S. Ravindra Bhat, J.
1. The petitioner in this proceeding (International Lease Finance Corporation, described hereafter as “ILFC”) claims a direction to the third respondent (hereafter “CELEBI” to refund demurrage amount, paid by it pursuant to directions of the court, to secure the release of its aircraft engine. CELEBI’s refusal to refund the amount is based on its position that the demurrage charges were collected justly.
2. The present petition is afourth proceeding in a series of writ petitions by ILFC. The petitioner owns and leases aircrafts had entered into a transaction with M/s Kingfisher Airlines. Kingfisher’s defaults (unconnected with ILFC) led to detention of some aircrafts by various revenue authorities including the customs department, as a consequence of which, the engine of one of these aircrafts was removed (cannibalized).
3. ILFC the lessor and the owner of the aircraft, for safeguarding its interest in the craft wished to fly back the aircraft. To this end, it assisted the entry of an aircraft engine. The engine was flown in showing Kingfisher Airlines as the importer. It was immediately detained; initially by the Service Tax department, which wished to exact amounts due. Later, the service tax proceedings were dropped. The customs authorities now moved in and detained the engine. Then ILFC, (the owner of the engine) filed the W.P.(C) 2937/2013. That writ petition was disposed of by order dated 11.02.2014. To avoid deterioration of functionality of the engine, the petitioner was permitted to furnish a bank guarantee in the sum of Rs. 8 crores, of which Rs. 1 crore was to be deposited within six weeks of the order, (directing release of the engine). The Customs Authorities were enjoined to adjudicate the proceedings and pass appropriate orders. ILFC too had to comply with all the pre-conditions and necessary formalities, including filing the bill of lading to indicate its ownership. ILFC was permitted to re-export the aircraft by paying the entire amount of Rs. 17.09 crores, based upon the determination of liability of basic duty and penalty by the Customs Authorities, without prejudice to its rights. This order was made, in the course of a clarification, recorded on an application by ILFC; the order directed that after release of the engine, it "shall be allowed to be re-exported". The rights and contentions of both the parties-the Revenue and the petitioner i.e., the owner of the engine, were kept open. The order dated 28.07.2014 further stated that:
“It is also pertinent to note that since the passing of the order dated 11.02.2014 the Commissioner of Customs had also delivered his adjudication order on 25.06.2014 whereby the total demand of Rs. 17,09,48.420/- has been raised on account of custom duty, penalty, redemption filed and interest calculated as of today. Furthermore, CELEBI who has been impleaded as Respondent no. 6 has claimed a demurrage of Rs. 6.5 crores as of today.
Mr. Sethi, Learned Senior Counsel appearing on behalf of the petitioner/applicant, submits that he may be permitted to release aircraft engine for re-export on the petitioners paying the entire amount of Rs. 17,09,48,420/- as well as the demurrage charges to CELEBI but without prejudice to the right to contest the same before appropriate fora. For this purpose, Mr. Sethi submitted that the bank guarantee of Rs. 8 crores may be encashed by- the custom authorities and the remaining amount out of Rs. 17,09,48A20l- after giving cash deposit of Rs. l crore shall be paid by Mr. Sethi's client with the Commissioner of Customs (Import & General) without prejudice to his right’s and contentions. The petitioner may do so. ln doing so, the aircraft engine shall be released to the petitioner without prejudice to the petitioner's right to challenge the adjudication order. CELEBI shall release the aircraft engine upon evidence that the custom dues as above has been paid and, on the petitioner’s, clearing the demurrage charges which approximately comes to Rs. 6.5 crores. The demurrage charges. calculated upto date of the release shall be paid by the petitioner. On doing so, the aircraft engine shall be released to for petitioner for re-export. The said payment made by the petitioner shall be without prejudice to the rights and contentions of the petitioner and it would be open to the petitioner to challenge the adjudication order as well as the demurrage charges levied by CELEBI in accordance with law.
