Calcutta High Court
Imsa Shipping Agency Pvt. Ltd. vs Commissioner Of Customs on 6 May, 2002
Equivalent citations: 2002(84)ECC581, 2002ECR1(CALCUTTA), 2002(145)ELT55(CAL)
Author: Dilip Kumar Seth
Bench: Dilip Kumar Seth
JUDGMENT Dilip Kumar Seth, J.
Facts.
1. In this case Imsa Shipping Agency is the owner of the containers, which were used by one Mr. Rajan Ghoshal (exporter), petitioner in Writ Petition No. 145 of 2002, in order to export certain goods. After the goods were cleared, the containers, hired by the exporter containing the goods, were loaded in the vessel M.V. Kota Bintang, which left Kolkata Port en route Singapore via Vizag. On the basis of some information in relation to attempt to export improperly, the said containers were off-loaded and were subjected to 100% examination, at Vizag Port, which was the subject matter of the challenge in the other Writ Petition No. 145 of 2002. In this writ petition, the petitioner claims that the containers should be released after destuff-ing the goods, which are subjected to investigation by the Customs Authority. The learned Counsel for the petitioner relied on a Circular issued by the Government of India in relation to the handling of containers by the Customs Authority, particularly, when the containers are detained on account of certain investigation with regard to the goods contained in such containers. Relying thereon, he contends that the containers should be released. The shipping agent and the exporter were not made party to the proceedings. In course of hearing, it appeared that the presence of the exporter and the shipping agent is necessary and they are proper parties. Therefore, on oral prayer, leave was granted to add them as parties to the proceedings. These two respondents had appeared and contested the application. Since this matter was related to the validity of the investigation, subject matter of Writ Petition No. 145 of 2002, therefore, this was directed to be listed along with other matters and were heard one after the other.
Submission on behalf of the Petitioners :
2. Learned Counsel for the petitioners contends that the containers are not subject matter of investigation and as such it cannot be detained. The containers cannot be confiscated, even if there is violation of the Customs Act 1962 by the exporter. It is only the goods or the packages that could be confiscated. The containers were imported containers. As such in terms of the declaration, it cannot be detained beyond six months. The petitioner has nothing to do with the goods subjected to investigation. It was the shipping agent, who took the containers on hire.
Objection on behalf of the respondents : Passing of title:
3. Various objections were raised on behalf of the Customs Authority as well as the exporter and the shipping agent. The shipping agent contended that it has nothing to do with the matter since he had only shipped the goods. In any event, he points out that the goods belong to exporter or to the person to whom it is being sent i.e., the consignee. According to him, as soon as the goods are exported, the title in the goods has passed, therefore, this writ petition cannot be maintained without the consignee.
3.1 But, this proposition does not seem to be of any substance. No document has been produced to show that the titles to the goods have passed to someone else. In any event, if there is an attempt to export improperly, then the Customs Authority has every right to seize the goods and confiscate under Section 110 and Section 113 of the Customs Act through the process provided in Section 106, so long goods are within the Indian territorial water, no matter whether the title to the goods had passed to someone else or otherwise, if the goods are found to be smuggled goods within the meaning of Section 2(39) read with Section 113.
Containers : Whether packages : Confiscation :
4. Similar objection was raised by the exporter, which can be answered with the same reason. Mr. Mullick, appearing for the exporter, relying on Section 118, contends that the containers are packages, which are also liable to confiscation. As such these containers can also be confiscated. This was supported by Mr. Kalyan Bandopadhyay for the Customs Authority.
4.1 This point appears to be devoid of any merit. The word "packages" have not been defined in the Act. But the word "package" had occurred in many of the Sections. In Section 106, the package has also been subjected to search. It is only the package, which is liable to confiscation. But containers are not packages. The goods may be stuffed in the container in an unpacked condition. Containers may be stuffed with packages containing the goods. In the present case, the goods were in packages, which were stuffed in the containers. Container has a different connotation than packages. Package means something within which certain quantity of goods is packed. This may vary according to the quality or quantity or size or character of the goods or materials packed. A package for liquid may differ from a package for solid or semi solid. It not only differs from the kind of materials used for packaging but also differs in sizes and other matters dependent on the goods packed. Whereas containers are of particular specific dimension in which packages of goods are to be stuffed for importation or exportation as the case may be. Containers are supplied by ship owners or their agents for stuffing the consignment by the intended shippers for being loaded in the vessel. The container is a receptacle for the purpose of transport or extended portion of the ships. Containers are used for the purpose of safe passage of the packages. Therefore, the containers stand on a different footing than packages. Therefore, under Section 118, though packages can be confiscated, but not the containers. In AP. Muller (Maersk Line) v. Collector of Customs (Preventive), Bombay , similar view was taken by the Tribunal. After having gone through the said judgment, I am in agreement with the views taken and the reasoning given in the said decision with regard to the question of the character of a container and its confiscation.
