IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
The Hon'ble Justice Jyotirmay Bhattacharya
W. P. No. 911 of 2005
GERMAN EXPRESS SHIPPING AGENCIES (INDIA) PVT. LTD. & ANR.
UNION OF INDIA & ORS.
For the Petitioner : Mr. Tilak Kr. Bose
Mr. Subhojit Roy
Mr. Anubhab Sinha
For the State Respondent : Mr. S. Talukdar
Mr. Nilay Sengupta
Mr. A. Bera.
For the Customs Authority : Mr. Kaushik Kanti Maity,
Mr. Tapas Kr. Hazra.
Heard on : 07/01/2011, 11/01/2011, 14/01/2011, 21/01/2011, 11/02/2011. 18/02/2011, 25/02/2011, 18/03/2011, 22/03/2011, 29/03/2011, 05/04/2011, 12/04/2011 26/04/2011, 06/05/2011 and 10/05/2011. Judgment On : 07.06.2011.
The petitioners are the owners of two containers forming subject matter of the present writ petition. The petitioner no.1 is acting as a container agent. Two containers were brought by the petitioners stuffed with Beetle nuts and those were landed at Haldia Dock Complex on 4th August, 2001 and 5th August, 2001 respectively. The petitioners being the container owners filed a landing guarantee with the Customs authorities undertaking that after disstuffing cargo, the containers would be re-exported either empty or after stuffing of export cargo. Import Agent Manifest (I.A.M.) was also filed by the petitioners with Customs authorities. Landing guarantee 2
was accepted by the Customs authorities on 30th August, 2001. As per the said landing guarantee the petitioners were required to re-export those two containers immediately after disstuffing the cargo, otherwise penalty would be imposed upon them as per Section 142 of the Customs Act, 1962.
The consignee of the imported cargo neither turned up to take delivery of the imported cargo nor abandoned the cargo. In such a situation the petitioner no.1 by its letter dated 23rd November, 2002, requested the Port authorities to allow the petitioners to disstuff the said cargo immediately as the said imported cargo was perishable item as notified under the manifest. In reply to the said letter, the authority of the Kolkata Port Trust, by its letter dated 26th November, 2002 informed that the steps have already been taken for disposal of the cargo by conducting auction thereof. The petitioner was further informed that disstuffing of the cargo would be allowed at the time of delivery thereof to the buyer after the cargo is sold through auction. Thus, the Port Trust authorities did not agree with the petitioners' proposal for immediate disstuffing of the cargo and/or release of the containers to the petitioner. Subsequently by another letter dated 30th November, 2002 the petitioner again requested the Port Trust authority to ensure disposal of cargo as per instruction of the Ministry of Finance and Customs Act and release of their containers so that those containers can be re-exported by them as per Customs regulation which provides that the containers are to be re-exported within six months from the date of landing. In spite of such request being made by the petitioners, the Post Trust authorities did not take any effective step either for disstuffing the cargo from those containers or for sale of the cargo by auction. Though, the Port Trust authorities were aware about their statutory duty regarding sale of the cargo as per Sections 61 and 62 of the Major Port Trust Act of 1963 for realizing the port charges, in case the cargo remains uncleared either by the consignee or by its agent within two months from the date of its landing in the port area but still then they did not take any step for sale of those cargo for realizing the port charges and, thus, they themselves became responsible for causing loss to Port Trust fund. Their awareness of their aforesaid duties is reflected from the letter written by the Port authority to another Line Operator, namely, Bengal Tiger Line (I) Pvt. 3
Ltd., on 21st July, 2003. As such they cannot disown their responsibility by pleading ignorance of their statutory duties.
