Container Shipping Lines Association (India) v Union of India and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **WEDNESDAY, THE 11TH DAY OF MARCH 2020 / 21ST PHALGUNA, 1941** ## **WP(C).No.7435 OF 2020(D)** ## **PETITIONER/S:** - **1 THE CONTAINER SHIPPING LINES ASSOCIATION (INDIA) A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860, HAVING ITS REGISTERED ADDRESS AT MACKINNON MACKNENZIE BUILDING, BALLARD ESTATE, MUMBAI 400001 REPRESENTED BY ITS CHIEF EXECUTIVE OFFICE, MR. SUNIL VASWANI.** - **2 CMA CGM AGENCIES (INDIA) LTD. HAVING ADDRESS AT OFFICE NO.219, 2ND FLOOR, METRO HOUSE, OPP. PMTC, OFF WADIA COLLEGE, MANGALDAS ROAD, PUNE 411001, MAHARASHTRA, INDIA, REPRESENTED BY ITS BRANCH MANAGER MR. SHYAM SUNDER N.** - **3 MSC AGENCY INDIA PVT. LTD. HAVING ADDRESS AT MSC HOUSE, ANDHERI KURLA ROAD, ANDHERI EAST, MUMBAI-400 059 REPRESENTED BY ITS BRANCH MANAGER JACOB GEORGE. BY ADVS. SRI.V.M.SYAM KUMAR SMT.KRIPA ELIZABETH MATHEWS SMT.P.F.ROSY** ## **RESPONDENT/S:** - **1 UNION OF INDIA THROUGH SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE NORTH BLOCK, NEW DELHI-110 001.** - **2 COMMISSIONER OF CUSTOMS CUSTOM HOUSE, WILLINGTON ISLAND, COCHIN-682 009.** - **3 SPECIAL SECRETARY LOGISTICS DEPARTMENT OF COMMERCE, MINISTRY OF COMMERCE AND INDUSTRY, UDYOG BHAWAN, NEW DELHI-110 107.** - **R1, R3 BY ADV. SHRI.P.VIJAYAKUMAR, ASG OF INDIA** ## **OTHER PRESENT:** **SRI SREELAL N WARRIER SC FOR R2** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **JUDGMENT** Petitioners, Container Shipping Lines Association (India) and two other agencies have approached this Court challenging notice Ext.P1 Notice dated 3[rd] February 2020, whereby a facility of paying terminal handing charges and other charges of the port terminal directly to the terminal operators instead of shifting through the Shipping Lines like the petitioners have been issued by Commissioner of Customs on behalf of Government of India, Ministry of Finance, Central Board of Indirect Taxes and Customs. 2. All the petitioners are in the business of carrying of a containerized goods whereas 2[nd] and 3[rd] are agents/representatives of their Principal and members of the first petitioner Association. The manner in which the petitioners indulging in the business is summarized as under: 3. They are engaged in the business of carriage of containerized cargo by sea ie., from the Port of Discharge or from the Place of Receipt to the Place of Delivery and **WP(C).No.7435 OF 2020(D)** **3** the consideration payable to them by the client is under two discernible heads (i) freight; and (ii) local / other charges. On acceptance of the quotation by the client, petitioners issue a Booking Note/Confirmation recapitulating the details of the booking placed by the Client and the details provided by the client include Shipper and Consignee for the purpose of carriage of the containerized cargo. Upon loading of the containerized cargo on board the Vessel, petitioners issue the Bill of Lading or Seaway Bill to the Client, as evidenced from the contract of carriage entered into between the parties containing certain terms and conditions. Reliance has been laid to a sample Bill of Lading Ext.P6. The local and other charges (including terminal handling charges) varies for each contract of carriage depending upon the port of discharge, the port of loading and nature of usage of the container. The heads of charges payable to the 1[st] petitioner's members are conveyed to and accepted by the Client prior to the issuance of the Bill of Lading. Learned Senior Counsel appearing on behalf of the petitioner submits that the members of the first **WP(C).No.7435 OF 2020(D) 4** petitioner Association at the time of booking/offering quotation make the charges, involved in the transportation of the cargo, available to the Client. The tariff detailing the rates of charges can be verified by the client on the website. The aforementioned charges not only include transportation but other charges ie., handling etc. Therefore, the petitioner's client is contractually bound to pay the charges to the 1[st] petitioner's members. The contract of carriage entered into between the Association and the clients also include tariff which includes not only the amount payable to the port /terminal for handling the containers but also other miscellaneous charges and expenses to be levied. The first petitioner's members collect the same from the client along with other charges under the head of Terminal Handling Charges and pays at the time when the goods are dispatched or received. The services provided by the petitioners are enumerated here under. - a. Preparation of Vessel arrival report and obtaining certificates and clearance from Customs/ Immigration Department, Port Health Department. - b. Carrying out of vessel clearance activity of the vessels after berthing, by coordinating with **WP(C).No.7435 OF 2020(D)** **5** Customs/Immigration and Port Health authorities. - c. Liaising with various departments of Port d. Furnishing requisite security in advance for Terminal Handling Charges (THC) - e. Updating of Port Community System (PCS) - f. payment of lighthouse charges. - g. - Booking inward pilot - h. Preparation and filing of Import General Manifest - I. Sharing details of