If it is ultimately decided by the customs authorities or by any other court that no fine, penalty, personal penalty, a warning could have been imposed by the custom authorities, the above amount of demurrage paid by the petitioner to CELBI as indicated above shall be refunded by CELEBI to the petitioner in terms of the policy for waiver of demurrage charges notified by Airport Authority of India in 1999. This direction been given in terms of the judgment delivered by this court in Trip Communication Pvt. Ltd. bearing W.P.(C) No. 7438/2012 decided on 28.03.2014.”
4. Aggrieved by the Commissioner's decision assessing the aircraft to duty and proposing confiscation, ILFC appealed to the Tribunal [CESTAT], which by its order dated 23.06.2017, accepted its plea and allowed the appeal as regards penalty and confiscation. However, it was held liable for payment of duty since the engine had been imported. The two amounts (towards penalty and redemption fee) were set aside. ILFC approached this court again by filing W.P.(C) 6544/2018, claiming refund of the penalty amount, which had been deposited by it during the pendency of the appeal, since those amounts were not released by the Customs Authorities. This Court by its Division Bench order dated 24.09.2018 directed the release of those amounts after considering the entirety of the circumstances.
5. In another writ petition (WP 6344/2018) ILFC claimed a direction to the customs authorities for duty draw-back in terms of Sections 71 and 74 of the Customs Act and argued that since the re-export (of the aircraft engine) after import and its utilization (towards safe return out of the country) and not for any other purpose, there was. No occasion for its commercial use. The customs authorities' position was that the drawback was impermissible on account of the deficiency memo which could not be adequately satisfied. It was submitted that the deficiency memo pertains to the requirement of the concerned entity [which seeks export] filing a declaration of "Guaranteed Remittance" document. It was submitted that in the peculiar facts and circumstances of this case, the question of remittance did not arise.
6. While allowing the third writ petition, by its judgment (dated 10-01-2019), this court observed as follows:
“8. It is evident from the above discussion that the petitioner was compelled by the unfolding of the circumstances-which perhaps started with the unfortunate event of leasing the aircrafts in the first instance to M/s. Kingfisher Airlines, and later the inability to meet the Revenue's demands. The first setback was that the petitioner's aircraft was detained, and subsequently seizure of the aircraft engine by the Customs authorities. Initially Service Tax Authorities laid claim over aircrafts. Later the jurisdiction of the Customs Authorities was invoked, who stated that the aircraft cannot be flown back. By that time the engine had been cannibalized. The petitioner who was anxious as the owner of the aircraft, sought to bring the engine for the sole purpose of facilitating the movement of the aircraft back to where it came from.
9. The first proceedings preferred before this Court in W.P.(C) 2937/2013 resulted in the release of the aircraft and imposition of various conditions including furnishing of bank guarantee etc. Those orders were modified and the petitioner paid Rs. 17.09 crores. The Customs Authorities assessed the Show Cause Notice and raised the demand; they also imposed penalty and sought to confiscate the goods i.e. the aircraft engine. Eventually CESTAT set aside the penalty and confiscation. Even at that stage, the Customs Authorities were recalcitrant and did not refund the penalty amount, which had been deposited way back in 2014. The amounts were released to the petitioner eventually after the direction of this Court in W.P.(C) 6544/2018.
10. If one sees the matter from the above aspects, the issue which this Court has to address itself to is whether the petitioner can claim entitlement to the duty drawback under Section 74 of the Customs Act, which reads as follows:
11. The Revenue's stand is premised upon the applicability of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 [FEMA Regulations of 2000]. It is interesting to note that although the definition of 'Export' in Regulation 2(iv) is inclusive, the drift of that Regulation perhaps deals with exports envisioned in the course of trade, as evident from the emphasis placed upon "export includes the taking or sending out of goods by land, sea or air, on consignment or by way of sale, lease, hire-purchase, or under any other arrangement by whatever name called". This Court is of the opinion that further discussion on this is not necessary, as the matter ultimately turns on the facts of the present case.
