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The Delhi High Court in a recent judgement dismissed a batch of petitions filed by importers seeking waiver of penal charges levied by Inland Container Depots (ICD) and Container Freight Stations (CFS) for the period beyond a certain number of free days during which the goods continue to remain in their premises and fines charges levied by shipping lines in the event the containers are not returned to them within a fixed number of “free days”. The waiver was sought having regard to the pandemic.

The bench of Justice C Harishankar observing that the contract between the importers and the ICDs and CFSs was a private contract the Court relying on the Supreme Court judgement in the case of Indian School v. State of Rajasthan,  observed  that the Apex Court has disapproved interference, by orders seeking to draw power from the Disaster Management Act, with private contracts, or with “commercial or economic aspects of matters between private parties with which the State has no direct causal connection.

The court further said that  under the Disaster Management Act, “benefit  cannot be extended to one party at the cost of the other, so as to permit Paul to profit at the cost of Peter. One may legitimately, in our view, extend the principle to holding that, while putting, in place, ameliorative measures under the Disaster Management Act – or, for that matter, under the Epidemic Diseases Act – the Governmental authorities had to be circumspect and have to balance the interests of all stakeholders who would be affected, one way or the other, by such dispensations. It is not permissible, in short, for the Government to play Robin Hood. Nor, for that matter, can the Court do so, at the instance of the petitioners before it.”

The Court further observed that” the petitioners are not entitled to capitalise on the Orders of the MOS and the DGS, to maintain a plea for issuance of a mandamus to ICDs, CFSs or shipping lines, not to charge penal charges from exporters and importers beyond the “free period”. Per corollary, no such rights can inure, in favour of the petitioners, even from the circular issued by the CBIC”

It was further clarified that CFSs and ICDs are not creatures of the Customs Act. They are, essentially, in the nature of godown facilities – whether privately owned or managed by governmental agencies such as the Central Warehousing Corporation or the Container Corporation of India (which, as on date, manages all ICDs in the country) – which owe their entitlement to operate as CFSs and ICDs (for the purpose of loading and unloading of export, and imported, goods) to the notifications issued under Section 7 or Section 8 of the Customs Act. That, by itself, cannot render the collection of charges by CFSs or ICDs from their customers, penal or otherwise, subject to control by the CBIC. The CBIC, therefore, has wisely not chosen to issue any mandatory directive, on its own accord, to CFSs or ICDs, not to charge penal charges from importers or against storage of containers in their premises beyond the “free period”.

The case relates to a batch of petitions filed by importers who  in view of the Pandemic sought wavier of penal  charges levied  by Inland Container Depots (ICD) and Container Freight Stations (CFS) for the period, beyond a certain number of “free days”, during which the goods continue to remain in their premises, and levied by shipping lines, in the event the containers are not returned to them within a fixed number of “free days”.

Ordinarily, after containers are unloaded from the vessel in which they arrive, the containers are required to be returned to the shipping lines within a contractually stipulated number of days. If they are so returned, no additional charge is levied on the importer. If they are not returned to the shipping lines within such “free days”, they suffer detention charges, levied by the shipping lines in accordance with the contract executed between the shipping lines and the importers. Similarly, ICDs and CFSs also permit the imported goods to be stored within their premises for a number of “free days”, on payment of normal charges. If the goods remain in their premises beyond such “free days”, they suffer penal charges, chiefly ground rent at much higher rates than is ordinarily charged.

Case Title: M/S Polytech Trade Foundation vs UOI