temperature-controlled containers - j. Obtaining from Customs, a CMC (Container Monitoring Cell) permission prior arrival of both loaded and empty containers - k. Preparation of terminal stowage planning - l. For identification of containers as per RailRoad shipments / DPD/Non-DPD/DPD-CFS and preparation of segregation report - m. - Coordination with Terminals - n. Informing the Terminals about segregation of containers - o. Arranging for under-hook delivery of containers. - p. Indicating to the Terminal about requirements for certain containers that require special stacking. - q. Post movement of containers to nominated points in the Terminal premises - r. During the vessel's stay at berth, monitoring the progress of terminal operation and coordinating with the Terminal /Marine Department/Trade Department - s. Liaising with various authorities for clearance of abandoned containers. 4. The impugned notice dated 3[rd] February 2020, is not sustainable and issued without taking into consideration the pre-negotiated contracts already **WP(C).No.7435 OF 2020(D) 6** entered between the first petitioner's members and clients and without considering that it has no locus and/or authority for payment of the charges. Giving liberty to the consignors and the consignee to pay the handing charges by bypassing shipping lines. In support of the aforementioned contentions, reliance has been laid to a judgment of High Court of Bombay in **J.J Polyplast Private Ltd. And Ors. vs. The Ministry of Shipping and Ors. (Writ Petition No.2973 of 2014)** whereby one of the importer being aggrieved of such variation in the facility despite having entered into a contract with a shipping lines was issued facility notices. While dismissing the said writ petition certain directions were issued. The reliance has also been laid to the provisions of Section 141(2) of the Customs Act providing that imported and exported goods may be received, stored, delivered, dispatched or otherwise handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged. 5. I have heard the learned counsel for the parties and appraised the paper book and of the view **WP(C).No.7435 OF 2020(D)** **7** that there is no force and merit in the submission of the learned counsel for the petitioners. It would be apt to reproduce the impugned notice and Section 141 in order to assign the reasoning to the submission of the learned counsel for the petitioners. ## **PUBLIC NOTICE No.05/2020** ## **Sub: Terminal handling charges levied by Shipping Lines - reg.** …................... Attention of all importers, exporters, customs brokers, shipping lines/agents, CFSs, Custodians, Port Terminal Operators, members of the trade and industry and all other stakeholders is invited to the above mentioned subject. 2. Terminal Handling Charges are levied by the Port Terminals from the Shipping Lines and the Shipping Lines in turn collect these charges from the importers or the customs brokers as the case may be. Many importers have represented to the Customs Department that the Shipping Lines are collecting terminal handling charges and other charges such as SSR (Special Service Request), Demurrage charges, Reefer Monitoring Charges, Special Handling Charges etc., which are at variance with what the Shipping Lines have paid to the port terminals. This results in lack of transparency in collection of these charges. 3. In order to bring transparency, augment 'Ease of Doing Business' and to reduce the logistics costs, it is decided that the importers having AEO status or DPD facility for containerized cargo may be allowed the facility of paying terminal handling charges and the other charges of the port terminal directly to the terminal operators instead of paying through the Shipping Lines. Therefore, all such eligible importers who have already opened P.D accounts with the concerned ports/Terminals are also requested to raise invoices for terminal charges directly to the eligible and willing importers. 4. The above directions may be followed in letter and spirit. Difficulties faced, if any, may be brought immediately to the notice of the undersigned. **WP(C).No.7435 OF 2020(D)** **8** ## **Section 141 of the Customs Act:** ## **Conveyances and goods in a customs area subject to control of officers of customs:** 1. All conveyances and goods in a customs area shall, for the purpose of enforcing the provisions of this Act, be subject to the control of officers of customs. 2. The imported or export goods may be received, stored, delivered, dispatched or otherwise handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed. 6. On a perusal of the provisions of 141(2) of the Customs Act, no doubt certain procedure is being prescribed with regard to storage and arrival of the consignment but the argument that the notice having been issued without jurisdiction is not able to cut eyes on plain and simple reading of the provisions of Section 143AA inserted with effect from 29[th] of March 2018. The same reads hereunder: ## 143AA. **Power to simplify or provide different procedure, etc., to facilitate trade** Notwithstanding anything contained in any other provision of this Act, the Board may, for the purposes of facilitation of trade, take such measures or prescribe separate procedure or documentation for a class of importers or exporters or for categories of goods or on the basis of the modes of transport of goods, in order to,- a. maintain transparency in the import and export documentation; or b. expedite clearance or release of goods entered for import or export; or c. reduce the transaction cost of clearance of importing or exporting goods; or d. maintain balance between customs control and **WP(C).No.7435 OF 2020(D)** **9** facilitation of legitimate trade. 