12. The exemptions under the original Regulation 4, by and large envisioned non-commercial export. Significantly, Regulation 4(f) has dealt with the export of aircraft or aircraft engine and spare parts but for "overhauling and/or repairs abroad subject to their re-import into India". The other condition was goods imported free of cost on re-export basis. The amendment by Regulation 4 generally empowered RBI subject to the terms and conditions stipulated by it to promote the export.
13. In case the Revenue's stand were to be accepted, the petitioner would be bound to file a Guaranteed Remittance Declaration, which in turn would imply that it would remit back the amounts. The declaration is to ensure that the exporter [i.e. Indian resident by Regulation 7 of the said regulations] would receive the concerned amount. The requirement of a waiver, in the alternative, would arise only if the principal requirement of the GR declaration is at all attracted. In this case, it is undisputed that the exporter i.e. owner and the person entitled to the engine were one and the same i.e. the petitioner. Having regard to these circumstances, the necessity for blind adherence to a declaration and further necessity for waiver, in the opinion of the Court was entirely uncalled for. There is sufficient indication in the Regulations-i.e. the manner of definition of export and even the phraseology of Regulations regarding non-commercial exports-that in cases like the present one, if compelling circumstances lead the original owner to bring in goods to remedy an unforeseen eventuality, such as the need to fly back an aircraft, it is not to be subjected to such requirements. The absurdity is writ large on the face of the record.
14. Having regard to these facts, the Court is of the opinion that there is no question of respondents/Customs Authorities insisting that the GR requirement was mandatory or that, in its absence, exemption from RBI was necessary. For the above reasons, the writ petition deserves to and accordingly succeeds. A direction is given to the respondents to process the drawback claim of the petitioner and release the amounts to the extent permitted in law, within four weeks. Interest on the said amount, due to the petitioner shall be payable, as permissible under Section 75A.
15. As in the directions in W.P.(C) 6544/2018, in the present case too, the respondents are directed to ensure that the refund of the amount with interest be remitted to the petitioner's account, the details of which should be disclosed within next one week to the Customs Authorities. Furthermore, in case the account is an overseas account or if the petitioner per se, does not have any account in India but seeks remittance into an account in India of another entity, the respondents shall ensure that the amount would be remitted into that account in the foreign currency or its equivalent in the Indian rupees.”
7. ILFC’s argument in support of its writ petition is that firstly, demurrage could not have been validly collected; in this regard it is stated that with the CESTAT’s findings in its order dated 23 June 2017, the illegality in the order of detention is undeniable. Secondly, ILFC’s counsel urges that this court’s order dated 28th July, 2014 was forthright in that the amount of demurrage paid by IFCI to CELBI “as indicated above shall be refunded by CELEBI to the petitioner” in terms of the policy for waiver of demurrage charges notified by Airport Authority of India in 1999. The direction was to be “in terms of the judgment delivered by this court in Trip Communication Pvt. Ltd. bearing W.P.(C) No. 7438/2012 decided on 28.03.2014.” It is thus urged that CELEBI cannot now be heard saying that it can claim demurrage even if the detention was declared illegal. It is pointed out that the confiscation (of the craft) and penalty directed by the customs authorities was set aside; this court directed refund of penalty amounts deposited (previously as a condition for the re-export of the craft) along with interest. Furthermore, by the judgment in WP 6344/2018, even duty drawback was allowed to ILFC.
8. Counsel for ILFC relies on the “Powers Relating to Remission/Waiver of demurrage charges (Cargo)”, 1999 alluded to in the order of 28-07-2014 and argues that the restriction from sanctioning (i.e. allowing) remission of demurrage charges applies only when penalty or fine is imposed, by reason of Para 10.10 (a). It is submitted that since the penalty was ultimately held to be unjustly levied, CELEBI cannot, legitimately refuse waiver or remission of demurrage charges. It was emphasized that ILFC had to approach this court, at every stage, despite CESTAT’s orders and the insistence – by CELEBI- that it is entitled to retain the amounts for the period the aircraft engine was in its custody as remuneration or consideration, is plainly unreasonable. It is submitted that the real culprit in this case is the revenue, i.e. the customs and -earlier-service tax authorities, who detained the aircraft. It is submitted that CELEBI”s reason for refusing refund, i.e. that
a. demurrage charges could not be waived in view of the imposition of fine and penalty since waiver of demurrage was not permitted by the applicable policy concerning waiver of demurrage charges in cases where fine or penalty had been imposed on an importer/ party;
b. CELEBI was entitled to be secured for the demurrage charges by ILFC in the form of a bank guarantee or bond or security as deemed fit by this Court prior to the provisional release of the engine.