The petitioners herein also wrote a letter on 12th September, 2003 requesting the Customs authorities to sell the said unclaimed cargo as per the provision contained in Section 48 of the Indian Customs Act, 1962 so that those containers could be exported by the petitioners as per the Customs regulation. Identical request was made by the petitioners to the Customs authority on 7th April, 2004 as will appear from the petitioners' letter dated 7th April, 2004 addressed to S.A.C./Dy Commissioner of Customs. But all such efforts of the petitioners were in vein as neither the Port Trust authorities nor the Customs authorities took any effective step either for sale of the cargo stuffed in the containers or for release of the empty containers to the petitioners. Ultimately on 24th October, 2004, the petitioners were informed by the Port authorities that the cargo stuffed inside the containers have been declared unfit for human consumption. The petitioners were further informed that the special Officer, appointed by this Hon'ble Court by an order passed by the learned Single Judge of this Court on 8th October, 2004 in W.P. No. 1537 of 2003 (Private Consumer Cooperative and Stores Limited and Anr. Vs. Union of India) took physical possession of the contents of those two containers on 26th October, 2004 for onward removal thereof outside the Port premises. Thereafter by the impugned letter dated 5/8th November, 2004 the Port authorities demanded a sum of Rs.2,61,681/- towards the dock stayal charges of those two containers during the period of their stay in the port area i.e. from the date of their respective landing at the dock up-to the date of removal of those containers from the port area. The legality of such demand of the Port Trust authority is under challenge in this writ petition at the instance of the Line Operator viz. the container owner. It is contended by Mr. Bose, learned senior Counsel, appearing for the petitioners that as per Sections 61 and 62 of the Major Port Trust Act, 1963, the Port Trust authorities were required to sell the cargo after sixty days from the date of their landing, as the cargo was neither cleared either by the consignee or by its agent within the statutory period nor port charges were paid by 4
the consignee and/or its agent. It was further contended by him that if the orders dated 9th July, 2000 and 13th September, 2005 issued by the Tariff authority for major ports, constituted under Chapter V Section 47A of the Major Port Trust Act are taken into consideration then it goes without saying that in addition to time limit of 60 days as prescribed in Sections 60 and 61 of the Major Port Trust Act, the Port authorities get an additional time of 15 days (i.e. 10 days for procedural steps and 5 days for notice to the consignee) for sale of the cargo by the Port authorities. Thus, it is contended by him that 75 days is the ultimate time limit within which the consignee or its agents are required to clear the cargo from the Custom area and in default thereof the Port Trust authorities are required to sell the cargo after expiry of the said statutory period so that the empty containers can be delivered to the containers owner immediately thereafter enabling the container owner to re-export the containers either empty or with export cargo within sixty days and/or seventy-five days as the case may be, from the date of its landing so that the declaration given by the petitioner with the Customs authorities can be fulfilled as per the Custom Regulation.
Referring to those provisions, it was further contended by him that if those provisions are read conjointly with the Custom Regulation, then necessarily it will follow that the petitioners' liability to pay ground rent and/or port charges cannot extend beyond 75 days from the date of landing of those containers in the port area. Mr. Basu also referred to the following decisions of the Hon'ble Supreme Court to support his submission that the ground rent and/or port charges cannot be demanded by the Port Trust authorities from the petitioners beyond the period prescribed under the statute for sale of the cargo by the Port Trust authorities in case of delivery of the cargo is not taken from the port area within the time prescribed in the statute:- i) In the case of Om Sankar Biyani vs. Board of Trustees Port at Calcutta and Ors. Reported in (2002) 3 SCC 168;
ii) In the case of Kutch Shipping Agency Pvt. Ltd. Vs. Board of Trustees Kandal Port Trust reported in (2010) 11 SCC 795.
Mr. Basu further contended that the provisions contained in Sections 45 to 49 of Customs Act, 1962 have no application to the containers; firstly, for the reason that the containers can neither be regarded as "goods" within the meaning of "goods: as contemplated under the Customs Act nor those containers were imported either by the consignee or by the line operator. According to Mr. Basu, since those containers were neither imported goods nor those containers were imported either by the consignee or by the line operator no permission was required from the Customs authorities either for disstuffing the cargo therefrom or for delivering the empty containers by the Port Trust authorities to the petitioners.