4.2 Thus, if the container cannot be confiscated, even when it contains smuggled goods. There is no bar in releasing the container, when the goods are required to be detained for a longer period.
Release of containers : If permissible :
5. The petitioner had asked for release of the containers. But the Customs Authority had no objection in releasing the container, provided the petitioner obtains no objection from the exporter, so as to ensure that no claim is lodged against it, on the allegations of any damages in respect of the goods by the exporter. It is this condition, which is subject matter of challenge in this writ petition. Now, it is to be seen as to whether the Customs Authority can put any such condition. Admittedly, the Customs Authority may not like to be held liable for other consequences in respect of the goods seized in course of its investigation. The exporter had challenged the right to investigate and seizure of the goods and initiation of the proceedings resorting to Section 106, Customs Act. According to it, unless Section 106 could be resorted to and the goods could be seized or confiscated, there is no question of detaining the goods and as such the question of release of containers is redundant on it.
5.1 Since all these questions were subject matter in Writ Petition No. 145 of 2002, as observed earlier, the same was also heard along with this case. In the decision, which I have delivered today in Writ Petition No. 145 of 2002, it was held that the investigation was competent and within the jurisdiction of the Customs Authority. Therefore, such a contention of the exporter cannot be sustained.
5.2 The investigation might take time. The goods may be seized or confiscated or may be released if on investigation nothing is found against the exporter. But, admittedly, pending investigation, the goods are to be detained. In such circumstances, we may now examine whether the containers can be released.
5.3 In this regard, the exporter and the Customs Authority had raised certain questions. According to Customs Authority, it has no storage facility, the goods are either to be stored in the Central Warehouse at Vizag or it has to be brought to Kolkata. But the cost is to be borne either by the petitioner or by the exporter, as the case may be. It also does not want to undertake destuffing of the goods least, it may be alleged by the exporter that the Customs Authority had not properly maintained the goods or might raise some claim in respect thereof. But, these are not questions with which the owner of the containers can involve itself. These are not questions with which the owner of the container is concerned. If the law permits detention or seizure of the goods, if law permits storing or such goods in warehouses or such other place, in that event, it is open to the Customs Authority to do it. The Customs Authority under the law can detain the goods, confiscate the goods. But as observed earlier, it is not supposed to detain the container, nor it can confiscate the same.
5.4 The Customs Authorities were alive to this situation and had issued such Circulars. One such Circular was issued on 25th of July, 1995 by the Ministry of Finance, Department of Revenue, Central Board of Excise and Customs. There, it was instructed that the containers should not be detained longer than the period of six months. In cases where investigations are continuing, periods are extended. But this should not be done, as was pointed out in the said Circular. Section 49 provides for storage of imported goods in warehouse pending clearance. Therefore, it is up to the Customs Authority to store these goods in Customs warehouse pending release. But, no provision is provided for in the Customs Act in respect of storing of goods, which are to be exported. In such a case when the goods are seized, it awaits release or confiscation, as the case may be, so long the investigation is not over. Therefore, there cannot be a different treatment in respect of goods meant for import or export in the matter of storage in the Customs warehouses, when such goods are subjected to any proceedings under the Customs Act.
5.5 However, this Circular was questioned by Mr. Mullick as well as Mr. Kalyan Bandopadhyay, on the ground that this Circular relates to imports and not exports. As such it has no manner of application in respect of exports. But, such a differentiation does not seem to be of any substance. Because it was dealing with the fate of containers. It refers to imported containers. The process is meant for dealing with imported containers. In the present case, the containers are imported, which are to be returned. The purpose of the said Circular was return of the imported containers. Therefore, if a container is returned through export of goods stuffed in it, the same principle can very well be made applicable.
5.6 However, this question is no more matter of debate, by reason of Circular No. 83/98-Cus., dated 5th November, 1998, a copy of which was produced before this Court and is taken on record. This Circular may be found at Page 2054 of Excise & Customs Circulars and Clarifications. In order to appreciate the said Circular, we may quote the relevant portion thereof as hereafter :-
"Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Movement of containers and containerised cargo-Instruction regarding.
M/s. Indian Freight Container Manufacturers Association has represented to Government of India that a huge dumping of empty containers into the system is affecting the off-take of containers manufactured in the country because of lack of monitoring of the requirement to re-export the imported containers within six months. Moreover, extension beyond six months is granted by Customs from time to time routinely. Ministry of Commerce have requested that in addition to close monitoring, bank guarantee be taken for import of containers.