9. Learned counsel also highlighted CELEBI’s position in its Counter Affidavit filed in the previous proceedings and contended that it is estopped from now saying that the policy does not allow it to waive demurrage charges. The relevant extract of the affidavit is as follows:
"E. As such, the importer/Petitioner is under and obligation to secure the demurrage charges payable to answering Respondent from the date it was imported and handed over to the custody of Celebi/ Respondent No.6 till the date it is physical released, be it on a provisional basis, by furnishing a Bank Guarantee and/or bond and/or security as may deem fit by this Hon'ble Court securing/ stating that in case any fine, penalty, personal penalty and/or warning is imposed by the customs authorities, the Importer/Petitioner would pay the demurrage charges.
F. That it shall be against the established principles of Law, in case the engine under dispute is released to the importer/ Petitioner without securing demurrage charges payable by the Petitioner.
G. That it is therefore in the interest of justice that the Petitioner be directed to furnish appropriate Bank Guarantee and security bond securing the demurrage charges and undertaking that the Petitioner would pay the demurrage charges to the Respondent No. 3 in case on conclusion of the adjudication proceedings if any fine, penalty, personal penalty and/or warning is imposed by the customs authorities.”
10. It is argued, therefore, that having articulated its position that demurrage can be charged only if fine, penalty or personal penalty is imposed, CELEBI cannot now state that there are other conditions which restrict its freedom in waiving demurrage. ILFC also relied on the decision of the Division Bench-in Trip Communication Pvt. Ltd. vs. Union of India &Ors.2014 (302) ELT 321, referred to in the order dated 28-07-2014, especially the following observations:
“35. The AAI has framed regulations in exercise of powers conferred under the AAI Act. The regulations relied upon by the respondent CELEBI as applicable to the present case are the Airports Authority of India (Storage and Processing of Cargo, Courier and Express Goods and Postal Mail) Regulations, 2003 (hereinafter referred to as, 'the Regulation'). As per the said Regulation, the Airport Authority fixes the charges for processing of the Cargo and also formulates Policy for Waiver of such demurrage charges. The relevant portion of the policy relating to waiver of demurrage charges (Cargo) lays down as under:
10.1.1 Subject to such policy, rules and procedures as may be described the authorities specified hereunder are authorized to sanction, in consultation with the Finance and Accounts Department, remission/waiver of demurrage charges regarding Cargo Operation.
10.1.2 .... .......
10.1.10 Demurrage charges shall not be waived where:
(a) Any fine/penalty/personal penalty/warning is imposed by the Customs Authority.
(b) Delay arose by reason of dispute in the assessable value or for revalidating or correcting the license in ordinary course of appraisal.”
36. The Policy farmed by the AAI lays down that the authorities specified are authorized to sanction, in consultation with the Finance and Accounts Department, remission/waiver of demurrage charges regarding Cargo Operation. It further lays down that Demurrage charges shall not be waived where any fine/penalty/personal penalty/warning is imposed by the Customs Authority or where the delay arose by reason of dispute in the assessable value or for revalidating or correcting the license in ordinary course of appraisal.
37. Section 156 of the Customs Act lays down the general rule making power of the central government to make rules to carry out the purposes of the Act and Section 157 lays down the power of the Board to make regulations to carry out the purposes of the Act. Under the customs Act, the custom authorities are concerned with the setting up of public or private warehouses and for storage, removal and handling of imported goods in a customs area.