Mr. Basu also referred to another Single Bench decision of the Hon'ble Bombay High Court in the case of Industrial Cables (I) Ltd. Vs. Board of Trustees of Port of Bombay reported in (1990) 45 ELT 395 (Bombay) to support his stand that the Port Trust authority having independent right to sell the cargo due to non-clearance thereof from warehouse within the stipulated time or for non-payment of rent under the Major Port Trust Act, permission of the Customs department under the provision of Section 48 of the Customs Act, 1962 is not required as the provisions under those two statutes work independently in different filed and each of them is independent of the other and each is not controlled by the other. Mr. Basu, learned senior Counsel, thus, ultimately submitted that the petitioners' liability towards the ground rent and/or port charges cannot be extended beyond 75 days from the date of landing of those containers in the port area.
The Port authorities contested the writ petition by filing affidavit. It is contended by them in their affidavit that since the cargo stuffed in those containers were never abandoned either by the consignee or by the line operator, the Port Trust authorities could not take any step to sell those imported cargoes stuffed in those two containers. It was further contended by them that 6
since the other formalities regarding sale of the cargos which were required to be fulfilled by the petitioners as per the directions contained in the order date 19th July, 2000 issued by the TAMP were not fulfilled by the petitioners, they could not take steps for sale of those imported cargos. It was further contended by them that since the petitioner did not undertake to pay the cost of disstuffing and other charges incidental to disstuffing and sale of the said cargos, the Port Trust authorities could not sell those imported cargos. It was also contended by them that since the materials in the containers were Beetle nuts and beetle nuts come under the definition of food under the Prevention of Food Adulteration Act, 1952, no step could be taken by the Port authorities for disposal of the cargo before clearance was given by the Port Health Officer regarding its fitness for human consumption. In fact, the Port Health Organization, after examining the sample of beetle nuts certified on 1st August, 2003 that the cargos in the containers became adulterated and thus became unfit for humane consumption. Incidentally it may be mentioned herein that sample of beetle nuts were sent by the Port Trust authority to the Port Health Organization only on 27th December, 2002 for its examination though those cargos were landed on 4th and 5th August, 2001 respectively.
It is, however, contended by them that though the permission was sought for from the Customs authorities for sale of the cargo in the containers but in fact, such prayer of the Port authorities remain unattended and even no reply was given to such request of the Port authorities by the Customs authorities. Thus, the Port authorities wanted to explain the reason which prevented them from selling the said cargo within the time as stipulated in Sections 61 and 62 of the Major Port Trust Act read with TAMP's order dated 19th July 2000 in the aforesaid manner.
Mr. Talukdar, learned Senior Counsel, appearing for the Port Trust authority, also drew my attention to the decision of the Hon'ble Supreme Court in the case of Kandala Port Trust vs. Good Rick Mari Time Pvt. Ltd. & Anr. Reported in (2010) 11 SCC 789 wherein the Supreme Court clarified that besides the TAMP's order, defence of the port must also be heard and considered for proper adjudication of the issue. Relying upon the said decision Mr. Talukdar submitted that the 7
reasons which prevented the Port Trust authorities for not selling the cargo and/or disstuffing the cargo from the containers, are also required to be considered for ascertaining as to whether the Port Trust authorities can be blamed for not carrying out their statutory duties within the prescribed time in the facts of the instant case. According to him such consideration is necessary as fixation of the liability to pay demurrage by the consignee and/or the line operator towards payment of ground rent and/or other port charges beyond the statutory period is directly linked with such consideration . By referring to the said decision of the Hon'ble Supreme Court, Mr. Talukdar, learned senior Counsel contended that it is absolutely absurd to argue that in no circumstances the petitioners' liability to pay ground rent and/or other port charges can be extended beyond 75 days from the date of landing of the containers. He further strengthened his submission by referring to the other decisions of the Hon'ble Supreme Court in Kutch Shipping Agency's case which was relied upon by Mr. Basu, wherein the Hon'ble Supreme Court also permitted the Port authorities to charge ground rent and/or other port charges beyond 75 days from the date of its landing. In the said case, the Hon'ble Supreme Court permitted the Port authorities to charge port charges upto the date when the cargos were abandoned by the respective consignees and/or the containers agents and the physical possession of the goods were, in fact, handed over to the Port authorities for sale. Thus, he refuted the submission of Mr. Basu by contending that 75 days is not the ultimate date beyond which the ground rent and/or port charges cannot be demanded in any circumstances as contended by Mr. Basu. Mr. Talukdar further contended that since in the instant case neither the consignee nor the Line operator abandoned the cargo at any point of time nor they delivered the cargo to the Port Trust authorities for sale thereof nor they fulfilled the formalities by obtaining permission from the Customs authorities to disstuff the cargo and/or for sale thereof nor they undertook to bear the expenses for disstuffing the cargo from the containers, the Port Trust authorities could not take any step to sell those cargos. He further contended that since beetle nuts are food items, sale of such food items could not be organised as the cargos were not certified as fit for human consumption by the Health Officer. He pointed out that Port Health Officer ultimately certified the said cargos are unfit as human consumption only on 1st August, 2003 and as such the Port 8
