# 11 S.C.R. 470 MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS AND ORS. ETC - **Citation:** [2017] 11 S.C.R. 470 - **Court:** Supreme Court of India - **Decided:** 2017 - **Case number:** Civil Appeal Nos. 9831-32 of 2017 - **Bench:** Madan B. Lokur, Deepak Gupta - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/11-s-c-r-470-mumbai-port-trust-v-mis-shri-lakshmi-steels-and-ors-etc-31584 - **Pages:** 27 ## Headnote Major Port Trusts Act, 1963: ss.47A and 53 - Detention of guods uf imporrers - By the Customs Departme/l/ at the instance of Directorate of Revenue lmelligence (DR!) - Demand of demurrage! detention charges by the Port Tnist and Shipping Line - Demand challenged - Mala fide alleged against the ofjicials of DR! - High Court held that the importers were not liable to pay demurrage charges to the Port D trust nor were liable to pay the detention charges to the Shipping Line; that DRE/Customs authorities were liable to pay the detention charges and that Port Tnist was 1101 entitled to charge demurrage in view of Regulation 6(1) of 2009 Regulations - Port Trust was directed to waive the demurrage charges - On appeal, held: Mumbai E F Port Trust has the power and authority to levy rates includi11g demurrage as fl.red by Tiiriff Authority ui.f.47A - The right is not affected by the provisions of Customs Act or by the 2009 Regulations in view ofs. 160(9) of Customs Act -Even if the importer is not at fault, it is importer alone who is liable to pay the demurrage charges - Su fi1r as detention charges are concerned, it bdng a private contract between the importer and carrier (Shipping Line), importer is liable to pay the same - DR!!Customs Authorities can be directed to pay detemionl demurrage charges on(v whe11 it has been proved that the action of DRE/Customs Authorities was mala fide - !11 the presellt case allegation of mala fide has not been proved - Even if importer feels that it has been 111y11stly dealt with, it must clear the G goodv by paying the due charges and then claim reimbursement from Customs Authority - The importers are free to approach the Port Trust in terms of s.53 - Customs Act, 1962 - s. 160(9) - Handling of Cargo in Customs Areas Regulations, 2009 - Regn. 6(1). H 470 MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS 471 Allowing the appeals, the Court A HELD: 1.1 The question whether the. Port Trust is a custodian of the .Customs Department u/s. 45(1) of the Customs Act, 1962, is pending for considscration before this Court in another case. Therefore, this issue cannot be addressed. Even assuming that Mumbai Port Trust is a custodian or cargo service B proviclcr, the question that arises is whether Handling of Cargo in Customs Areas Regulations, 2009 apply to the Mumbai Port Trust. These Regulations have been framed u/s.157 of the Customs Act. Section 160(9) of the Customs Act clearly lays down that nothing in the Act shall affect the power of the Port Authority in a Major Port, as defined in the Major Port Trusts Act, 1963. The Mumbai Port Trust (appellant) is a major port. (Paras 28, 29][49-A-H; 491-A-B) c 1.2 The Mumbai Port Trust has the power and authority to levy rates including demurrage us fixed by the Tariff Authority uncler Section 47 A of the Major Port Trusts Act. This right of D the Port Trust is not affected either by the provisions of the Customs Act or by the Regulations of 2009. Section 160(9) of the Customs Act clearly lays clown that the provisions of the . Customs Act shall not in any manner affect the constitution and powers of any port authority in a major port. This will include the E right of the major port authority that is a Major Port Trust to levy and charge rates uncl clcmurragc. 2009 Regulations arc framed under the Customs Act. Regulations arc in the nature of subordinate legislation. There can be no manner of doubt that subordinate legislation that loo a legislation framed by a Board unclcr the Customs Act cannot in any manner affect the power and authority of the Major Port Trust, statutorily vested in it. (Paras 30, 31)[491-B-D] F 1.3 Neither the Regulations nor the provisions of the Customs Act can impinge or in any manner affect the statutory power of the Major Port Trusts to levy rates under the Act. In G fact, the Authority that framed the Regulations was itself aware of this because Regulation 6(1) itself begins with the words"" subject to any .other law for the time being in ## Text _Characters 0–39,895 of 63,076. This is a partial read: ask again with offset=39895 for what follows._ A [20 l 7] 11 S.C.R. 470 MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS AND ORS. ETC. (Civil Appeal Nos. 9831-32 of 2017) B JULY27,2017 c [MADAN B. LOKUR AND DEEPAK GUPTA, JJ.] Major Port Trusts Act, 1963: ss.47A and 53 - Detention of guods uf imporrers - By the Customs Departme/l/ at the instance of Directorate of Revenue lmelligence (DR!) - Demand of demurrage! detention charges by the Port Tnist and Shipping Line - Demand challenged - Mala fide alleged against the ofjicials of DR! - High Court held that the importers were not liable to pay demurrage charges to the Port D trust nor were liable to pay the detention charges to the Shipping Line; that DRE/Customs