2. On the issue of clearance of containerised cargo and re-export of marine containers, the attention is drawn to Board's earlier Circular F. No. 434/17/94-Cus. IV, dated 16th May, 1994. The Notification No. 104/94 as amended by Notification No. 101/95, dated 20-5-1995 exempts the freight containers of durable nature from payment of whole of the duty of Customs and the whole of additional duty payable provided the containers are re-exported within six months for which a bond is executed by the importers or the shipping agent. It was stressed in the Circular dated 16-5-1994 that extension may not be given routinely.
3. It has been observed that as and when request for extension beyond 6 months period is received, the Customs House are routinely granting such extensions. This casual approach leads to the possibility of use of such containers for domestic trade in addition to affecting the domestic industry engaged in manufacturing of marine containers.
4. It has been felt that there is need to exercise more effective control over the clearance of marine freight containers and their subsequent reexport. Separate account may be kept and bonds taken for import of loaded containers and empty containers. The re-export bonds for clearance of containers should be regularly monitored. The demands in terms of bond should be issued immediately on expiry of six months. The Assistant Commissioner may grant an extension beyond 6 months up to further 3 months for the reasons recorded in writing. The extension beyond 9 months should not be granted, as a matter of routine. However, in case of genuine difficulty further extension of a period not exceeding six months at a time may be granted by the Commissioner of Customs on merits of each case for the reasons recorded in writing.
5. In case the goods are required to be detained for detailed examination, investigations, etc. the goods should be destuffed from the container and stored in any warehouse. The containers should be released so that the shipping agents can fulfil their commitment of re-exporting the container within six months of their import.
6. The instructions may kindly be brought to the notice of all officers by way of issuing suitable standing orders. The difficulty if any in implementation of this circular may kindly be brought to the notice of Board."
5.7 It appears that a container can be detained for six months, it can be extended by another three months, no extension shall be granted beyond nine months as a matter of routine. In case the goods are required to be detained for detailed examination or investigation, the goods should be destuffed from the container and stored in any warehouse. The containers shall be released soon, so that the shipping agents can fulfil their commitment of re-exporting the containers within six months of their import. Therefore, in terms of Section 49, Customs Act, even goods meant for exportation can also be stored in Customs warehouses. In case there is no Customs warehouse, it may be stored in any warehouse either Government or licensed warehouse, as defined in Section 2(43) read with Section 57 and 58 as the case may be.
5.8 In order to ensure that no damage is caused to the goods, the Customs Authority is expected to take proper care if the goods are stored in Customs warehouse. The same principle will apply if it is stored in the Central Warehouse or any other warehouse. Chapter IX of the Customs Act provides for warehousing. It has provided for detailed provision of warehousing of goods. The entire provision deals with imported goods or dutiable imported goods, as the case may be. But in case of necessity, the said provision may also apply to goods meant for exportation or which are subjected to investigation, even though it may not be imported goods or it may not be dutiable goods.
5.9 In Khwaja Nazir Ahmed v. King Emperor, AIR 1936 PC 253, the Privy Council had laid down that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. This decision was relied upon by Mr. Mullick in order to strengthen his submission with regard to the release of the container and justification of the initiation of the investigation. Inasmuch as, unless there are provisions provided for such an action in respect of 'export goods', the jurisdiction cannot be exercised. The said proposition cannot be questioned. But, in the present case, as discussed above, on the materials disclosed before this Court, the liability cannot be wiped out by the actual exportation on being successful in the attempt to export improperly, when there are reasons to believe that there were infraction of the Customs Act by the exporter. Therefore, reference to the said decision will not help Mr. Mullick.
ORDER
6. In these circumstances at the option of the exporter, the goods may be warehoused at the Central warehouse at Vizag or it may be stored in Customs warehouse at Kolkata, for which the cost is to be borne by the exporter. For the purpose of destuffing the goods from the containers, the Customs Authority shall issue notice to the exporter, fixing a date, giving at least a week's time for the purpose of destuffing the goods in the presence of the agent of the exporter and storing the same in the Central warehouse or otherwise, as the case may be, after such destuffing. In case the parties do agree, a Special Officer may be appointed for the purpose, the cost of which is to be borne by the exporter, in whose presence the goods should be destuffed and be stored in the warehouse subject to the result of the investigation, until the goods are released or confiscated, as the case may be. However, the Customs Authority shall complete the investigation and take appropriate decision after giving opportunity to the exporter in accordance with law, as the case may be, as early as possible preferably within a period of three months from the date of communication of this order. The container should be released within a fortnight from the date of communication of this order.
With this observation, this writ petition is allowed.