authority cannot be blamed for not taking any step for sale of those cargos until fitness certificate was received by them. Thus, Mr. Talukdar invites this Court not to interfere with the impugned demand which, according to him, was legal, justified and reasonable. Though the Customs authorities appeared in this proceeding but they did not use any affidavit in connection with this writ petition. Mr. Maity, learned Advocate, appearing for the Customs authorities, submitted in clear terms before this Court that permission for sale of the imported goods is necessary only when the goods are seized by the Customs officers. He further submitted that even no permission from the Customs authorities is necessary to disstuff the cargo from the containers. Thus, he contended that his client cannot be held responsible for the delay which was caused by the Port Trust authorities in taking step for sale of the cargo stuffed inside those containers.
Let me now consider the submission of the learned Counsel of the respective parties in the facts of the instant case.
Sections 61 and 62 of the Major Port Trust Act, 1963 authorize the Port Trust authorities to sell the good under certain situations. Section 61 deals with the Port Authority's power to sell the goods after two months from the time when the goods have passed into the custody of the Port, if rates and/or rent are not paid or lien for freight is not discharged. Section 62 deals with the power of the Port Trust authorities to dispose of the goods not removed from the port premises within the time limit prescribed therein. In both the aforesaid provisions the expression 'may' was used which apparently indicates that those provisions are simply enabling provisions which prescribe that under certain situation the Port Trust Authority may sell the cargo when it remains uncleared beyond the notice period or the rates and/or port charges are not paid to the Port Trust authorities. For ascertaining as to whether the expression 'may' was used only to give an option to the Port authorities to sell the goods in its custody in certain circumstances or a duty was cast upon the Port Trust Authority to sell the goods in its custody in a situation contemplated under those two provisions of the Major Port Trust Act after expiry of the statutory 9
period, reference may be made to the orders dated 19th July, 2000 and 13th September, 2005 both issued by the Tariff authority for Major Port Trust (hereinafter referred to as the TAMP) constituted under Chapter V Section 47A of the Major Port Trust Act in this regard. Order dated 19th July, 2000 passed by the TAMP indicates that the Port Trust authorities are required to wait 15 days (10 days for procedural step and 5 days for notice to the consignee) beyond the statutory period of 60 days before selling the cargos by auction. That means 75 days is the ultimate time limit within which the Port Trust authorities cannot sell the cargos unless the cargos are abandoned either by the consignee or by the line operator before expiry of 75 days from the date of landing. The TAMP authority gives clear indication in the order dated 19th July, 2000 that if the letter of abandonment is issued before 75 days, either by the consignee or by the container owner, the Port authorities have to release the containers without waiting for 75 days to auction goods. However, under such circumstances the containers owner has to take into his custody both the containers and the cargo. It is also clarified therein that if no letter of abandonment is issued either by the consignee or by container owner, the container owner has no other option but to wait for 75 days for the Port Trust Authority to act in terms of Section 61 of the said Act. Thus, if the container owner wants Port Trust Authority to release the containers without abandoning the cargo, he must wait for 75 days for auction of the cargo. This necessarily follows that if the container owner wants the containers to be released before 75 days then he has to remove the containers with the cargo outside the Port area after payment of all port charges and/or customs charges. However, in case either the cargo or the containers are seized and/or confiscated by the Customs Authority, then 75 days' time limit is not attracted, as sale of the cargo by the Port authority, in such a situation, is not possible unless the cargos or the containers are released by the Customs Authority. However, if the container owner wants the cargo to be disstuffed from the containers then he has to bear the cost of disstuffing and is also required to complete necessary formalities under the Major Port Trust Act and is also required to fulfill the undertaking given by the Line operator in his declaration before the Customs Authority. 10