authorities were liable to pay the detention charges and that Port Tnist was 1101 entitled to charge demurrage in view of Regulation 6(1) of 2009 Regulations - Port Trust was directed to waive the demurrage charges - On appeal, held: Mumbai E F Port Trust has the power and authority to levy rates includi11g demurrage as fl.red by Tiiriff Authority ui.f.47A - The right is not affected by the provisions of Customs Act or by the 2009 Regulations in view ofs. 160(9) of Customs Act -Even if the importer is not at fault, it is importer alone who is liable to pay the demurrage charges - Su fi1r as detention charges are concerned, it bdng a private contract between the importer and carrier (Shipping Line), importer is liable to pay the same - DR!!Customs Authorities can be directed to pay detemionl demurrage charges on(v whe11 it has been proved that the action of DRE/Customs Authorities was mala fide - !11 the presellt case allegation of mala fide has not been proved - Even if importer feels that it has been 111y11stly dealt with, it must clear the G goodv by paying the due charges and then claim reimbursement from Customs Authority - The importers are free to approach the Port Trust in terms of s.53 - Customs Act, 1962 - s. 160(9) - Handling of Cargo in Customs Areas Regulations, 2009 - Regn. 6(1). H 470 MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS 471 Allowing the appeals, the Court A HELD: 1.1 The question whether the. Port Trust is a custodian of the .Customs Department u/s. 45(1) of the Customs Act, 1962, is pending for considscration before this Court in another case. Therefore, this issue cannot be addressed. Even assuming that Mumbai Port Trust is a custodian or cargo service B proviclcr, the question that arises is whether Handling of Cargo in Customs Areas Regulations, 2009 apply to the Mumbai Port Trust. These Regulations have been framed u/s.157 of the Customs Act. Section 160(9) of the Customs Act clearly lays down that nothing in the Act shall affect the power of the Port Authority in a Major Port, as defined in the Major Port Trusts Act, 1963. The Mumbai Port Trust (appellant) is a major port. (Paras 28, 29][49-A-H; 491-A-B) c 1.2 The Mumbai Port Trust has the power and authority to levy rates including demurrage us fixed by the Tariff Authority uncler Section 47 A of the Major Port Trusts Act. This right of D the Port Trust is not affected either by the provisions of the Customs Act or by the Regulations of 2009. Section 160(9) of the Customs Act clearly lays clown that the provisions of the . Customs Act shall not in any manner affect the constitution and powers of any port authority in a major port. This will include the E right of the major port authority that is a Major Port Trust to levy and charge rates uncl clcmurragc. 2009 Regulations arc framed under the Customs Act. Regulations arc in the nature of subordinate legislation. There can be no manner of doubt that subordinate legislation that loo a legislation framed by a Board unclcr the Customs Act cannot in any manner affect the power and authority of the Major Port Trust, statutorily vested in it. (Paras 30, 31)[491-B-D] F 1.3 Neither the Regulations nor the provisions of the Customs Act can impinge or in any manner affect the statutory power of the Major Port Trusts to levy rates under the Act. In G fact, the Authority that framed the Regulations was itself aware of this because Regulation 6(1) itself begins with the words"" subject to any .other law for the time being in force". It is, therefore, obvious that the Regulations are subject to any other law including the Major Port Trust Act. Therefore, these H 472 SUPREME COURT REPORTS (2017] 11 S.C.R. A Regulations cannot in any manner affcctthe right of the Port Trust. [Para 32)(491-E-F] B c D E 1.4 Reliance placed by the Union of India on Section 128 of the Major Port Trusts Act is totally misplaced. This provision only deals with the right of the Central Government to collect customs duties. It docs not deal with the rights of the Port Trust to collect rates including demurrage. [Para 32)(491-G-H] Trustees of the Port of Madras v. Mis Ami11chand Pyare/a/ (1976) 3 SCC 167: [1976] 1 SCR 721; Board of Trustees of the Port of Bombay v. Jndia11 Goods Supplyi11g Co (1977) 2 SCC 649 : [1977] :t SCR 343; Board of Trustees of the Port of Bomhay v. Jai Hind Oil Mills Cump011y (1987) 1 SCC 648: [1987] 1 SCR 932; lnternatio11a/ Airports Authority v. Grand Slam International (1995) 3 SCC 151 : [1995) 2 SCR 149; Union of India v. R. C. Fabrics (P) Ltd. (2002) 1 SCC 71 : [2001] 4 Suppl. SCR 263; Om Prakesh Biyani v. Board of Trustees, Port of Calcutta (2002) 3 SCC 168: [2002] 2 SCR 19; Shipping Corporation of India v. CL.Jain Woolen Mills (2001) 5 SCC 345 : [2001) 2 SCR 1080 - relied on. Unio11 of India v. Sa1yeev Woolen Mills 1998 (100) ELT 323 - distinguished. 