A NEW PERCEPTION OF MAJOR PORT TRUST ACT AND CUSTOMS LAW

The import is controlled or supervised with several laws such as Custom Tariffs Act, Customs Act, and so on. In pursuance of these laws, the importer binds to satisfy or follow the provisions of payment of customs duty or taxes levied upon, to obtain clearance from the Customs Department. Further, the importer, owner of the vessel must comply with rules and provisions of the Major Port Trust Act, 1963 (the MPT Act). The Supreme Court (SC), in the judgment of The Chairman, Board of Trustees, Cochin Port Trust vs M/S Arebee Star Maritime Agencies Pvt. Ltd. & Ors., dated 05.08.2020, has dealt with significant questions of law such as interpretation of provisions of the Act, provisions of Custom laws and so on. The incidence happened in 1998 when containers consisting of synthetic, woollen rags landed at Cochin Port Trust. While checking, the Customs Department placed hurdles for goods, as it was not the woollen rags as declared and such Act of consignee attracted liability imposed by the Customs Department. The goods were lying idle at the port, as the consignee did not clear the goods and the port imposed ground rent on the steamer agents/owners of the containers.

The SC in this judgment has interpreted sections of the MPT Act and Customs Act:-

The SC elaborated that, Section 2(o) of the MPT Act defines the owner about goods separately from the owner concerning any vessel. It is an inclusive definition, which includes a person who owned the goods or beneficially entitled to the goods like consignor, consignee and shipper and includes the agents for sale, custody, loading or unloading of goods. The facts of this case read with Section 2(o), excludes the ship-owner or its agent from the definition, therefore, considering the facts of loading-unloading by steamer's agent, it was hard to determine the steamer's agent as the owner.

Under Section 42(2) of the MPT Act, the Board may take charge of goods, only after request of the owner, to undertake the services and must give a receipt to the owner. So, in this case, the Board could not take charge of goods from the steamer's agent, as it is not the owner. Under Section 60(2), the goods will hold in the Board's custody on the risks of owners, until the lien is discharged. Further, the rent incurred for such hold must be paid by the 'parties entitled to such goods'. In this case, the ship-owner or agent is never considered as parties entitled to such goods'.

Goods sold under Section 62, any surplus must pay to the importer, owner or consignee of the goods u/s 63 of MPT Act. The definition of importer u/s 2(26) of Customs Act, 1962 includes any owner, beneficial owner or any person holding himself out to be the importer; therefore, word 'importer' in section 63 of MPT Act includes the beneficial owner.

Relying on upon Garden Silk Mills Ltd. and Anr v. Union of India and Ors. (1999) 8 SCC 744 and Mangalore Refinery & Petrochemicals Ltd. v. Commissioner of Customs (2006) 14 SCC 709, SC observed 'import', u/s 2(23) of Customs Act, completes only after goods crossed into territorial waters of India.

The SC denied the findings of the High Court of Kerala regarding the reading of the word "may" as "shall"; and stated, it was not the correct position in law, as discretion is given to the Board for selling the goods. The Board, within the meaning of Article 12, is considered as State, so bound to Article 14 of Constitution as stated in Dwarka as Marfatia and Sons v. Board of Trustees of the Port of Bombay (1989) 3 SCC 293. Further, the Board must sell such goods, exercising its constitutional duty, within a reasonable time from the date of custody.  

SC answered the following questions based on its analysis:-

Whether determination of liability of consignee or steamer agent based on the time when title to the goods transferred?

The Court held the time when the title of goods passed to the consignor was irrelevant for determining the liability.

Whether the determination of payment for storage charges is based on the bill of lading being endorsed?

The Court differentiated the bill of ladings endorsed to steamer agent (for delivery) and the owner of the goods (passing of title). Observing both as irrelevant, Court held, steamer agents would be liable for services of unloading until the port takes charge or gives a receipt, after that the owner, importer, consignee or their agents are liable for the demurrage charges for storage of goods.

Which provisions enable the port to impose liability on owners?

The Court observed the steamer's agent or the vessel itself should be liable for rates of the services, until the stage of landing and removal to storage. After that, the owner or other person entitled to such goods must pay detention charges and demurrage charges from the moment port trust takes charge of goods from the owner.

Whether port trust has any statutory or contractual obligation, to dyestuff every container and handed over to steamer agents?

Under the MPT Act and Custom Valuation Rules, 2007, the distinction is made between goods and containers. The containers under the category of 'suitable for repetitive use' could not classify as goods contained therein for payment of duty. Therefore, the person is liable to pay only for goods and obligation on the port to dyestuff and return the containers to the steamer agent.