38. The Handling of Cargo under Customs Area Regulations, 2009 have been framed to provide for the manner in which the imported goods/export goods shall be received, stored, delivered or otherwise handled in a customs area. The regulations also prescribe the responsibilities of the persons engaged in aforesaid activities.
39. The custom authorities are concerned with the receiving, storing, delivering and handling of cargo in a custom area. The custom authorities are not concerned with the upgradation, modernisation, finances, operation and maintenance and management and provision of services at the Cargo Terminal of the Airport, which is the function of the AAI. The custom authorities are also not concerned with the responsibility of providing and fixing demurrage charges in respect of storage, processing and handling of Cargo at the terminal, which responsibility is of the AERA."
40. The Regulations of the AAI of which the Policy for Waiver of demurrage charges is a part specifically deals with the Storage and Processing of Cargo, Courier and Express Goods and Postal Mail. The Airport Authority fixes the charges for processing of the Cargo and has thus formulated the Policy for Waiver of such demurrage charges.
41. The custom authorities it appears issues certificate for waiver in every type of case irrespective of the fact whether the importer is at fault or not. The custom authorities have issued certificate for waiver of the demurrage charges in both the cases at hand. In one case the release of the goods are on provisional basis pending adjudication and in the other there is imposition of both fine and penalty. These are not cases where the importer has been held to be not at fault. In one case the Importer has been found to be at fault and penalty and fine imposed. The importer has accepted the said order. In the other case adjudication proceedings are pending and are yet to be finalised.
42. There is an overlap in the Policy for Waiver framed by AAI and the HCCAR. Though initially there appears to be a conflict between the policy and the regulations but on closer scrutiny it is apparent that they can both be harmoniously construed and coexist.
43. The policy makes a distinction between the cases where the importer is innocent but his imported goods are seized and detained pending an enquiry and adjudication and the cases where the importers have indulged in mis-declaration, mis-description, under valuation or concealment and fine, penalty, personal penalty and/or warning is imposed by the customs authorities. Importers who are innocent cannot be equated with the importers who violate the law and be given the same treatment. The AAI policy makes a distinction between the two and in our view rightly so.
44. The regulations frames in 2009 themselves stipulate that they are subject to any law for the time being in force and as such the regulations would be applicable in terms of the Policy for Waiver framed by the AAI in 2003.
45. In case the HCCAR were to be made applicable in all cases then the result would be that in no case where there is a fine, penalty, personal penalty and/or warning imposed by the customs authorities CELEBI would be able to charge demurrage charges. Custom authorities are issuing waiver directions even in cases where the importers are clearly at fault and fine, penalty, personal penalty and/or warning has been imposed by the customs authorities. Even in cases of mis-declaration, undervaluation and concealment, the certificates are being issued. This is clearly giving premium to dishonesty. The waiver should be granted in genuine cases where the importers are ultimately found not at fault. It cannot be that all importers honest and dishonest are treated equally.
46. In cases where the importer is found innocent and there is no imposition of any fine, penalty, personal penalty and/or warning by the customs authorities, the Policy for Waiver would be applicable and the importer would be entitled to be considered for its benefit provided a certificate entitling him to be so considered is issued by the custom authorities. The importer would not be automatically exempt but would be covered under the Policy for Waiver and eligible for waiver which would be granted subject to other compliances.
47. The execution of the superdginama by CELEBI that it would not claim any storage charges for the safe custody of the goods charge would also not be in conflict with the Policy for Waiver. The Policy has been framed by the Airports Authority of India and the execution of the Superdginama by an employee would not override the policy. It would be applicable in cases where no fine, penalty, personal penalty and/or warning is imposed by the customs authorities. In cases where the importer is found eligible for the benefit of the Policy, the Superdginama would automatically become applicable.
48. Where the importer is clearly at fault and fine, penalty, personal penalty and/or warning is imposed by the customs authorities, making the regulations applicable and granting the benefits of waiver would be clearly unreasonable and would grant benefit of waiver, with the person who has provided space suffering. This was and is not the intention and purpose behind HCCAR. Regulation recognizes and accepts that any other law in force is not abrogated or repealed. The existing provision applicable stands protected.”