2.1 Even if the importer is not at fault, it is the importer alone who is liable to pay the demurrage charges. As far as detention charges arc concerned, this is a private contract F between the importer and the carrier, i.e. Shipping Line. The ORI/Customs authorities can be directed to pay the dcmurragc/ detention charges only when it has proved that the action of the ORI/Customs Authorities is absolutely ma/a fide or is such a gross abuse of power that the officials of the DRI/Customs should be G asked to compensate the importer for the extra burden which he has to bear. Even if an importer feels that it has been unjustly dealt with, it must clear the goods by paying the charges due and then claim reimbursement from the customs authority. [Para 34)[492-B-O] H 2.2 [n the present case allegations of ma/a fit/es were MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS 473 levelled that since the respondent-importers had filed writ A petitions before the High Court wherein the officials (respondent Nos. 7 and 8) had been summoned to appear in person, they had acted mala fide against the respondent-importers. Charges of discrimination have also been levelkd against them. The High Court itself did not go into this aspect in detail.There is no specific finding of 11111/a fides. However, the High Court held that the respondent-importers suffered a loss because of delay on the part of Revenue staff to clear the goods and the executive instructions of the Department were violated. The Revenue was justified in apprehending that the imported goods may have been B · mis-declared and, therefore, they must be thoroughly checked and verified. [Para 35][492-E-H; 493-A] c 2.3 The respondent-importers did not take the benefit of provisional assessment offered on two grounds:- (1) that all other importers were only asked to furnish PD Bonds whereas the importers herein were asked to furnish some bank guarantee D also. (2) That the demurrage and detention charges had piled up. The stand of the DRI is that all other importers were importing sheets/scrap and not coil. It was only the respondentimporters who were importing coils. Safeguard duty is applicable only in relation to coils and not in relation to sheets. Therefore the original respondent-importers were asked to furnish bank guarantees also. The respondent-importers were required to furnish bank guarantee only to the extent of 20% of the. provisional assessment and the bank guarantee demanded was only Rs. 18. 71 lakhs. It is thus obvious that importers even at this stage could have got the goods released only by furnishing the bank guarantee for Rs.18.71 lakhs and furnishing PD Bonds. All other importers took benefit of this offer given by the DRI/ Customs and got their goods released but the respondent- . importers for the reasons best known to them did not take the benefit of this offer. If they had taken the benefit of this offer, there could have been a reduction of the demurrage as was done in the case of other importers. [Para 44][495-C-F) 2.4 From. the record it is apparent that the Revenue sent samples of the goods imported for second test. As per the reports of the second test, eight of these consignments were hot rolled E F G H 474 SUPREME COURT REPORTS [2017] l l S.C.R. A coils and not cold rolled coils. The allegation of the petitioner is that the report of the first test of samples was not accepted and the goods sent to the second laboratory for analysis even though that laboratory did not have the requisite facilities to carry out the tests. The Revenue cannot be barred from asking for a second 8 test. Whether the second labortory was competent to carry out the test or not, is not for this Court to decide. However, in these tests, eight of the consignments were found to be violating the import guidelines. Even thereafter, offer were given to the assessee to de-stuff the goods and also to get the goods released for provisional assessment which offer was not accepted by the C assessec. [Para 45)(495-G-H; 496-A] 2.5 Therefore, even though there may be some delay on the part of the ORI and the customs authorities, the respondcntimportcrs have also been guilty of delaying the matter and, therefore, they n111not claim that they are not liable to pay D dcmurrage and detention charges. The respondent-importers arc l'ree to approach the Mumbai Port Trust in terms of Section 53 of the Act for exemption and remission of demurragc and other charges and the Board may take a sympathetic view while considering the case of the respondent-importers under Section E 53. [Para 46][496-B-CJ F G H 2.6 The High Court could not, in writ proceedings, have directed the ORI/Customs to pay the detention charges to the Shipping Line since these were to be paid on the basis of a contract between the respondent-importers and the shipping line. [Para 47][496-0] Case Law Rcfcrem«· [I976) 1 SCR 72I relied on Para 20 [ 1977] 3 SCR 343 relied on Para 21 [1987] 1 SCR 932 relied on Para 22 [1995) 2 SCR 149 relied on Para 24 [2001) 4 Suppl. SCR 263 relied on Para 25 [2002) 2 SCR 19 relied on Para 25 [200 I) 2 SCR 1080 relied on Para 26 1998 (100) ELT 323 distinguished Para 27 MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS 475 CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 9831A 32 of2017. From the Judgment and Order dated 23.12.2016 of the High Court of Punjab and Haryana at Chandigarh in CWP No. 10021 of2016 and CWP No. 10036 of2016 WITH C. A. Nos. 9833-34 of2017. Maninder Singh, ASG, K.K. Vcnugopal, Parag P. Tripathi, P. Chidambaram, Sr. Advs., A. V. Rangam. Buddy A. Ranganadhan, Ms. Mishica Bajpai. Col. R. Balasubramaniam, Tara Chandra Sharma, Prabhas Bajaj, Akshay Amritanshu, Roh it Rathi, B. Krishna Prasad, Kap ii Arora, Ms. Manjula Baxla, Karan Khanna, (for Mis. Cyril Amarchand Mangaldas), Saurabh Kapoor, Prashant Bhushan, Ms. Neha Rathi, Sunil Kumar Jain, Ashok Mathur, Shrcc Pal Singh, Advs .. for the appearing parties. The J udgmcnt of the Court was dcliwrcd by DEEPAK GUPTA, J. I. Leave granted. 