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Judgment
S.R Nayak, J.—A short, but an important question of law of general importance that arises for decision in this writ petition is whether a custodian appointed u/s 45 of the Customs Act, 1962 (for short ''the Act'') is entitled to claim demurrage charges only in respect of the period during which the imported goods are in actual physical custody of such custodian or whether such custodian can also claim demurrage charges from the date of unloading of the imported goods in a custom area.
To put the case of the petitioner in brief is: The petitioner company is a public limited company, which is engaged in the manufacture of Telecom Cables Jointing Kits. One of the components of the Telecom Cable Jointing Kits is a heat shrink sleeve. The petitioner has a manufacturing unit at IDA, Mallapur, whereas, inter alia, the heat shrink profiles which are imported, are processed and converted into heat shrink sleeves. The petitioner has technical and financial collaboration with RXS Schrumpftechnik, Garnituren Gmbh, Germany. The petitioner company in the course of its business imports profiles for heat shrink sleeves from the said collaborator. Accordingly, the petitioner company in the course of business had imported several consignments under five Bills of Entry Nos.058 3389 8465; 058 3389 8480; 058 3433 2045; 058 3389 0496 and 058 3389 8056 during the months of April to June, 1994. According to the petitioner company, on importation, these goods were detained by the Indian Airlines, the 3rd respondent herein on the ground that they were too large and difficult to handle. It appears that the petitioner company did not clear the goods despite repeated reminders from the Indian Airlines. Under those circumstances, the Cargo Manager of the Indian Airlines issued a letter dated 20-7-1994 to the petitioner company. It reads :
INDIAN AIRLINES
Our Reference Hyd: CGO: 16:473
Dated 20-7-1994
To
Managing Director, Telecom Limited, Chandralok, underabad
Dear Sir,
Sub :--Consignments from Germany in various AW
We acknowledge the receipt of your letter XL: 291:94:1479 dated 15-7-1994 on the subject.
In this connection, as desired by you we are furnishing below the arrival dates and flight Nos. against the shipment concerned.
058 3389 8465 - 4 of 30 by flight IC 920 of 3.5.94
4 of 30 each by flight IC 920 of 4 and 11 May, 1994
6 of 30 by flight IC 920 of 14.5.94
058 3389 8480 - 16 of 30 and 14 of 30 by flights IC 920 of 22/23 and 24th May'' 94
058 3343 2045 - 10 of 60 and 02 of 60 by flights IC 920 of 27 and 28 May'' 94
15 of 60 and 18 of 60 by flights IC920 of 29/ and 22/24 June'' 94
05 each of 60 by flights IC 920 of 31.5.94, 14 & 15 June'' 94
058 3389 0496 - 05 of 19 by flight IC 920 of 29.4.94
058 3389 8056 - 05 of 17 each by flights IC 920 of 29 and 30th April''94
As per the agreed norm (between STC/ Customs/ and Airlines) these odd size parcels were detained at Airport and respective acknowledgments obtained on the same day.
We have on several occasions informed your office about the arrival and requested you to clear the consignments. Even after two months after arrival of the parcels and due to non-liftment of them by you from our premises, the parcels were shifted to APSTC at our expense as below:
24 parcels on 11-7-1994 and 2. balance 99 parcels on 13-7-1994.
This is for your kind information.
Thanking you and assuring you our best attention at all time.
Yours faithfully,
For Indian Airlines Limited
Sd/- Cargo Manager."