10. CELEBI, which resists the claim in the present writ petition, urges that even the previous order of this court, i.e. dated 28th July, 2014 requires it to consider the issue of waiver and grant it, in terms of the existing policy. Counsel emphasizes that Trip Communication (supra) relied on by ILFC – and cited in the said previous order, was entirely premised upon the fact situation in Para 10.12.1 (a) i.e where penalty or fine or personal penalty is imposed. In that case, the penalty was not justified; thus CELEBI’s position that the importer could not claim demurrage was held to be unjustified.
11. The customs department – in addition to CELEBI- argues that ILFC’s claim that detention of the aircraft engine was illegal, was rejected by CESTAT. In this respect, the following observations of CESTAT are relied upon:
“17. Incidentally, it may be mentioned here that the appellants submitted that the detention ordered by the Customs Authorities immediately after filing of bill of entry, based on the revenue recovery. action Initiated by the Service lax Department, Mumbai should be considered as detention or seizure under Customs Act. We find that the said submission is on erroneous appreciation of the factual and legal position. The Customs Authorities in New Delhi acted as per the request of another wing of the same Department who are having confirmed tax arrears of crores against the importer, who filed the bill of entry in pursuance of the detention notice issued for recovery of confirmed arrears, the Customs Authorities, New Delhi acted by detaining the said import cargo. This is a revenue recovery action permissible under law and not a seizure in terms of Customs Act which is for contemplated punitive action against the goods/importer. The detention for revenue recovery is entirely different from seizure under Customs Act. As such, we find no merit in the contention of the appellant on this ground.”
12. It is further pointed out by CELEBI that no importer can claim a right to waiver of demurrage charges, since those are because of the service rendered for storage of detained goods, in terms of provisions of the Customs Act. Such being the case, the third-party service provider has to be compensated for the work done. The 1999 policy envisioning waiver, is firstly premised on the exercise of discretion; crucially, that discretion cannot be exercised where waiver is not permissible and is barred by express terms of the policy. Since the importer disputed payment of duty, the question of waiving demurrage charges does not arise. Counsel also pointed out that the period during which the goods were detained at the behest of the service tax department, has received waiver of demurrage; consequently, the overall charges were scaled down.
Analysis & Conclusions
13. The fundamental issue at dispute is whether, in this case, CELEBI can justly withhold the amounts paid and refuse to refund them to the ILFC, which claims that its action in importing the aircraft engine and exporting it was out of compulsion, even necessity, to safeguard its interests as property owner. The revenue authorities acted unreasonably in detaining the engine; the CESTAT’s order vindicated its stand.
14. International Airports Authority v Grand Slam International 1995 (3) SCC 151 is the leading judgment on the rights of bailees and warehousemen, such as CELEBI who are statutorily enjoined to provide services in connection with storage of goods and articles. In that case, the Supreme Court considered Section 45 of the Customs Act and held as follows and analyzed the provisions of the International Airport Authority Act (the predecessor to the Airports Authority Act) and held that:
41. None of these provisions entitles the Collector of Customs to debar the collection of demurrage for the storage of imported goods. They do not entitle him to impose conditions upon the proprietors of ports or airports before they can be approved as Customs ports or Customs airports. Section 45 provides that all imported goods imported in a customs area must remain in the custody of the person who has been approved by the Collector of Customs until they are cleared and such person is obliged not to permit them to be removed from the customs area or otherwise dealt with except under and in accordance with the permission of the Customs Officer. Section 45 does not state that such person shall not be entitled to recover charges from the importer for such period as the Customs Authorities direct.
42. The purpose of the Customs Act on the one hand and the Major Port Trusts Act and the International Airports Authority Act on the other hand are different. The former deals with the collection of Customs duties on imported goods. The latter deals with the maintenance of seaports and airports, the facilities to be provided thereat and the charges to be recovered therefor. An importer must land the imported goods at a seaport or airport. He can clear them only after completion of customs formalities. For this purpose, the seaports and airports are approved and provide storage facilities and Customs officers are accommodated therein to facilitate clearance. For the occupation by the imported goods of space in the seaport or airport, the Board or the Authority which is its proprietor is entitled to charge the importer. That until customs clearance the Board or the Authority may not permit the importer to remove his goods from its premises does not imply that it may not charge the importer for the space his goods have occupied until their clearance.