Here is the case where the line operator asked the Port Trust authorities to disstuff the cargo and release the containers. The Port Trust authorities did not accept the said proposal. The Port Trust authorities stated that the containers will be released only after the cargos are disstuffed and sold in auction. The said decision was taken by the Port Trust Authority even though they knew very well that as per Sections 61 and 62 of the said Act read with the TAMP's order, as aforesaid, they were required to wait for sale of cargo for a period of 75 days only from the date of landing of the containers loaded with cargo in the Port area. The Port Trust authorities did not take any effective step to sell the said cargo and release the containers immediately after expiry of the stipulated period despite they were fully aware of their statutory duties for selling those cargos immediately after expiry of the said statutory period and their awareness about their legal duties is reflected in their letter dated 21st July, 2003, addressed to another Line operator viz. Bengal Tiger Lime (I) Pvt. Ltd. The stand taken by the Port Trust authorities in deferring the sale process on a plea that since the cargo was not abandoned either by the consignee or by the line operator and further since the necessary permission was not obtained from the Customs authority for sale of the said cargo, the Port Trust authorities were unable to take steps for sale of the said cargo, was contrary to law and as such the Port Trust authority cannot penalise the Line operator by demanding payment of demurrage for stayal of those containers in the port area beyond 75 days for no fault on the part of the Line operator. Since 75 days was the ultimate time limit either for abandoning the cargo or for clearing the cargo by the consignee or by the Line operator, demurrage can be demanded from them for stayal of the cargo in port area for a maximum period of 75 days unless the goods are seized by Customs Officer.
I have already indicated above that the learned Advocate, appearing for the Customs authorities, submitted before this Court in clear term that no permission for sale of cargo is necessary from his client for enabling the Port Trust authorities to sell the cargo if the goods are not seized. He further submitted before this Court that even for disstuffing the cargo from the containers, no permission is necessary from his client. In view of such submission made by the 11
learned Advocate, appearing for the Customs authorities, this Court has no hesitation to hold that there was no impediment on the part of the Port authorities in selling the cargo after expiry of 75 days from the date of its landing, notwithstanding the fact that neither the consignee nor the line operator abandoned the cargo. Such abandonment by the Line operator is necessary only in a case where the line operator wants to get his containers released after disstuffing the cargo from it within 75 days from the date of its landing.
Since the Port Trust authorities failed to discharge their duties to sell the cargo within a reasonable time beyond 75 days, despite notice was given by the petitioners to the Port Trust authorities for release of their containers after disstuffing the cargo therefrom, this Court has no hesitation to hold that the Port Trust authorities cannot demand the port charges and/or ground rent from the petitioners beyond 75 days which is the statutory time limit within which the Port Trust authorities are not permitted to sell the cargo in case the cargo is not abandoned either by the consignee or by the line operator within the said 75 days being the prescribed limit. Though it is true that in the case of Kutch Shipping Agency Pvt. Ltd. (Supra) The Hon'ble Supreme Court permitted the Port Trust authorities to recover storage charges of the containers even for a period beyond the statutory time limit but one should not loose sight of the basic fact that at a point of time when the said decision was given by the Hon'ble Supreme Court then the TAMP's orders dated 19th July, 2000 and 13th September, 2005 were not issued. Thus, the effect of those two orders issued by the TAMP was not under consideration before the Hon'ble Apex Court. As such this Court holds that the circumstances under which the said order was passed by the Hon'ble Supreme Court were altered subsequently because of issuance of those two TAMP's orders. The other decision of the Hon'ble Supreme Court in the case of Om Sankar Biyani vs. Board of Trustees Port at Calcutta and Ors. (supra) the Hon'ble Supreme Court held that the Board was disentitled to claim demurrage for any period subsequent to the date when the Port authorities were permitted to sell the goods after releasing the goods from seizure. In other words, it was stated therein that so long as the goods are under seizure by the Customs authorities, the Port authorities cannot sell such goods and when the seizure is ultimately lifted 12
even after 75 days, the Port authority can sell even beyond 75 days and in such a situation the Port can certainly charge demurrage till the date when the restriction on sale of such seized items is lifted. In such cases the Hon'ble Apex Court held that 75 days limitation will not be operative. But here in the instant case neither the cargo was seized nor the containers were seized; as such the Port authorities cannot claim any demurrage beyond 75 days after landing of the containers containing the cargo in the port area.
