Win for Shipping Line: CESTAT Rules SCMTR Does Not Require Waiver of Detention Charges Beyond 60 Days [Read Order]

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that shipping lines are required to waive detention charges only for up to 60 days under the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMTR), and that any waiver beyond this period is not mandatory.

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ASR India Pvt. Ltd., the appellant, is a registered shipping line and authorised carrier under SCMTR. The company filed an appeal against the order passed by the Principal Commissioner of Customs, Mundra, which revoked its carrier registration and imposed a penalty of Rs. 50,000. The order alleged that ASR India failed to waive detention charges for containers that were held up by Customs for inspection, thus violating Regulations 10(1)(l) and 10(1)(m) of SCMTR.

The dispute began when four import containers managed by ASR India were detained by Customs authorities for detailed examination. Even after Customs later issued a No Objection Certificate (NOC) for clearance, the department accused ASR India of continuing to charge detention fees for the period the containers were under hold, despite instructions to waive them.

The appellant’s counsel argued that it had complied with Regulation 10(1)(l) by waiving detention charges for the Customs hold period, as required by law. The company pointed out that the regulation allows a waiver for up to 60 days, and any waiver beyond that period is discretionary.

They further argued that the direction to waive charges “until clearance” was not binding and that there was no clear or direct communication instructing them to do so. The appellant’s counsel relied on precedents such as G.K. International v. Principal Commissioner of Customs and S.U. Sirajdeen, which clarified that the waiver of detention charges is limited and subject to specific conditions.

The department’s counsel argued that ASR India had violated the SCMTR by not following its instructions and by failing to respond clearly to official letters seeking full waiver of charges. They argued that ASR’s inconsistent responses amounted to non-compliance and justified the revocation of its registration and the imposition of a penalty.

The two-member bench comprising Ramesh Nair (Judicial Member) and Raju (Technical Member) observed that Regulation 10(1)(l) requires waiver of detention charges only for the period of Customs hold, and even that is limited to 60 days. It clarified that the proviso to the regulation allows shipping lines to impose charges beyond 60 days at their discretion. The tribunal also found that ASR India had not deliberately violated any rule and that the directions given by Customs to waive all charges beyond the mandated period were not legally enforceable.

The tribunal set aside the order passed by the Principal Commissioner of Customs and allowed the appeal. It ruled that the penalty of Rs. 50,000 and the revocation of ASR India’s registration were unjustified. The tribunal concluded that ASR India had acted within the scope of SCMTR and advised both the company and Customs to ensure clearer communication in such matters going forward.

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