Thereafterwards, it appears that the petitioner company contacted the Andhra Pradesh State Trading Corporation, Hyderabad, the 2nd respondent herein, which is appointed as custodian u/s 45 of the Act for the purpose of issuing the receipt-cum-bill to enable the petitioner to pay the handling charges and ancillary charges, for the purpose of clearance of goods for home consumption. The 2nd respondent told the petitioner that demurrages would be chargeable from the day the goods were unloaded at the airport. The petitioner by his letter dated 29-7-1994 addressed to the 2nd respondent stated that the 2nd respondent as the custodian of Cargo Air Terminal Complex, Hyderabad (for short "CATCH") is entitled to collect demurrages only for the period during which the goods were in the actual physical custody of the 2nd respondent and that too after exclusion of seven days in accordance with the Circular No.2, dated 22-9-1989 issued by the CATCH itself. Thereafterwards, it is stated that the petitioner company submitted fifteen applications for clearance of import cargo on 3rd August, 1994. In the said application in Column No.3, the date of landing of cargo at CATCH, the petitioner company has mentioned the dates as "12th and 13th July, 1994". The 2nd respondent has scored off the date of the landing of cargo at CATCH, as filled by the petitioner and has charged demurrage for the period during which the imported goods were not in the actual physical custody of the 2nd respondent. The petitioner company addressed a letter dated 2-8-1994 to the Deputy Collector of Customs in the Office of the Collector of Customs, Hyderabad, the 1st respondent herein, to direct/the 2nd respondent to charge demurrage only from the day on which the goods landed in the godowns of the 2nd respondent and that the petitioner reliably understands that the 1st respondent has advised the 2nd respondent that the demurrage is not to be collected for the period anterior to 12/13-7-1994 on which dates alone the imported goods landed at CATCH. So alleging the writ petition is filed praying for the following relief:
"For the reasons stated in the accompanying affidavit, the petitioner herein prays that this Hon''ble Court may be pleased to issue a writ, order or direction especially in the nature of mandamus directing the 2nd respondent to issue a receipt-cum-bill for handling charges, ancillary charges and demurrages only for the period during which the imported goods were in the custody of the 2nd respondent at Cargo Air Terminal Complex, Hyderabad (CATCH) and pass such other order(s) as this Hon''ble Court deems fit and proper in the circumstances of the case".
In response to rule nisi and opposing the writ petition, the 2nd respondent has filed counter-affidavit. The material averments in the counter-affidavit read : The Collector of Customs, in exercise of the power vested u/s 45(1) of the Act has appointed the 2nd respondent as custodian in terms of a public notice dated 31-12-1986. As and when cargo arrives at the Airport, Indian Airlines issues Cargo Arrival Notice to the party concerned irrespective of the goods being small or big in size. No sooner the party is given such intimation, the party has to file a Bill of Entry. Insofar as the goods of small sizes are concerned, the physical custody of the same is given to the 2nd respondent by Indian Airlines. As regards the big and odd sizes of goods, the Indian Airlines issues a Detention Certificate to the Assistant Collector of Customs marking a copy to the 2nd respondent. The Detention Certificate is issued because the goods cannot be removed easily. Unless and until the person pays the customs duty and produces proof of such payment, the 2nd respondent does not handover the goods which are in its custody. Whenever a person imports by air on which customs duty is payable, the consignments are kept in the custody of the 2nd respondent and thereafter the importer of the consignment has to present a Bill of Entry with the Indian Airlines. There afterwards, the Indian Airlines verifies whether the duty payable has been correctly paid or not and thereafter on receipt of the said Bill of Entry, after pass-out from Customs charge, the 2nd respondent Corporation delivers the consignment and till such time the consignments are kept in the custody of the 2nd respondent as per Circular No.2, dated 22-9-1989 issued by CATCH. If the consignor files a bill of entry and pays the customs duty within a period of seven days from the date of landing of the cargo no demurrages are leviable by the 2nd respondent corporation. But, in the event if the Bill of Entry is not filed within seven days in accordance with the said circular, the 2nd respondent is entitled under law to levy and collect demurrages. As per the understanding reached between the Indian Airlines, the Department of Customs and the 2nd respondent, in case of odd and big size goods, the person who imports them alone is responsible for transportation of the same. Once the consignment lands at Hyderabad Airport from then onwards, it is the 2nd respondent under whose custody the consignment is kept and if the said consignment is not lifted in accordance with the Circular dated 22-9-1989, the importer has to pay demurrages from the date of unloading of the goods at the airport. Lastly, it is stated that the 2nd respondent is not aware of the letter of the petitioner company dated 2-8-1994 addressed to the Deputy Collector of Customs and at any rate the 1st respondent - Collector did not advise the 2nd respondent that demurrages need not be collected for the period anterior to the dates on which the goods were shifted to the godowns of the 2nd respondent.