Though, it is true, that since the containers were stuffed with Beetle nuts which were food items, the Port authorities could not have sold the cargo unless Health Officer certified that the cargo was fit for human consumption.
Since such a restriction was there on sale of the cargo because of the particular nature of the said cargo, this Court holds that it was the duty of the Port Trust authorities to seek a report from the concerned Health Officer as to the fitness of the cargo for human consumption immediately after expiry of 60 days from the date of landing of those containers. The Port authority miserably failed to discharge its duties in this regard as admittedly the Port authority waited for about two years for seeking a report from the Health Organization as to the certificate of fitness of such goods for human consumption.
That apart since the Customs authorities submitted in clear term that no permission was necessary either for sale of those cargos or for disstuffing the cargo from the containers as those cargos were never seized by the Customs authorities, this Court holds that the Port authorities ought not to have waited for disstuffing the cargos for such a long time on the plea that in the absence of the Customs authorities' permission, they were unable either to sell the said cargo or to disstuff the cargo from the containers.
On perusal of the provisions of the Customs Act starting from Section 45 to Section 49 of the said Act, this Court finds that those provisions clearly refer to the "goods" without referring to the containers in which such goods were stuffed. In fact, the cargo was imported; the containers carrying such cargo were not imported. Thus, the containers cannot be regarded as goods within 13
the meaning of the "goods" as defined in the Customs Act. As such the provisions contained in the Customs Act have no application to the containers. Thus, this Court holds that no permission was at all necessary for disstuffing the cargo stuffed in those containers nor the containers could have been sold by treating the same as "goods" for realising the ground rent and/or other port charges.
Before concluding, this Court also wants to keep it on record that this Court fully agrees with the Single Bench decision of Bombay High Court in the case of Industrial Cable (I) Pvt. Ltd. (supra); wherein it was held that the Port Trust authorities have independent right to sell the property under the Major Port Trust Act and the permission of the Customs department is not required for sale of those cargoes by the Port authority as the provision relating to sale of cargo under the Customs Act is different from that of the provisions contained in the Major Port Trust Act. Both the aforesaid Acts operate in their respective fields and one is not dependent on the other. Therefore, it is difficult to accept that the Port Trust authorities could not have sold those cargos in the absence of the permission from the Customs authorities under Section 48 of the Customs Act.
Accordingly, this Court holds that the Port Trust authorities were not justified in claiming demurrages and/or port charges for any period beyond 75 days from the date of landing. Thus, the impugned demand contained in annexure P-10 to this writ petition at page 36 stands quashed.
The Port Trust authorities are, thus, directed to raise fresh bill towards port charges for a period of 75 days from the date of landing of those containers from the petitioners which, according to this Court, is payable by the petitioners as per law. The petitioners are, thus, directed to pay demurrage charges for 75 days from the date of landing of those containers in the Port area within two weeks from the date of receipt of such bill from the Port Authority. The Port Trust authorities are thus directed to return the containers to the petitioner within one week from the date of payment of the port charges by the petitioner.
This writ petition is, thus, disposed of.
Urgent xerox certified copy of this order, if applied for, be given to the parties as expeditiously as possible.
(Jyotirmay Bhattacharya, J.)