A circular issued on 10th August 2020 (‘Circular’), by Central Board of Indirect Taxes and Customs (CBIC) calls urgently for a Special Drive to immediately dispose of all unclaimed/uncleared/seized/confiscated goods lying in the Customs Cargo Areas throughout India by 19th September, 2020. This, though a welcome step from the government, comes as a knee jerk reaction to the fiasco that occurred at the Port of Beirut recently. Unfortunately, the situation in India is not much better than that of Lebanon. The danger posed by the detained cargo lying in the Port areas across the country is dire. Just a few days after Beirut, attention was cast on a cargo lying in a Container Freight Station (CFS) near a Major Port in India, where 700 tonnes of Ammonium Nitrate was stored since 2015. This was the same chemical substance that caused the blast in Beirut and the consequent hue and cry among the public forcing the government to take action. This example is just the tip of the iceberg. A report tabled by the Comptroller and Auditor General (CAG) in the Parliament in early 2019 brings to light the grave dangers posed by the unattended cargo lying in huge quantity across the country. In fact, certain containers are said to contain live bombs and war materials since a decade! The Circular issued by CBIC, though not the first of its kind, shows urgency never seen before in addressing the problem and provides a very strict timeline for disposal. But the question that still remains unanswered is whether the current law is adequate to address the issue of unattended storage of dangerous materials, or will this Circular remain a dead letter law like the previous ones?
Scope of Customs Law
Under the Customs Act, 1962, when goods are seized by the authorities a Show Cause Notice (SCN) under Section 124 of the Act is issued usually within six months (Section 110 (2) of the Act), otherwise the goods ought to be returned to the person from whose possession they were seized. After confiscation, the offending goods become property of the Central Government and Government could sell/auction the goods.
The Customs Act, 1962 contemplates that the goods which are lying uncleared in the Port Area or Customs Area be disposed of within a period of 30 days. The CBIC has also issued various notifications to implement this statutory provision. Section 48 of the Customs Act, 1962 specifies the procedure for disposal of goods which are not cleared, warehoused or transshipped within thirty days of its unloading, after giving notice to the importer and getting permission from the proper officer. Section 49 of the Customs Act, 1962 provides for storage of imported goods in a public warehouse pending customs clearance. This facility is available for an initial period of 30 days which may be further extended by order of the appropriate authority. The legislative intent is clear; uncleared or unclaimed cargo is not to be stored in warehouses beyond a certain specified period of time. But the ground reality of the situation, at the Executive level, is a striking contrast.
The CAG Report
A Comptroller and Auditor General of India (CAG) Report tabled in the Parliament on 8th January, 2019 has expressed alarming concerns about the plight of uncleared cargo lying in Inland Container Depots (ICDs) in various parts of the country. As per the checks conducted by the CAG (as on March 31st, 2017) more than 7,877 containers were pending for disposal taking up a space of 1.17 lakh square kilometer out of which 3,397 (57%) had been pending disposal for over 3 years. Alarmingly, some of these containers containing live bombs and war material scrap have been lying at various ICDs for more than three years. The report identifies that almost all states have such containers with hazardous materials in storage pending disposal. It inter alia highlights the example of an ICD falling under the Jodhpur Commissionerate which has containers having 27 live bombs and 19.4 MT of war material scrap lying undisposed since 2008 and 195 kgs of empty cartridge shells and 102.8 MT of war material scrap lying undisposed since 2004.
The analysis of uncleared cargo which were lying idle in the Customs cargo areas by the report revealed that pendency was mainly due to delays in issue of No Objection Certificates by the Customs Department, delay in Clearance Certificates from participating agencies such as Plant Quarantine and Pollution Control agencies, delay in implementing orders for destruction of cargo and delay in re-export of containers. This not only causes economic loss to the Exchequer but also becomes a source of hazard for the people living and working in the vicinity of such places as well as the environment.
The Disposal Manual, 2019
The Disposal Manual, 2019 issued by the CBIC is the primary manual relied upon by the revenue authorities in dealing with the disposal and storage of seized and confiscated goods. Though this manual is comprehensive in dealing with aspects of how to dispose the goods, the methods of auction, the valuation etc., it is found lacking in any special instruction for safe storage of hazardous cargo. The Disposal Manual nowhere provides for extra precaution for storage of Cargo of a hazardous nature. The only precaution it seems to provide for is the installation of firefighting equipment, which is far from adequate. Therefore, it can be reasonably construed that the cargo containing hazardous materials are stored in the usual way without any special precaution. This underscores the lack of importance given by the government to the general safe practices of handling and disposing off uncleared cargo and poses a huge threat.