2. These civil appeals filed by the Union oflndia and the Mumbai Port Trust arc directed against the judgment dated 23.12.2016 passed by the High Court of Punjab & Haryana at Chandigarh in CWP No. 10021 of2016 and CWP No. 10036 of2016. whereby the High Court allowed the writ petitions and held that the detention ofthe goods imported by the writ petitioners/importers (respondent-importers herein) by the Customs, at the instance of the Directorate of Revenue Intelligence (for short 'DR!'), was totally illegal. The High Court directed that the goods impmtcd by the respondent-importers be released to them on payment B c D E F of custom duty. It further directed that the Port Trust was not entitled to charge any demurrage in view of Regulation 6( I) of the Handling of Cargo in Customs Areas Regulations, 2009 (in short '2009 Regulations') since the Customs had issued detention certificate. The detention charges demanded by the Shipping Line were ordered to be borne by the DR! G and/or the Customs. The writ petitioners/importers were also held entitled to costs of Rs.50,000/- each to be paid by the Dcpaitmcnt. 3. The facts of the case arc that the respondent-importers are two sister concerns viz., - (I) Imler International, a partnership firm, H 476 A B c D E F G H SUPREME COURT REPORTS (2017] ll S.C.R. and (2) Mis Shri Lakshmi Steels, a proprietorship firm. These firms deal in the import and trading of cold rolled coils and sheets (primary and secondary). Both the importers had imported various consignments of cold rolled coils. We are concerned only with ten consignments imported on three dates. The first batch of consignments of coils was imported vide bills of entry dated 04.12.2015 and the goods imported were declared to be cold rolled sheets/coils. The bills of entry for the second and third consignments were presented on l l.12.2015 and 29.12.2015 respectively. 4. On 14.12.2015, DR! wrote a letter to the Commissioner of Customs (Import), Mumbai to place the consignments of the respondentimporters, as well as some other importers, on hold. The DR! was of the view that these consignments required I 00% examination before these could be released. On 28.12.2015, another letter was written by the DRl to the Customs in which it was mentioned that specific intelligence had been received that the firms had been importing consignments in violation ofnotifications issued by the Customs to evade provisional duty imposed on their imports. By this letter, the Customs Authorities were requested to get the goods examined I 00% with the assistance of the Cha11ered Engineer with regard to the nature of the imported goods, including the description thereot: quality. thickness and width, along with supporting safeguards. In the meanwhile, on 18.12.2015, the respondentimporters in respect of the bills of entry dated 04.12.2015 and 11.12.2015 prayed that the duty be assessed under Section 18 of the Customs Act, 1962 (for short '1962 Act') and the goods be released, so as to avoid payment of demurrage and detention charges. Thereatler, a reminder in this regard was sent by the respondent-importers on 22.12.2015. Atler the third consignment was received on 29.12.2015, another letter was written by the respondent-importers on 31.12.2015 followed by one more letter dated 01.01.2016, praying that the duty be assessed and the goods be released on payment of duty. 5. Since no action was taken by the Customs Authorities on the letters written by the respondent-importers, they filed writ petitions in the High Court of Punjab & Haryana praying that the goods be released. Thereafter, samples of the goods were drawn between 05.01.2016 and 11.01.2016 and sent to one Shri Rajendra S. Tambi, Chmtered Engineer, for inspection. Shri Tambi got these samples tested from a Government approved laboratory Mis Perfect Laboratory Services and, as per the certificates issued by Shri Tambi on 19.01.2016, it was certified that the MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS [DEEPAK GUPTA. J.] goods imported appeared to be cold rolled coils. This supported the case of the impmters. 