44. It cannot be gainsaid that, by reason of unjustified detention of his goods by the Customs Authorities, the importer is put to loss by having to pay demurrage charges for the periods of such detention. The Central Government is empowered by Section 35 of the International Airports Authority Act, 1971, and Section 111 of the Major Port Trusts Act, 1963 to issue to the Authority and the Board of Trustees, respectively, directions on questions of policy after giving them an opportunity, as far as practicable, of expressing their views. The Central Government can, if so advised, after giving to the Authority and the Board of Trustees the opportunity of expressing their views, direct them, under the aforementioned provisions, not to levy demurrage charges for periods covered by detention certificates.
Venkatachala, J, in a concurring judgment, held that:
“66. From the above decisions of this Court it becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1961, 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 periods 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 who might have issued detention certificates owning such fault.
69. Therefore, my answer to the question considered by me is in the negative i.e. the Collector of Customs empowered under Sub-section (1) of Section 45 of the Customs Act, 1962 to approve persons to be custodians of imported goods in customs areas until they are cleared as provided for therein, while approving the International Airports Authority of India to be the custodian of such imported goods in the customs area of Indira Gandhi International Airport, New Delhi and Central Warehousing Corporation to be the custodians of such imported goods received at the customs area-the Container Freight Station, CWC Complex, Pragati Maidan, New Delhi, by issue of public notice or otherwise in that regard, if by such notice or otherwise directs such custodians not to collect custody charges from the consignees of such goods-"the Cargo", because of detention certificates issued by him or his delegates, will not be acting within the powers conferred upon him under the Act, its Rules or its Regulations and hence directions given by the Customs Collector or his delegates to release the goods of importers or consignees without collecting demurrage charges from them cannot be enforced by courts either against IAAI or CWC.”
15. The Supreme Court therefore ruled that Section 45 of the Customs Act did not, affect International Airport Authority’s right to collect charges from the importer-even if the detention were to result in no revenue. In Union of India v. R.C. Fabrics (P) Ltd. (2002) 1 SCC 71, the Supreme Court applied Grand Slam (supra). Yet later, in Om Shankar Biyani v. Board of Trustees, Port of Calcutta 2002 (3) SCC 168, the Supreme Court, after referring to Section 58 of the Major Port Trust Act, ruled:
“8............ Thus the charges of the 1st Respondent are to be paid before the goods are removed. The High Court seriously erred in permitting removal of the goods without payment of the port charges. To be noted that it was never disputed that the charges were payable. The 1st Respondent was not concerned with the dispute as to who had to pay the charges. It was the Appellant who was interested in clearance of the goods. It was for him to have paid the charges and cleared the goods. Even if it was the Appellant's case that the Customs Authorities had to pay the charges, the Appellant should have first cleared the goods by paying charges due to the 1st Respondent and then claimed reimbursement from the Customs Authorities.”
16. The Supreme Court had, earlier, in Shipping Corporation of India v. C.L. Jain Woolen Mills (2001) 5 SCC 345 – in the context of demurrage charges levied by the Shipping Corporation of India affirmed Grand Slam (supra) and said in its judgment that:
“7............... Having scrutinized the provisions of the Customs Act, we are unable to find out any provision which can be remotely construed to have conferred power on the Customs Authorities to prevent the proprietor of the space from levying the demurrage charges and, thereby absolving the importer of the goods from payment of the same........”
All these decisions were cited in the recent ruling in Mumbai Port Trust vs. Shri Lakshmi Steels & Ors.(2018)14SCC317 and the principles applied by the Supreme Court.
