Case Law Details

Case Name : Delhi International Airports Pvt. Ltd. Vs Commissioner Of Customs (Appeals) (CESTAT Delhi)
Appeal Number : Customs Appeal No. 52280/2019
Date of Judgement/Order : 23/09/2021
Related Assessment Year :

Delhi International Airports Pvt.Ltd. Vs Commissioner Of Customs (Appeals) (CESTAT Delhi)

 Delhi International Airports Pvt. Ltd (Appellant) has filed the current appeal being aggrieved against Order-in Appeal dated June 19, 2019 (’OIA’) in which the penalty was imposed on the Appellant for the removal of consignment as heavy as 700 Kgs from the Customs Area without filing the Bill of Entry for the same.

Factually, a consignment consisting of one package declared as machine parts weighing 700 kg shipped by M/s. Hartland Technologies Ltd., Hong Kong to M/s. Fern Grove Precision Concepts India, Noida through King Fisher Airlines and got entered but was got removed from the Import shed of Air Cargo complex, IGI Airport, New Delhi without filling Bill of Entry. The officers observed that Commissioner of Customs (IMG) New Delhi had appointed the Appellant as custodian of the imported goods with effect from May 03, 2006 until the goods are cleared for home consumption or are warehoused or are transshipped otherwise in terms of provisions of Customs. The said arrangement was regularised till March 16, 2014. However, the Appellant through concessional agreement between the Appellant and M/s,. Delhi Cargo Terminal Management India Pvt. Ltd. has appointed M/s. CELEBI to outsource its duty to upgrade, modernize, finance, operate, maintain and manage the existing cargo terminal at Delhi Airport.

Handling of cargo in Customs area will always be responsibility of the Custodian

The Department accordingly, opined that M/s. CELEBI failed to perform its duty and has also failed to abide by the provisions of Acts and Rules, Regulations Notifications and orders issued thereunder. Since the Appellant was otherwise appointed custodian under the Customs bond, it was proposed to be vicariously liable for all the acts of M/s. CELEBI. Accordingly, a show-cause notice dated March 13, 2015 was served upon the Appellant as well as M/s. CELEBI proposing the imposition of penalty on them under the provisions of the Customs Act, 1962 (“the Customs Act”).

It is submitted by the Appellant that since the Appellant has handed over day-today operation of cargo at Delhi Airport to M/s. CELEBI, it was M/s. CELEBI who was supposed to handle, manage cargo handling and storage of Import /export cargo at Delhi Airport in terms of provisions of Handling of Cargo in Customs Area Regulation, 2009 (“the HCCR”). Hence it can be M/s. CELEBI only to be held responsible for the consignment as heavy as that of 700 Kgs to be removed from the Customs Area without filing the Bill of Entry for the same. The penalty imposed upon the Appellant has wrongly been fixed. It is submitted that the Appellant cannot be held even vicariously liable for the faults of M/s. CELEBI.

The Hon’ble CESTAT, New Delhi considering the Section 45 of the Customs Act held that Bare perusal of the Act makes it clear that the person who approved by competent officer of Customs to be the Custodian of goods lying in customs area is duty bound for handling of cargo in the Customs area as mentioned in Section 45(2)(b)of the Customs Act till the goods are removed from the Customs area. As per Section 45(2)(b), the custodian is duty bound to not to permit such goods to be removed from the customs area except after proper permission. From the admitted facts, it is clear that approval of Principal of Commissioner of Customs was given in favour of Appellant and not in favour of M/s. CELEBI. Permitting the Appellant to enter into concessional agreement with M/s. CELEBI cannot be considered as approval as is mentioned in Section 45 of the Customs Act. Otherwise also, it was the statutory mandate for the person so approved to furnish the custodian bond which Appellant had furnished. The CESTAT held irrespective of the concessional agreement, the above fact is sufficient to hold that Custodian as is approved under Section 45 till date is the Appellant.

Further, held that the CESTAT do not find any infirmity nor any illegality when Adjudicating Authority has held violations of provisions of Section 141 of the Customs Act on account of said admission. Further, Rule 6(2) of HCCR restricts such contracting or outsourcing of Cargo handling functions. Even if the permission for outsourcing was given to the Appellant, the said permission was agreed to be coterminous with custodianship of the Appellant and was held subject to fulfillment of provisions of the Customs Act and the Rules and Regulations made thereunder. The provisions of the Customs Act and that of the HCCR do not absolve the custodian of the responsibilities as mentioned in these Regulations to be observed by the Custodians itself, the CESTAT do not find any infirmity with the order under challenge where simultaneously penalty has been imposed upon the Appellant as well. The order is accordingly, upheld.