6. On 19.01.2016, ORI wrote to the Customs Authorities to assess the provisional custom duty. Thereafter, on 28.01.2016, the Commissioner of Customs sent a letter to the respondent-importers asking them to produce PD Bond for release of goods and also to furnish bank guarantee of 20% of the provisional duty on the imported goods. Similar letters were written to other importers also, but no bank guarantee was demanded from them and only PD Bonds were sought. All the other importers took advantage of this offer and after furnishing PD Bonds they got the goods released alter payment of customs duty. 7. The case of the respondent-importers herein is that they were informed about the letter dated 28.01.2016 only in Court on 03.02.2016 when a copy of the letter was handed over to them. According to the counsel for the respondent-importers, by this time, lakhs of rupees were due as demurrnge and detention charges and, hence, they could not take advantage of the offer given by this letter. Moreover, the rcspondcnlimporters were asked to furnish bank guarantee whereas the other importers were not asked to do so. 8. It would also be pertinent to mention that DR! was not satisfied with the report of the Chartered Engineer. DR! was also not satisfied with the report of Mis Perfect Laboratory Services: according to ORI the samples sent to this laboratory were not taken in the presence of the officials ofDRI and the reports sent by this laboratory were false. Hence, the Customs Authorities decided to get the consignments checked again from another laboratory. Thereafter, samples of the goods were taken again and sent to another laboratory Mis TCR Engineering Services (for short 'TCR') on 20.01.2016. On 28.01.2016, this laboratory submitted its report. It opined that out of the ten consignments, the goods of eight consignments appeared to be hot rolled and goods of two consignments appeared to be cold rolled. However, bill of entry numbers were not mentioned and a fresh report was called from TCR and they were asked to give numbers of the bills of entry. Even the two consignments which were found to be cold rolled were not released. The grievance of the respondent-importers is that there was no provision for carrying out a second test and, in any event, the laboratory in question did not have any facilities to carry out test to distinguish between hot rolled and cold rolled coils. 477 A B c D E F G H 478 A B c D E F SUPREME COURT REPORTS [2017] ll S.C.R. 9. On 01.02.2016, the respondent-importers wrote to the Commissioner of Customs for issuance of detention certificates so that they could secure waiver of demurrage and detention charges. According to the respondent-importers, though vi de letter dated 28.01.2016, provisional release of the goods had been permitted on furnishing of PD bond and bank guarantee, there was no reason for discriminating between respondent-importers and other importers, who were also under investigation and were not asked to furnish any bank guarantee. Further, according to the respondent-importers, on 04.02.2016, the Commissioner of Customs sent a communication to the Deputy Commissioner to the effect that he had received telephonic call from DR! directing that the samples should be drawn again from all the consignments and, for this purpose, the name of the laboratory would be informed latcron. He was also told that the goods be released only after the process of sampling was complete. On 23.02.2016, the goods were seized and the respondentimporters were directed to approach the concerned authority for provisional release of the goods. I 0. In the meantime on 05.02.2016, DR! wrote to the respondentimporters rejecting the request for issuance of detention certificate. The DR! also directed that the thickness of the coils be also measured to ensure that the respondent-importers were not evading import duty. However, on 05.03.2016, DR! sent another letter that provisional release be allowed without waiting for measurement of goods. The fact however is that for one reason or the other the goods were not released. Both the parties blamed each other for the delay in release of the goods. 11. On 04.04.2016, the High Court of Punjab and Haryana passed orders in the writ petition filed by the respondent-importers directing the Customs Authorities to de-stuff the consignments within one week and the respondent-importers undertook to cooperate with the Customs Authorities during this process. According to the respondent-importers, the officials of the DR! with a view to harass them did not permit release of the goods, whereas, according to the Union of India and DR!, the G representatives of the respondent-importers did not cooperate and violated the undertaking. Thereafter, on 22.04.2016, the Shipping Line issued notice to the respondent-importers that it proposed to auction the goods to recover the detention charges. On 09.05.2016, the respondentimporters withdrew the writ petitions filed by them with liberty to file fresh writ petitions. H MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS 479 [DEEPAK GUPTA, J.] 12. Thereafter, fresh writ petitions were filed. An order was passed A by the High Court on 03.06.2016 directing that samples of the imported goods be sent to the Steel Authority oflndia Ltd. (for short 'SAIL'), Bokaro for testing.After testing, it was opined that the goods appeared · to be cold rolled coils but there was also a finding that the thickness of the coil was at'variance with the declaration given by the respondentB importers in respect of some of the consignments. Thereafter, the High Court, on 12.07.2016, directed that the goods be released on payment of . due duty and the issue of detention and demurrage charges would be decided later. The order of the High Court dated 12.07.2016 was challenged before this Court by way ofSLP (C) Nos. 23479-80of2016, which was allowed on 15 .092016 setting aside the order dated 12.07.2016 C ' passed by the High Com1 and the High Court was requested to dispose of the writ petition at an early date and release/auction of the imported · goods was stayed pending disposal of the writ petition. 