17. In the opinion of this court the judgments cited previously instruct the courts to not grant a direction stereotypically, but rather consider the circumstances under which the claim for waiver of demurrage can be reviewed under Article 226 of the Constitution. The starting point of courts’ enquiry is therefore, not to assume that a claim for refund per se exists as a matter of law, but rather, to contextually, determine, if the refusal to grant demurrage waiver is arbitrary or unreasonable.
18. It is important to recollect that in the present case, the penalty and confiscation ordered by the customs’ lower authorities was no doubt set aside by the CESTAT. However, ILFC’s argument about the illegality of detention (of the aircraft engine) was rejected. This is clear from the CESTAT’s finding that
“This is a revenue recovery action permissible under law and not a seizure in terms of Customs Act which is f
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or contemplated punitive action against the goods/importer. The detention for revenue recovery is entirely different from seizure under Customs Act. As such, we find no merit in the contention of the appellant on this ground…” 19. The original importer was Kingfisher Airlines; however due to its financial condition and other factors, ILFC, as owner, stepped in, flew the engine to help the aircraft which was grounded. Therefore, it had to apply for permission to fly back the engine and seek suitable amendment to the Bill of Entry, to facilitate export. This was done. The service tax authorities initially seized the article; but later relinquished and lifted the order; instead the customs authorities detained the engine, contending that duty was payable. The petitioner, ILFC, contested its duty liability and argued that it was exempted from payment of duty. Resultantly a show cause notice was issued. The show-cause notice was confirmed after due adjudication; besides penalty and confiscation (in lieu of which redemption fine was proposed) customs duty too was payable-of course, in the event of redemption. The appeal to CESTAT resulted in the invalidation of the penalty and confiscation, not the duty liability. In fact CESTAT concluded that detention-with the aim of revenue recovery was legal and valid. 20. Clause 10.1.10 of the 1999 policy relied upon by ILFC reads as follows: “10.1.10 Demurrage charges shall not be waived where: (a) Any fine/penalty/personal penalty/warning is imposed by the Customs Authority. (b) Delay arose by reason of dispute in the assessable value or for revalidating or correcting the license in ordinary course of appraisal.” In this case, no doubt the penalty imposed by the Customs authority contemplated by clause 10.1.10 (a) was set aside by CEGAT. However, that per se in the opinion of the court is not conclusive of the issue, because Clause 10.1.10 (b) visualizes a situation that is answered by the facts of this case. It states, in effect that demurrage cannot be waived if there is delay “by reason of dispute in the assessable value or for revalidating or correcting the license in ordinary course of appraisal…” In this case ILFC denied, categorically its liability to pay duty and said that the goods were exempt because of some notification. The adjudicating officer’s findings were otherwise; even CEGAT did not disturb them; rather it went on to hold that detention was justified. In these circumstances, CELEBI, in the opinion of this court acted within its rights to refuse and turn down the request for demurrage waiver and consequent refund of monies deposited (Rs. 5,50,68,516/- [Rupees Five Crore Fifty Lakhs Sixty Eight Thousand Five Hundred and Sixteen Only]). 21. Waiver of demurrage charges cannot be issued for the asking; therefore a court in judicial review cannot issue a direction without considering the reasons – if they are apparent, that underlie rejection of a request for exemption or waiver. After all, warehousing – and at the behest of the law (the Customs Act) is a commercial activity, for which the warehouseman or service provider (like CELEBI) invests with its resources, deploys manpower and creates infrastructure. The fee or consideration payable are determined by the duration or period for which warehousing is necessary, the kind of storage provided – including the safety and security to the goods. Unless the rules or relevant policy clearly mandate waiver from such services, courts cannot issue directions to such service providers. In this case, CELEBI relied on Clause 10.1.10 (b) to say demurrage waiver was precluded. In so saying, CELEBI was consistent with its policy. 22. As a result of the foregoing discussion, this petition has to fail. It is dismissed; in the circumstances the petitioner (ILFC) shall pay the costs of these proceedings, to CELEBI, quantified at Rs.3,00,000/- (Rupees three lakhs only) within two weeks.