The Indian Airlines, 3rd respondent herein has also filed a separate counter-affidavit. The material averments in the counter-affidavit are: The 2nd respondent is the customs custodian at Hyderabad Airport. The Indian Airlines in order to streamline handling of imported international cargo convened a meeting of certain identified parties like Andhra Pradesh State Trading Corporation, Andhra Pradesh Warehousing Corporation, State Bank of Hyderabad and Air India and Customs authority on 7-2-1989 and discussed all aspects/matters relating to customs clearance of imported consignments landing at Hyderabad Airport- Storage and Clearance at CATCH and it has evolved 14 norms for implementation. As per clause (3) thereof, "heavy packages which for practical reasons cannot be transported to the godown of 2nd respondent, such packages would be customs examined and delivery made at the airport subject to the fulfilment of all other formalities such as payment of duty at the SBH''s Counter, and also the usual charges of the complex etc. ....." Once the international cargo lands in the airport and the same is acknowledged by the customs, the 2nd respondent is deemed to be in the custody of such cargo. The cargo in question are very heavy packages and therefore they were retained in cargo section of the airport in terms of clause (3) of the norms. Inspite of several communications sent to the petitioner to clear the goods, the petitioner did not evince any interest to clear the goods. The cargo was unnecessarily occupying the limited space available in the cargo section of the airport and that there was no space at all to keep the cargo and in that view of the matter, the Indian Airlines authorities at their own cost transported the consignments in open lorries and handed over to the 2nd respondent.
The 1st contention of Sri S. Ravi, learned Counsel for the petitioner is that the demand for demurrages made by the 2nd respondent for a period when the 2nd respondent was not holding the custody of the goods at all, is patently illegal, arbitrary and violative of Article 14 of the Constitution. The learned Counsel would maintain that the 2nd respondent as custodian of CATCH is entitled to collect demurrages only for the period during which the imported goods were physically in the custody of the 2nd respondent and that too after exclusion of seven days in accordance with the guidelines contained in Circular No.2, dated 22-9-1989 issued by the CATCH itself. Adverting to the facts of this case, the learned Counsel would point out that the consignments landed in the Hyderabad Airport during April, May and June, 1994, whereas those goods were handed over to the 2nd respondent only on l2/13th July, 1994 by the Indian Airlines and therefore the demand made by the 2nd respondent to pay the demurrage charges right from the date of landing at the airport i.e., even before the goods were transported by the Indian Airlines and handed over to the 2nd respondent is totally unjustified, illegal. The alternative contention of Sri S. Ravi, learned Counsel is that when the consignments landed in the months of April, May and June, 1994 at the Hyderabad Airport, those goods were lying in the open space without any protection at the mercy of sun and rain which was extremely copious during that period and therefore the 2nd respondent is not entitled to claim any demurrages for the period during which the imported goods were lying in open without any protection, particularly because principles of fairness in action requires that the 2nd respondent is legally bound to keep the imported goods under its protection and since the 2nd respondent did not provide any protection to the imported goods during those days, it would be totally irrational for the 2nd respondent to claim demurrages even in respect of that period. Lastly, Sri S. Ravi, learned Counsel for the petitioner would contend that in the Public Notice No.151/86 (Customs), dated 31-12-1986 issued by the Collector of Customs and Central Excise, Hyderabad, u/s 45(1) of the Act appointing the 2nd respondent as the custodian of all imported goods landed at Airport, Hyderabad, the area in which the imported goods may be stored is confined only to the premises bearing No.1-10-1 to 8, Main Road, Begumpet, Hyderabad- 500 004, and therefore, unless the imported goods are handed over by the authorities of the Indian Airlines to the 2nd respondent - custodian and the same are stored in the above notified premises, the 2nd respondent is not entitled to claim demurrages. In support of this contention, the learned Counsel would seek to draw support from the following observation of the Supreme Court in para 41 of the judgment in International Airports Authority of India and Others Vs. Grand Slam International and Others,
"For the occupation by the imported goods of space in the sea-port or airport, the Board or the Authority which is its proprietor is entitled to charge the importer".