FULL TEXT OF THE CESTAT DELHI ORDER

PER RACHNA GUPTA

Present appeal has been filed being aggrieved of order in original Bearing No. 266/2019-20 dated 19.6.2019. The factual matrix relevant for the present adjudication in brief is as follows:

The officers of SIIB, Air cargo, Import New customs House while acting on an intelligence, observed that a consignment consisting of one package declared as machine parts weighing 691 kg shipped by M/s. Hartland Technologies Ltd., Hong Kong to M/s. Fern Grove Precision Concepts India, Noida covered under Air way Bill No. 090-4101-5564 IGM No. 207442, Flight No. IT 32 dated 04.12.2011 of King Fisher Airlines and that got entered but was got removed from the Import shed of Air Cargo complex, IGI Airport, New Delhi without filling Bill of Entry. The officers observed that Commissioner of Customs (IMG) New Delhi vide Public Notice No. 10/2006 had appointed M/.s Delhi International Airport Pvt. Ltd. (DIAL), the appellant as custodian of the imported goods with effect from 03.05.2006 until the goods are cleared for home consumption or are warehoused or are transhipped otherwise in terms of provisions of Customs. The said arrangement was regularised till 16.03.2014 vide letter dated 07.02.2012. However, M/s. DIAL through concessional agreement between M/s. DIAL and M/s,. Delhi Cargo Terminal Management India Pvt. Ltd. (DCSC) has appointed M/s. CELEBI to outsource its duty to upgrade, modernize, finance, operate, maintain and manage the existing cargo terminal at Delhi Air port.

2. The Department accordingly, opined that M/s. CELEBI failed to perform its duty and has also failed to abide by the provisions of Acts and Rules, Regulations Notifications and orders issued thereunder. Since M/s. DIAL was otherwise appointed custodian under the Customs bond, it was proposed to be vicariously liable for all the acts of M/s. CELEBI. Accordingly, a show cause notice bearing No. 91/DC/SIIB/ACC Imports/2015 dated 16.3.2015 was served upon M/s. DIAL as well as M/s. CELEBI proposing the imposition of penalty on them under the provisions of Customs Act, 1962. The said proposal was initially accepted vide Order in Original No. 507/2016 dated 22.01.2016 vide which the penalty of Rs. One lakh each was imposed on M/s. DIAL and M/s. CELEBI. The said order has been confirmed vide the Order under challenge.

3. I have heard Shri Anuj Kant, learned Authorised signatory (GM-Taxation) for the Appellant and Shri Pradeep Gupta, learned Authorised Representative for the Department.

4. It is submitted on behalf of the appellant that there is no denial to the fact that duties assigned to M/s. DIAL by Airport Authority. Commissioner of Customs (IMG) New Delhi were being outsourced by M/s. DIAL to M/s. CELEBI, after being duly executing the concessional agreement in the year 2009. It is submitted that since M/s. DIAL has handed over day-today operation of cargo at Delhi Airport to M/s. CELEBI, it was M/s. CELEBI who was supposed to handle, manage cargo handling and storage of Import /export cargo at Delhi Airport in terms of provisions of Handling of Cargo in Customs Area Regulation, 2009 (HCCR, 2009). Hence it can be M/s. CELEBI only to be held responsible for the consignment as heavy as that of 700 Kgs to be removed from the Customs Area without filing the Bill of Entry for the same. The penalty imposed upon M/s. DIAL has wrongly been fixed. It is submitted that M/s. DIAL cannot be held even vicariously liable for the faults of M/s. CELEBI. Order accordingly, is prayed to be set aside. Appeal is prayed to be allowed.

5. While rebutting the submissions, learned Departmental Representative has impressed upon that M/s. DIAL only was appointed the custodian as is required under Section 45 of the Customs Act and the provisions cost. Hence it is statutory obligation of M/s. DIAL to be responsible for handling cargo in the Customs area. Not only this, the provisions of Section 141 (2) of Customs Act, 1962 have also been violated. As such, M/s. DIAL has rendered themselves liable to penalty under Section 117 of the Customs Act , 1962. Therefore, there is no infirmity nor any illegality in the order under challenge where penalty has been imposed even on M/s. DIAL. Appeal is accordingly, prayed to be dismissed.

6. After hearing the parties and perusing the entire record, I observe and hold as follows:

Following are the admitted facts:

1) Vide Public Notice No. 10/2006, M/s. DIAL were appointed Custodian of imported goods with effect from 3rd May, 2006. The said sanction was regularised till 16th March, 2014.

2) Custodian M/s. DIAL entered into concessional agreement on 24.08.2009 with M/s. CELEBI Delhi Cargo Terminal Management India Pvt. Ltd. to upgrade, modernize, finance, operate, maintain and manage the existing cargo terminal at Delhi Air port.

3) Permission for outsourcing the functions required to be carried out by M/s. DIAL to M/s. CELEBI was granted in terms of Regulation 6 (2) of Handling of Cargo in Customs Area Regulation, 2009.

4) Lastly, the consignment weighing 691 Kgs as was imported from Hong Kong got removed from the Customs Area without filing of Bill of Entry.