- The Supreme Court in a writ petition (W.P.657/1995) filed before it in the case of Research Foundation For Science Technology and Natural Resource Policy v. Union Of India And Others on 11 September, 2007 gave certain directions to the government, which culminated with a Circular from the Ministry of Finance . It divided wastes into two categories: –
A) Wastes that are banned: They must be re-exported, if permissible, or destroyed at the risk, cost and the consequence of the importer.
B) Wastes that are regulated: If they are permitted to be recycled or re-processed then they must be sold or auctioned off to such registered re-cyclers or re-processers having the requisite facilities.
- It is also laid down that the disposal/auction of hazardous waste shall be carried out under the supervision of the Monitoring Committee on Hazardous Waste Management.
- The Ministry of Finance further issued another circular, vide Circular No.49/2018 which provides precise and strict timelines to implement the disposal of Cargo. It also points out that the committee appointed by the Central Vigilance Commission (CVC) to examine the situation had concluded that there had been inordinate delays and complete breakdown of system resulting in a substantial loss to the government. Even though a stricter timeline has been prescribed by these circulars, there is a lack of accountability amongst the officers implementing it and there are no redressal mechanisms in place. Even if the officers in charge default in complying with these timelines, they only get a slap on the wrist in the form of a negative remark on their file. This has resulted in a lackadaisical implementation of the prescribed directions.
- The most recent attempted remedy is the Circular issued by CBIC on 10th of August, (F.No.450/179/2017) which took cognizance of the various unclaimed, undisposed cargo lying in various ports and the hazardous nature of some of them and instructed that the disposal of all the uncleared/unclaimed/seized be done expeditiously as per the timelines stated in the 2018 circular. Moreover, a Special Drive was instructed to be undertaken for complete disposal of all unclaimed/uncleared/seized/confiscated goods within a month (11.08.2020 to 15.09.2020) as per the prescribed guidelines.
Conclusion and Solutions
It is no secret that the lengthy nature of legal disputes and lack of proper resolution mechanisms for the issues is the primary reason why goods remain in the customs areas for an ostensibly long period. The reasons which led up to the Lebanon incident were quite similar, the Vessel MV Rhosus was embroiled in a lengthy legal dispute for years over Port fees, during which an accident occurred deeming it unseaworthy. Due to this the authorities took possession of the cargo (Ammonium Nitrate) and stored it in Warehouse No.12, in the Port of Beirut where it was stored for years due to the non-resolved legal issue. Despite repeated appeal by the authorities through letters informing of the impeding danger, there was no cognizance taken.
The attention and care required for Cargo containing dangerous substance is conceivably higher. It is therefore, important that certain specific guidelines for storage and disposal of dangerous cargo is laid down by the government with immediate effect to avoid another Beirut-like catastrophe.
A few suggestions to that effect are provided below: –
- The storage areas must be created far away from areas of human settlement or at least far away from densely populated areas.
- Special Designated Areas or specially licensed ICDs must be notified. These areas will act as exclusive zones to store hazardous cargo.
- The Monitoring Committee on Hazardous Wastes must actively evaluate the measures and actions undertaken at the national level in storage and disposal of hazardous cargos.
- Additionally, a Special Task Force (STF) for disposal of Hazardous Cargos must be set at the national level. The STF must be involved in the ground level implementation of the Government’s policy and must ensure the timely disposal of hazardous cargo. It may work under the oversight of the Monitoring Committee on Hazardous Wastes and report on its progress to the committee at regular intervals.
- A state level monitoring committee may also be setup in combination with SPCB (State Pollution Control Board) and the Customs Department.
- Courts must grant timely provisional relief in case of certain unclaimed cargos so that measure can be taken either for disposal or re-export of hazardous substances.
Cite As: S. Vibu Nandhan, ‘Management of Uncleared Hazardous Cargo in India: Have We Done Enough to Avoid Another Beirut?’ (The Contemporary Law Forum, 18 September 2020) <https://tclf.in/2020/09/18/management-of-uncleared-hazardous-cargo-in-india-have-we-done-enough-to-avoid-another-beirut> date of access.