The learned Counsel would maintain that unless the imported goods are shifted and kept in the custody of the 2nd respondent in the premise bearing No.1-10-1 to 8, Main Road, Begumpet, Hyderabad - 500 004, no demurrage charges can be collected from the petitioner. On the other hand, the learned Counsel appearing for the respondents would support the demand made by the 2nd respondent.
In view of the pleadings of the parties and the contentions raised therein and the arguments placed before the Court, the only question that arises for our consideration and decision is whether the 2nd respondent, A.P. State Trading Corporation who is appointed as customs custodian by the Collector of Customs, Hyderabad Collectorate, u/s 45(1) of the Act is entitled to claim the demurrage charges right from the date of landing of the consignments at the Hyderabad Airport or it is entitled to claim damages only with effect from 12/13th July, 1994, the days on which the physical possession of the imported goods were handed over to the 2nd respondent by the authorities of the Indian Airlines. In deciding this question, it is relevant at the threshold to notice certain relevant statutory provisions. Section 45 of the Customs Act reads:
Restrictions on custody and removal of imported goods :--(1) Save as otherwise provided in any law for the time being in force, 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 are transshipped in accordance with the provisions of Chapter VIII.
(2) The person having custody of any imported goods in a customs area, whether under the provisions of subsection (1) or under any law for time being in force,--
(a) shall keep a record of such goods and send a copy thereof to the proper officer;
(b) 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.
(3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), 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 u/s 30 for the arrival of the conveyance in which the said goods were carried."
Sub-sections (10), (11), (12) and (13) of Section 2 of the Customs Act define the terms "customs airport", "customs area", "customs port" and "customs station" as follows:
2(10) "customs airport" means any airport appointed under clause (a) of Section 7 to be a customs airport.
2(11) "customs area" means 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;
2(12) "customs port" means 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;
2(13) "customs station" means any customs port, customs airport or land customs station.
In this case by and large, the material facts are not in dispute. The material facts are : Fifteen (15) consignments of components for cables jointing kits were imported by the petitioner company from Germany and those consignments landed in the Hyderabad Airport during April, May and June, 1994. These goods were physically handed over to the 2nd respondent only on 12/13-7-1994 by the authorities of the Indian Airlines the only factual controversy between the petitioner and the respondents is that when these goods were lying in the cargo section of the airport, whether they were given any protection or not. According to the petitioner company, they were subjected to vagaries of rain, wind and heat whereas this allegation was denied by the respondents.