13. Respondent-importers had also levelled allegations of ma/a fide against the Officials of DRI. It was alleged that these officials D were inimical towards respondent-importers since they were summoned to Court and the Court had made certain oral observations against such officials. As far as the allegations of ma/a fide are concerned, the High Court has not given any clear-cut finding. The High Court however came to the conclusion that the respondent-importers were hara.ssed by ·E the officials ofDRI and ordered that the respondent-importers were not liable to pay any demurrage and, even with regard to detention charges io be paid to the Shipping Line, held that it is DR! or the Customs Authorities who are liable to pay the same. The Port Trust was directed to waive the demurragc charges. 14. Two issues arise before us - (I) whether any direction could be given to the Mumbai Port Trust to waive the dcmurrage charges and (2) whether the liability to pay the demurrage/detention charges in respect of the imported goods could be fastened upon the DRI/Customs Authorities. F 15. As far as the first issue is concerned, it would be pertinent to G point out that the Mumbai Port Trust is a statutory authority created under the Major Po11 Trusts Act, 1963 (for short 'the Act'). A Major . PortTrusfis managed by the Board ofTrustees appointed under Section 3 of the Act. The works and services to be provided by the Trust at the Major Ports are set out in Chapter V of the Act. Chapter V-A ~hich H 480 A B c D E F G H SUPREME COURT REPORTS (2017] l l S.C.R. was introduced with effect from 09.01.1997 provides for fixation of tariff for Major Port Trusts. The tariff to be charged by the port trust is determined by an independent statutory authority, called the Tariff Authority fl,r Major Ports, under Section 47 A of the Act. 16. Shri P. Chidambaram, learned senior counsel appearing on behalfofthe Mumbai Port Trust, submitted that the High Court gravely erred in relying upon Regulation 6(1) of the 2009 Regulations, framed by the Central I3uard uf Excise and Custums. He submitted that this subordinate legislation i.e., regulations framed by the Central Board of Excise and Customs cannot supersede the statutory provisions of the Major Port Trusts Act and the judgments of this Court. The stand of the Mumbai Port Trust is that it is entitled to recover the statutory tarift; including demurrnge charges, from the respondent-importers and neither the High Court nor the Union of India, can direct it to release the goods without payment of such statutory charges. The second contention is that the High Court gravely erred in holding that the Port Trust is the custodian of the Customs Department under Section 45( I) of the Customs Act, 1962. In the alternative, he submitted, that even if the Port Trust is held to be a custodian, it is still entitled to charge dcmurrage on goods detained by the customs. Even if the Customs Authorities or DR! arc at fault. the Port Trust cannot be barred from claiming the charges which arc charged statutorily. It is submitted that Regulation 6(1) is subject to other laws including the Major Port Trust Act and it was also submitted that Section 160(9) of the ,\oms Act. 1962 provides that nothing in the Customs Act shall affect ally htw for the time being in force relating to the constitution and powers of any Port authority in a major port as defined in the Indian I' .>rts Act, 1908. 17. Shri Maninder Singh, learned Additional Solicitor General appearing for the Union oflndia submits that the High Court erred in directing the customs authorities and the ORI to pay the demurrage and the detention charges. He submits that the officials did not act mala fide. They had specific intelligence inputs that the respondent-importers were misdeclaring ihe goods to avoid payment of duty. He submits that even if it is found that the intelligence inputs were not correct, action cannot be said to be mala fide. He also submits that the respondent-importers did not exercise their option to pay provisional duty or get the goods destuffed. Therefore, no relief could have been given to the respondcntimporters. MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS [DEEPAK GUPTA, J.] 18. On the other hand the stand of the respondents is that once a detention order is passed by the Customs Authorities, the Port Trust has to waive the dcmurragc and reliance has been placed on Section 128 of the Act and 2009 Regulations. The stand of the respondent-importers is also that in terms of the regulations the Mumbai Port Trust is not entitled to claim any demurrage charges for the period when the goods were under detention of the Customs Authorities. In the alternative, it is submitted that even if, for any reasons, the Mumbai P011 Trust is held entitled to recover the demurragc charges, the liability of the same should be fastened upon the Customs AuthoritiesiDRI. 