7. On a perusal of the aforementioned provision, the board of the custom is empowered to take measures for the facilitation of trade by prescribing accepted procedures, documentation for a class of importers or exporters or for categories of goods prohibiting accepted documentary clause on or category of goods basis of the modes of transport of goods, in order to maintain transparency in the import and export documentation or clearance or release of goods or reduction of transaction cost and balance between customs control and facilitation of legitimate trade. Notice Ext.P1 has been issued on behalf of the Board by an officer concerned as the power to delegate provided under Section 15 of the Customs Act, where the Central Government is empowered to authorize Principal Chief Commissioner of Customs or Chief Commissioner of Customs, Principal Commissioner of Customs or Commissioner of Customs or Assistant Commissioner of Customs or Deputy Commissioner of Customs etc. The provision under Section 152 of the Customs Act reads as **WP(C).No.7435 OF 2020(D)** **10** follows: ## **152. Delegation of powers** The Central Government may, by notification in the official Gazette, direct that subject to such conditions, if any, as may be specified in the notification- a. any power exercisable by the Board under this Act shall be exercisable also by a [Principal Chief Commissioner of Customs or Chief Commissioner of Customs] empowered in this behalf by the Central Government. b. any power exercisable by a [Principal Commissioner of Customs or Commissioner of Customs] under this Act may be exercisable also by a [Joint Commissioner of Customs] or an [Assistant Commissioner of Customs or Deputy Commissioner of Customs] empowered in this behalf by the Central Government; c. any power exercisable by a [Joint Commissioner of Customs] under this Act may be exercisable also by an [Assistant Commissioner of Customs or Deputy Commissioner of Customs] empowered in this behalf by the Central Govt; d. any power exercisable by an [Assistant Commissioner of Customs or Deputy Commissioner of Customs] under this Act may be exercisable also by a Gazetted Officer of Customs empowered in this behalf by the Board. In my view, the petitioners do not have any cause of action in laying challenge to Ext.P1. There was already a written contract between them and the client and obviously the apprehension expressed of deviation is at far-fetched. It will not curtail or take away their right to recover the handing charges as per the terms and conditions of the contract. Be that as it may, while hearing the aforementioned case, a specific query in this **WP(C).No.7435 OF 2020(D) 11** regard was put. In order to answer the query, the reliance was laid to the judgment of the Hon'ble High Court of Bombay. In the reported judgment cited supra, the petitioner was an importer, who assailed the facility notice providing a mail based procedure for monitoring the movement of imported containers from Port to the container freight station. It was held that all the charges have already been included in the original bill of lading duly discharged payment of terminal and other charges. The Bombay High Court after considering the argument did not accept the contention by holding that the facility notices were issued with the object of facilitating and enabling the importer to have an efficient movement of container for early clearing of the goods. At the best, it can be a dispute arising out of the contract or money between the shipping line and the importer or the exporter. For the reason aforementioned, I do not find any justification warranting any interference under Article 226 of the Constitution of India, to bring the case under the realm of judicial review. **WP(C).No.7435 OF 2020(D)** **12** The writ petition is accordingly dismissed. **Sd/-** sab **AMIT RAWAL JUDGE** **WP(C).No.7435 OF 2020(D)** **13** ## **APPENDIX** **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE PUBLIC NOTICE BEARING NO.05/20 DATED 3.2.2020 ISSUED B Y THE 2ND RESPONDENT.** **EXHIBIT P2 TRUE COPY OF THE E-MAIL DATED 15.2.2020 ISSUED BY R3. EXHIBIT P3 TRUE COPY OF THE E-MAIL DATED 27.2.2020 ISSUED BY R3.** **EXHIBIT P4 TRUE COPY OF THE E-MAIL DATED 27.2.2020 ISSUED BY R3. EXHIBIT P5 TRUE COPY OF THE E-MAIL DATED 28.2.2020 ISSUED BY R3. EXHIBIT P6 TRUE COPY OF THE SAMPLE BILL OF LADING OF THE 3RD PETITIONER. EXHIBIT P7 TRUE COPY OF THE SAMPLE BILL OF LADING OF THE 3RD PETITIONER.** **EXHIBIT P8 TRUE COPY OF THE PUBLIC NOTICE BEARING NO.04/20 ISSUED BY THE CHENNAI CUSTOMS COMMR.** **EXHIBIT P9 TRUE COPY OF THE ORDER DATED 27.2.2020 RENDERED BY THE PRINCIPAL BENCH OF THE HON'BLE HIGH COURT OF MADRAS.** **EXHIBIT P10 COPY OF THE LIST OF THE MEMBERS OF THE IST PETITIONER ASSOCIATION.**