The provisions of Section 45 of the Act make it very clear that once the imported goods are unloaded in a custom area, such goods shall remain in the custody of the custodian. In order to hold that a custodian appointed u/s 45(1) of the Act should be the custodian of the imported goods, three conditions should coexist. The 1st condition is that the goods in question should be imported goods; the 2nd condition is that such imported goods are unloaded and the 3rd condition is that such unloading takes place in a customs area. If all these three conditions co-exist, then, by force of statutory mandate contained in sub-section (1) of Section 45 of the Act, the imported goods should remain in the custody of the custodian only. If this legal position is kept in our mind and look at the facts of this case, there will not be any difficulty or legal impediment for holding that the fifteen consignments landed in Hyderabad Airport during the months of April, May and June, 1994, were in the custody of the 2nd respondent immediately after unloading of the same at the Hyderabad Airport. There is no controversy between the parties that the goods in question are imported goods; the goods were unloaded at the Hyderabad Airport which is a "customs area" as defined under sub-section (11) of Section 2 of the Act. Before us, the validity of the statutory mandate contained in subsection (1) of Section 45 of the Act to the effect that all imported goods, "unloaded in a customs area shall remain in the custody of such person" thereby meaning custodian, is not assailed. Therefore, we have no hesitation to hold that the 2nd respondent had the custody of the imported goods immediately after unloading the same in the months of April, May and June, 1994, by force of the above noticed statutory mandate in sub-section (1) of Section 45. The language used in sub-section (1) of Section 45 relating to the above mandate is quite clear, plain, precise and unambiguous and it does not admit any other meaning than the one we have adopted. Besides this statutory position, it is also the specific case of the Indian Airlines as pleaded in their counter-affidavit that once the international cargo lands in the airport, such goods will be in the custody of the custodian i.e., the 2nd respondent. Merely, because the imported goods were not physically handed over to the 2nd respondent and they were not kept in the godowns of the 2nd respondent immediately after unloading, it cannot be said that the 2nd respondent did not have the custody of the imported goods before 12th and 13th of July, 1994 when the goods were shifted to the godowns of the 2nd respondent. It is also relevant to note at this juncture that as per the clause (3) of the norms evolved in the meeting held by the authorities of the Indian Airlines on 7-2-1989 with the representatives of the Andhra Pradesh State Trading Corporation, Andhra Pradesh Ware Housing Corporation, State Bank of Hyderabad, Air India and Customs authorities, if heavy packages which for practical reasons cannot be transported to the godowns of the 2nd respondent, such packages would be customs examined and delivery made at the airport subject to the fulfilment of all other formalities such as payment of duty at the SBH''s counter, and also the usual charges of the complex etc. In other words, this clause permits the keeping of the transported goods at the airport itself and also provides for delivery of the goods to the consignee at the airport itself without shifting the same to the godowns of the 2nd respondent. Looking from that angle also, it cannot be said that the demand made by the 2nd respondent from the petitioner to pay demurrage charges even in respect of the period during which the imported goods were not in physical custody of the 2nd respondent in its godowns. It is also stated in the counter-affidavit filed by the 2nd respondent that it has been the practice that all large and odd sized imported goods are always kept at the cargo section of the airport itself in terms of clause (3) of the norms evolved in the meeting held on 7-2-1989, and this factual assertion made in the counter-affidavit is not denied by the petitioner by filing any reply affidavit. In that view of the matter, we unhesitatingly reject the 1st contention of the learned Counsel for the petitioner.
This takes us to the second alternative contention of the learned Counsel for the petitioner. In the entire affidavit filed in support of the writ petition, not a word is said regarding the factual allegations put forth by the learned Counsel for the petitioner at the time of argument that the imported goods were lying in the open without any protection and at the mercy of sun and rain and on account of the same, the goods were damaged. However, the petitioner in his letter dated 29-7-1994 addressed to the General Manager of the 2nd respondent has stated-
"The result has been that all these packages were lying in the open without any protection at the mercy of sun and rain, which was extremely copious during this period".