481 A B 19. Bdore dealing with these issues, it would be relevant to refer to the provisions of the Act. As already mentioned above, the Tariff C Authority for Major Ports is constituted under Section 47A of the Act and the imposition and recovery of rates at Major Po11s arc fixed by the Tariff Authority. Section 48( l) of the Act provides that the authority shall, by notification in the Official Gazette, frame a scale of rates and a statement of conditions umkr which, any of the services specified hereunder shall be performed by a Board in relation to a port. Subsection ( 1 )(ct) of Section 48 deals with wharfoge, storage and dcmurrage of goods. Section 53 of the Act empowers the Board to exempt, either wholly or partially. any goods or vessels or class of goods of vessels from the payment of any rate or of any charge leviablc in special case, for the reasons to be recorded in writing. Section 58 deals with time for payment of rates on goods. Section 59 of the Act provides that the Board shall have a lien on the goods which arc kept in the po1t in respect of the amount due to the Board under the provisions of the Act. Sections 48, 53, 58 and 59 of the Act read as follows: "48. Scales of rntes for ser>"ices performed by Board or other person.- (/) The Authority shall from time to 1ime, by norification in the Oj}icia/ Gazelle . .fame a scale of roles al which, andr freight and other charges where such lien MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS 483 [DEEPAK GUPTA. J.] exists and has been preserved in the manner provided in subA section (I) o.fsection 60, and for money payable to the Central Government under any law for the time being in force relating to customs, other than by way of penalty or fine." The Union oflndia relics upon the provisions of Section 128 of the Act, which read as follows: B "128. Savi11g of right of Ce11tral Gover11111e11t a11d 1111111icipa/ities to use wharves, etc., for collecti11g duties a11d of power of Customs Officers.- Nothing in this Ac/ shall ajfect- (1) the right of the Central Government to collect customs duties ur of any 1111inicipali1y to collect tuw11 duties at any dock, berth, whwj; quay, stage, jetty or pier in the possession of a Board, or (2) any power or authority vested in the customs authorities . under any law for the time being in force." As far as the Customs Act is concerned, we may refer to Section 45 and Section 160(9) of the Act, which read as follows: "45. Reslriclions on cuslody and removal of imported goods. - (I) Save as otherwise provided in any law for the time being in force, all imported goods, unloaded in a customsoarea shall remain in the custody of such person as may be approved by the Principal Commissioner of Customs or Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. c D E F (2) The person having cuslody of" any imported goods in a customs area, >vhether under the provisions of sub-section (I) or under any law for the time being in force, - (a) shall keep a record of such goodv and send a copy thereof to the proper officer; (b) shall not permit such goods to be removed ji"om 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 afier G H 484 A B c D E F G H SUPREME COURT REPORTS (2017] 11 S.C.R. unloading thereof in a custom' area while in the custody of a person referred to in suh-section ( 1), that person shall he liahle to pay duty on such good1· at the rate prevailing on the date of deli wry of an impon manifest VI; as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said good' were carrie(/. " "160. ReJJl!lll 1111d savi11gs.- xxx xxx xxx (9) Nothing in this Act shall af]'ec:t any law for the time being in force relating to the constitution and powers of any Port authority in a major port as dejined in the Indian Ports Act, 1908 (/ 5 of 1908). " Regulations 2(b) and 6(1) of the 2009 Regulations arc also relevant and the same read as follows; "2. Definitions.- xxx xxx xxx (b) "Customs Cargo Services provider" means any person re.SJ-'Onsible.lor receipt, storage. delive1:11. c/ispalch or otherivise handling of imported goods and export goods and includes a custodian as r~/'erred to in section 45 of the Act and persons as referred to in sub-section (2) of section 141 of the said Act." "6. Respo11sibilities of tire Customs Ct1rgo Service prm•itle1:- (JJ The Customs Cargo Service provider shall - xxx .rxx xxx (/) sul1ject lo any other law for the time being in .force, shall not charge an)' rent or de11111rrage 011 the goocls seized or detained or confiscated by the Superintende/11 of Customs or Appraiser or lnspeclor of Customs or Preventil'e officer ur examining officer. as the case may be. " 20. The issue whether an importer is liable to pay dcmurrage charges even when the imported goods have been detained by the Customs Authorities and later it is found that the version of the imponcr is correct, has been the subject matter of a number of decisions. In the MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS [DEEPAK GUPTA, J.] case of Trustees of the Port of Madr11s v. Ml.