MUMTAZ MEHBOOB MUNSHI v. COMMISSIONER OF CUSTOMS (PORT), KOLKATA AND OTHERS

standing counsel for the second respondent and Mr. Rajesh Kumar Shah, learned standing counsel for the Union of India.

The appellant had filed a writ petition praying for return of the interest amount of Rs. 13,04,464/- which according to the appellant has been illegally collected in the name of rent, insurance and GST charges which are not payable by the appellant. The facts leading to the filing of the writ petition are set out hereunder:

The appellant was granted advance license by the Foreign Trade Development Officer, Mumbai dated 26.06.2002 to manufacture and export of 310 metric tons of zinc oxide of 100% purity through their supporting manufacturers. On 15.07.2002, the appellant purchased on high sea sales basis zinc ingots the said product which were stuffed into eight containers, were ceased by the Directorate of Revenue Intelligence, (DRI) on the allegation that the goods were to be diverted to the local market instead of sending the same to the supporting manufacturers for manufacture of goods to be exported. Show cause notice dated 14.02.2003 was issued as to why, REPORTABLE APO NO. 28 OF 2023 the eight containers which were detained should not be signed and the goods to be confiscated in terms of Section 111 of the Customs Act, 1962, (the Act). The appellant submitted their reply and the show cause notice was adjudicated culminating in an order-in-original dated 31.10.2005, confiscating the goods under Section 111(m) and (o) of the Act with an option to redeem the goods on payment of redemption fine of Rs.

The learned single bench noted that under the pre-amended Section 68, there was a provision that the goods which were warehoused may be cleared for home consumption after paying rent however the said provision was deleted by way of substitution of the said Section with effect from

14.05.2006 by Finance Act, 2016. The learned writ court noted that it is an admitted position that the goods in question which were kept in the bonded warehouse for which rent has been demanded and recovered from the appellant/writ petitioner pertains the period prior amendment/substitution as the period for which rent has been recovered is from 2001 to 2009 which covers both pre-substituted provisions of Section 68 and post substituted provisions of Section 68. The learned Writ court held that CWC was perfectly justified in demanding rent for the period prior to 14.05.2016 and the appellant is entitled for refund of the rent which has been collected for the period after 14.05.2016. The appellant being aggrieved by that portion of the order passed by the learned single bench in not granting full relief to the appellant by way of directing refund/return of the entire amount has filed the present appeal.

The case of the appellant is that the amendment to Section 68 of the Act by which the term “rent” has been deleted by way of substitution is REPORTABLE APO NO. 28 OF 2023 retrospective in nature and not prospective on and from 14.05.2016 when the substitution took place. It is submitted that Section 68(b) of the Act has been substituted whereby the words penalty, interest and other charges was substituted with the words interest, fine and penalties on 14.05.2016 which means the earlier provision was repealed and a new provision has been put in place instead and the new provision has to be read retrospectively from the time when the original Section was enacted. Further it is contended that the newly substituted provision has to be effective even for the goods kept in the warehouse prior to such substitution of the statutory provision of Section 68 of the Act otherwise while releasing the goods after such substitution, there would be unreasonable discrimination amongst all the goods being released. Further it is submitted that an amendment by way of substitution, no substantive right has been taken away nor any penal consequences has been imposed and only an obvious mistake was sought to removed and therefore the amendment will have retrospective effect. Thus, it is contended that when there was no provision under which the authorities can demand rent or warehousing charges from the importer, the amount which was paid by the appellant under protest has to be returned to the appellant.

The learned advocate appearing for the appellant has drawn our attention to the material papers annexed with the stay petition to demonstrate about the various orders which were passed by the authorities and ultimately communication sent by the Deputy Commissioner of Customs Group-IV, Customs House, Kolkata dated 18.09.2009 wherein it was acknowledged that the appellant has paid the applicable duty, interest, REPORTABLE APO NO. 28 OF 2023 fine and penalty and NOC from the DRI has also been issued to release the goods subsequent to adjudication of the case by the Commissioner of Customs (Port) and therefore the Deputy Commissioner of Customs, SPS (Port), Kolkata was directed to allow for clearance under the supervision of the preventive officer. It is submitted that inspite of such a direction, the goods were not released. By letter dated 17.11.2018, CWC informed DRI that the appellant had stated that they are not liable to pay storage charges of CWC and they are not bound to pay the charges as the cargo is detained by DRI under Section 110 of the Act. Therefore, CWC sought for necessary guidance from DRI. By communication dated 29.03.2019, the appellant was informed by Assistant Commissioner of Customs that Section 68 of the Act as applicable in the appellant’s case should be read as before the amendment of the Act in the year 2016 and hence the appellant is not entitled for protection under the amended Section 68 and cannot claim that the amended provision will operate retrospectively. Further it was stated that the detention charges and warehousing charges are payable to the custodians and shall be paid by the appellant even where the customs detention has been finally held as improper or illegal.

The learned advocate for the appellant placed heavy reliance upon the communication dated 25.05.2019 from the Deputy Commissioner of Customs, apprising Group IV, Kolkata, to the Regional Manager of CWC informing him to release the goods as per guidelines under Regulation 6(l) of the Cargo Handling Rules in Customs Area 2009 (regulations). In spite of said factual position, CWC by communication dated 04.07.2019, directed the appellant to pay the storage charges and insurance charges which was REPORTABLE APO NO. 28 OF 2023 paid by the appellant under protest. After referring to the amendment to Section 68 of the Act by Finance Act, 2016, published in the Gazette of India dated 14.05.2016, the learned advocate for the appellant referred to the Regulations 6(l) and submitted that the said regulation clearly states that subject to any other law for the time being in force, the customs cargo services provider shall not charge any rent or demurrage on the goods seized or detained or confiscated as the case may be. Therefore, it is submitted that no rent is payable by the appellant. With regard to the effect of substitution by way of an amending Act, it was contended that it has effect of deleting the old provision and make a new provision and therefore it is retrospective in character. In support of such contention, reliance was placed on the decision of the Hon’ble Supreme Court in Gottumukkala Venkata Krishamraju Versus Union of India and Others 1 and Government of India and Others Versus Indian Tobacco Association 2. With the above submission, the learned advocate appearing for the appellant prayed for allowing the appeal.

The learned standing counsel appearing for DRI contended that the order-in-original passed by the adjudicating authority has been accepted in full by the appellant, consequently the detention and seizure of goods are valid and therefore the appellant is liable to pay the warehousing charges to CWC. The learned advocate referred to Section 63 of the Customs Act before omission i.e. with effect from 14.05.2016 and submitted that prior to the said date the appellant is liable to warehousing charges/rent to CWC. To