or, as the case may be, Inland Container Depots. The deponent has relied on the Regulations of 2009 and the background leading upto the circular issued by the Central Board of Excise and Customs following the recommendations of the Parliamentary Committee on Subordinate Legislation. The submission which is contained in the affidavit, and which has been reiterated on behalf of the Respondents by Counsel during the course of the hearing, is that the prescription of a safe distance for the segregation of general cargo from hazardous cargo is intra vires the Regulations of 2009 and has been VBC 12 wp3651.11-5.10 imposed in order to ensure safety and security. Moreover, it has been urged that the Regulations which have been framed in 2007 for Jawaharlal Nehru Port cannot be replicated to CFSs and ICDs. Unlike a port area where the cargo is moved within a few hours of the berthing of the vessel, the cargo at CFSs and ICDs is stored for days, months or sometimes for years together and hence stringent guidelines were required for CFSs. Though CFSs can be construed as an extended arm of a port, it is urged that under the provisions of the Act both are different not only with respect to their origin but also as regards the nature of their operations and role. 10. The statutory framework under which Container Freight Stations or, as the case may be, Inland Container Depots of the Port function originates in the provisions of the Customs Act, 1962. Under Section 45, all imported goods which are unloaded in a Customs area, remain in the custody of such persons as may be approved by the Commissioner of Customs. Under Section 8, the Commissioner of Customs is empowered to approve of proper places in a Port area for unloading and loading of goods and to specify the limits of any Customs area. Under Section 141(2), VBC 13 wp3651.11-5.10 imported or export goods have to be received, stored, delivered, despatched and handled in a Customs area in such manner as may be prescribed. The Regulations have been made in exercise of the statutory power conferred by Section 141(2) read with Section 157. The Regulations spell out the conditions which are required to be fulfilled by an applicant who seeks permission for retaining custody and in handling imported or export goods in a Customs area. Regulation 5 prescribes conditions in regard to maintenance of infrastructure and other facilities and empowers the Commissioner of Customs to specify the facilities which are required to be maintained. The safety and security of the Customs area is a matter of paramount concern. Even though a power to relax has been conferred upon the Commissioner by Regulation 7, that power has to be exercised with a view to subserving the basic object and purpose of the regulations. 11. Following the suggestions of the Parliamentary Committee on Subordinate Legislation, the Central Board of Excise and Customs initially prescribed a minimum distance of 200 meters between the storage of hazardous cargo and the main office or VBC 14 wp3651.11-5.10 administrative or Customs office building. The Deputy Commissioner of Customs introduced a check list which was forwarded together with a communication dated 3 March 2011. The check list required the maintenance of a minimum distance of 100 meters between the place of storage of hazardous cargo and general cargo. The prescription of a distance between hazardous cargo and an office building or, for that matter, between general cargo and hazardous cargo cannot by any means be regarded as arbitrary or ultra vires. As a matter of fact, the Commissioner of Customs, who is the Competent Authority to grant permission under Regulation 5 is duty bound to ensure that all requirements in regard to safety and security are fulfilled. The Regulations which have been framed for the Jawaharlal Nehru Port prescribe requirements for segregation of cargo. For that purpose, goods are classified in accordance with the International Maritime Dangerous Goods Code. Regulation 6(4) of those Regulations prescribe segregation in accordance with IMDG recommendations which are specified in Schedule II of the Regulations. Schedule II contains a table. The note appended to the segregation table provides for situations where no segregation is necessary unless required by VBC 15 wp3651.11-5.10 individual schedules; Segregation of a minimum distance of three meters and in certain open areas a minimum of six meters’ distance is required to be maintained. The Regulations of 2007 which have been made applicable to the Jawaharlal Nehru Port do not ipso facto apply either to CFS or ICD areas. As a matter of fact, the affidavit in reply contains, in our view, a valid justification why a more stringent standard may be required to be applied in the case of CFSs or ICDs where goods may be stored over a much longer duration than is the typical duration of storage in a Port area such as JNPT. 12. In the exercise of its jurisdiction under Article 226 of the Constitution, this Court has to be mindful of the fact that issues such as the maintenance of a safe distance between general and hazardous cargo are matters of scientific expertise where the Court would place a degree of deference on the decision which is taken by the Commissioner of Customs. The Commissioner of Customs is an authority which is vested with the jurisdiction and obligation to take such a decision under the Regulations of 2009. Unless there is something arbitrary, the Court would not be inclined to interfere. VBC 16 wp3651.11-5.10 The communication which has been issued by the Central Board of Excise and Customs on 6 April 2011 clarifies that the matter has now been referred to the Union Ministry of Environment and Forests and to the Union Ministry of Shipping. Obviously in such matters a decision which is once taken is capable of being altered having regard to the requirements of safety and security and after taking into account practical concerns which are expressed by trade and industry. The concerns of safety and security need continuous monitoring and evaluation. A standard once laid down is not immune to change. In our view, it would be appropriate, since a process of re-examination has been initiated by the Central Board of Excise and Customs, if the Competent Authority in that regard is left to take a considered decision after considering all the requisite facets of the case. We accordingly would expect that the concerned Ministries of the Union Government which are seized of the issue namely, the Union Ministry of Finance (Department of Revenue), the Union Ministry of Environment and Forests and the Union Ministry of Shipping will undertake a collaborative exercise and arrive at a decision, based on the views of experts and the need to maintain safety and security. Nothing arbitrary in the VBC 17 wp3651.11-5.10 decisions impugned before the Court is shown. With these observations, we accordingly dispose of the Petition. No order as to costs. ( Dr.D.Y.Chandrachud, J.) ( A. A. Sayed, J.)