~ Ami11cl11111d PJ•11relal', the Customs Authorities had issued detention certificate ofimported goods. There was no fault or negligence on the part of the imp011cr. The Truskcs of the Port of Madras waived demurragc charges for the period of detention; thl' impo1tcr paid the balance amount and cleared the goods. Later. the Board wrote to the Customs Authorities that the detention ce11ilicatc had been wrongly issued. Thereafter, the Board sued the importer for recovery of the balance dcmurrage charges. It was urged that the Board could not charge demurrnge for the period during which the goods had been detained for no fault orncgligenee of the impo1tcr or his agent. This Court, alter noticing the provisions of the Madras Port Trust Act. especially Sections 42, 43 and 43A thereof. which are similar to the provisions of the Major Po1t Trusts Act, 1963 referred to above, he Id that the Board was entitled to claim the rates as framed under the provisions of the said Act. This Court held that the Port Trusts were public representative bodies entrusted by the Legislature with authority 485 A B c to frame the scak of rates and the conditions subject to which these D rates and services were to be rendered. These rates were approved by the Central Government and, thereafter. the rates had the force of the law. It was held that the Port Trusts were under a statutory obligation to render services of various kinds in the larger public and national interest. ln case there is congestion in the port it would affect the free movement of ships and of essential goods. Therefore, the scale of rates had to be framed in such a manner that it worked both as an incentive to the impo1ters to remove the goods as expeditiously as possible from the transit areas and also acted as a disincentive to keep the goods in the premises of the Bcnm\ for a long time, thereby increasing the dcmurrage charges substantially with passage of time. This Court held that the High Court was in error in holding that the Board's power to charge demurragc \,·as limited to cases where the goods were not removed from its premises due to some fault or negligence on the part of the importer. 21. In Bo11ril ofTr11.1·tees of tire Port of Bo111/u1y v. /11di1111 Goods Supplying Co', this Court held that it was the duty of the Board to rc·cover rates: the Board had a lien on the goods and the right to seize and detain the goods, until the rates were fully paid and to sell the goods if the rates were not paid and recover the same. It was held that ce1tain concessions may be given taking into account the hardship of the '\t976)3SC'C t67 '\1977) 2 sec 649 E F G H 486 A B c D E F G SUPREME COURT REPORTS [2017] ll S.C.R. importers, but the legality of the rates cannot be questioned. This Court went on to hold that the importer of the goods was liable to pay the demurrage charges even if the importer was not responsible for any delay, nor any fault could be attributed to the importer. 22. In Board of Trustees oftlte Port of Bombay" Jai Hi11d Oil Mills Co111pa11y', this Com1 noted that the provisions of the Major Port Trust, 1963 were pari materia to the acts governing the Individual Port Trusts prior thereto. It was held that the demurragc charges arc levied in order to ensure quick clearance of the cargo from the harbour and the rntes are fixed in such a way that they would make it unprofitable for the importer to use the port premises as a warehouse. 23. In all these cases, this Court took the view that the Board of Trustees of the Pm1s, which arc creations of a statute, arc entitled to charge dcmurragc and other charges from the importer even in respect of those pl'fiods during which the importer was unable to clear goods from the premises of the Board, for no fault or negligence on the part of the importer. It was further held that the Boards were entitled to charge demurrage from the importer even when the importer was unable the clear the goods because of the detention thereof by the Customs authorities, which detention may lateron have been found to be unjustified. 24. The provisions of the International Airport Authority Act, 1971 arc similar in nature and these provisions came up for consideration before this Court in /11tematio11al Airports Authority v. Gra11d Slam /11fer1111tio11al4. In that case, this Court took note of Section 45 of the Customs Act and held as follows: "41. None of these provLvions entitles the Collector of Customs to debar /he collection of demurrage for llte storage of imported goods. They do 1101 entitle him lo impose conditions upon tlte proprielors 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 Callee tor of Customs until they are cleared and such person is obliged 1101 lo permit them to be removed fi"am the customs area or otherwise dealt with except under and in accordance with the permission of tlte Customs 1 (1987) 1 sec 648 H '11995)JSCCl51 MUMBAI PORT TRUST v. MIS. SHRI LAKSHMI STEELS 487 [DEEPAK GUPTA, J.) Officer. Section 45 does not state that such person shall not A be entitled to recover charges from the importer for such period as the Customs Authorities direct. 42. The 'purpose of the Gus toms Act 011 the one hand and the Major Port Trusts Act and the International Airports Authority Act on the .other hand are different. The former deals B with the collection of Customs duties on imported goods.