In this letter also except stating that the goods were lying in the open, not a word is said about any damage caused to the goods. Be that as it may, even assuming that on account of the fact that the imported goods were lying in the open and damage was caused to the imported goods on account of the negligence of the authorities of the Indian Airlines, and that the petitioner is entitled to seek damages either from the authorities of Indian Airlines or from the 2nd respondent, it has to workout remedies for that relief in a competent civil Court. That is not a question which arises for decision in this case. The Supreme Court in Trustees of the Port of Madras through its Chairman Vs. M/s. K.P.V. Sheikh of Mohd. Rowther and Co. Pvt. Ltd. and another, , has opined mat if an authority is custodian of the imported goods because of the provisions of Section 45 of the Act, that authority would be entitled to charge demurrages for the imported goods in its custody and make the importer or consignee liable for the same even for the period during which he/it was unable to clear the goods from the customs area due to fault on the part of the customs authorities or of other authorities which might have issued detention certificates owning such fault. In this case, firstly there is a total lack of pleading and proof to show that the imported goods were damaged and also regarding the quantum of damage. That allegation also does not form part of the pleading of the petitioner filed in this Court. The vague allegation made in the letter dated 29-7-1994 addressed to the General Manager of the 2nd respondent cannot be equated to a responsible and accountable pleading in support of this writ petition on the basis of which the learned Counsel for the petitioner could validly possibly advance the second contention noted above.
We do not find any merit in the last contention of the learned Counsel for the petitioner also. Public Notice No.151/86 (Customs), dated 31-12-1986 issued by the Collector of Customs and Central Excise, Hyderabad u/s 45(1) of the Act reads:
"Office of the Collector of Customs & Central Excise, CLS Building, Nampally Station Road, Hyderabad - 500 001
Public Notice No. 151/86 (Customs) Dated 31st Dec., 1986
It is notified for the information of the Trade and General Public that in pursuance of the powers vested u/s 45(1) of the Customs Act, 1962 (52 of 1962), I, R. Gopalnathan, Collector of Customs and Central Excise, Hyderabad, hereby approve the M/s. A.P. State Trading Corporation Ltd., (as the Terminal Operator of the Cargo Air Terminal Complex, presently located at 1-10-1 to 8, Main Road, Begumpet, Hyderabad), Hyderabad - 500 004 as Custodian of all imported goods landed at Airport, Hyderabad until they are cleared for home consumption or are warehoused or are transshipped in accordance with the provisions of Chapter VIII of the Customs Act, 1962.
This Public Notice conies into force with immediate effect.
//Attested//
Sd/- Sd/- (T. Jagapathi Rao) (R. Gopinathan) Asst. Collector (Customs) Collector (Issued from File C.No. VIII/1/9/81- Customs)."
It is true that in the above public notice, the location of the 2nd respondent is shown to be at the premises bearing No.1-10-1 to 8, Main Road, Begumpet, Hyderabad - 500 004. But, that space in which the office and the godowns of the 2nd respondent are located cannot be equated to "customs area" of the Hyderabad Airport, within the meaning of that term as defined under sub-section (11) of Section 2 of the Act. At any rate, the description of the premises, rather address, of the 2nd respondent mentioned in the public notice dated 31-12-1986 cannot have the effect of modifying the statutory definition of "customs area". "Customs area" may include the above premises of the 2nd respondent, but it cannot be said that the above premises of the 2nd respondent would alone constitute the customs area of the Hyderabad Airport and the remaining space in the customs airport does not form part of the customs area. Such an interpretation, if adopted, would cause violence to the clear, plain and unambiguous language employed in the definition of the term "customs area" and restrict its meaning and content, and such an interpretation is totally impermissible in law having due regard to the well settled principles and rules governing interpretation/construction of statutes. The observation of the Supreme Court in para (41) of the judgment in the case of Grand Slam International (supra) noticed above, would in no way advance the last contention of the learned Counsel. By that observation, the Apex Court has only stated that the Board or the Authority which may be the custodian, as the case may be, is entitled to charge the importer for the space provided by it for the occupation of the imported goods. That judgment is not an authority to state that the "customs area" includes only that area or the premises in which the office and godowns of the custodian appointed u/s 45 of the Act are located and not the remaining space in the customs airport. Therefore, we do not find any merit in the last contention of the learned Counsel for the petitioner and the same is rejected as untenable.
In the result and for the foregoing reasons, we dismiss the writ petition with no order as to costs.