7. Apparent from the above admitted facts M/s. CELEBI is directly responsible for the aforementioned lapse amounting to improper handling of cargo in Customs area. Whether or not M/s. DIAL can simultaneously be held liable for violating relevant provisions need to be looked into. The provisions read as follows:

Clearance of imported goods

SECTION 45. 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 [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.

2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the 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 [or in such manner as may be prescribed].

[(3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilferred 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 [arrival manifest or import manifest] or, 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 goods were carried.]

SECTION 141. Conveyances and goods in a customs area subject to control of officers of customs.

[(1)] All conveyances and goods in a customs area shall, for the purpose of enforcing the provisions of this Act, be subject to the control of officers of customs.

[(2) The imported or export goods may be received, stored, delivered, despatched or otherwise handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed.]

8. Bare perusal of the Act makes it clear that the person who approved by competent officer of Customs to be the Custodian of goods lying in customs area is duty bound for handling of cargo in the Customs area as mentioned in the sub clause (2)(b) of section 45 till the goods are removed from the Customs area. As per section 45(2)(b), the custodian is duty bound to not to permit such goods to be removed from the customs area except after proper permission. From the admitted facts, it is clear that approval of Principal of Commissioner of Customs was given in favour of M/s. DIAL and not in favour of M/s. CELEBI. Permitting M/s. DIAL to enter into concessional agreement with M/s. CELEBI cannot be considered as approval as is mentioned in above section 45. Otherwise also, it was the statutory mandate for the person so approved to furnish the custodian bond.

Apparently and admittedly it is M/s. DIAL who has furnished the custodian bond dated 0-5.05.2006 under section 45 of Customs Act for Rs.4,00/- crore for Import Cargo with Commissioner of Customs (IMG), New Delhi with bank guarantee of Rs.40 crore (still continuing). Technically speaking irrespective of the concessional agreement, the above fact is sufficient to hold that Custodian as is approved under Section 45 till date is M/s. DIAL.

9. I further observe from the Order under challenge that learned Commissioner (Appeals) has thoroughly gone through the concessional agreement and observed that despite outsourcing of Custodian duty by M/s. DIAL to M/s. CELEBI, the agreement still required M/s. CELEBI to submit detailed development plan corroboration plan the concept trading etc. to M/s. DIAL before proceeding with any future upgradation, modernization, of cargo terminal. M/s. DIAL was still entitled to inspect the development processes and to issue such directions as may be deemed appropriate by M/s. DIAL to remove any defect in designing for upgradation (para 6.1.4 of Concessional agreement). Learned Departmental Representative has also referred to various other similar paragraphs in said agreement. Hence I am of the opinion that it has rightly been held that M/s. CELEBI was never intended to be a Custodian and M/s. DIAL cannot absolve them from the responsibilities and obligations casted upon them in the manner prescribed as per section 145 of Customs Act, 1962 and those as are mentioned in HCCR, 2009.

10. The HCCR regulations define Customs Cargo Service provider to mean any person responsible in receipt, award, delivery, discharge or otherwise handling of imported goods and exported goods and includes the custodian as referred to in Section 45 of the Act and the persons as referred to in sub-section (2) of Section 141 of the said Act. The use of words while ‘includes the custodian’ again corroborates the finding of the Adjudicating Authority Below. The legislature clearly intends for custodian to be always responsible about the duty as far as handling of cargo in customs area is concerned. Rule 5 of these Regulations talks about the conditions to be fulfilled by the Customs Cargo service provider.

11. Further from the record of the case, I observe that M/s. DIAL after taking notice of the impugned incidence of removal of package without filing of Bill of Entry have taken measures to avoid any such incidence in future. All the conditions which are required to be
complied with under Rule 5 of HCCR, 2009, are admitted to have been complied with by M/s. DIAL post the impugned incidence. I do not find any infirmity nor any illegality when Adjudicating Authority below have held violations of provisions of Section 141 of the Customs Act on account of said admission. Further, Rule 6(2) of HCCR restricts such contracting or outsourcing of Cargo handling functions. Even if the permission for outsourcing was given to M/s. DIAL vide the letter of Commissioner of Customs (IMG) dated 07.07.2012, the said permission was agreed to be coterminus with custodianship of M/s. DIAL and was held subject to fulfilment of provisions of Customs Act, 1962 and the Rules and Regulations made thereunder.

12. Admittedly the custodian bond was still of M/s. DIAL. M/s. CELEBI never substituted the same. As already discussed above, the provisions of Customs Act and that of HCCR do not absolve the custodian of the responsibilities as mentioned in these Regulations to be observed by the Custodians itself, that I do not find any infirmity with the order under challenge where simultaneously penalty has been imposed upon M/s. DIAL as well. The order is accordingly, hereby upheld. Appeal accordingly, stand dismissed.

(Pronounced in the open Court on 23-09-2021)

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(Author can be reached at [email protected])

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