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Great Eastern Shipping Co. Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1984)(17)ELT482Tri(Chennai)
AppellantGreat Eastern Shipping Co. Ltd.
RespondentCollector of Customs
Excerpt:
.....(i) paragraph 15 of the show cause notice proceeds on the basis of an assumption that the master, chief officer and chief engineer of the vessel colluded with the crew and allowed them to smuggle contraband goods by carrying them in the said vessel and allowing the crew to secrete the goods in the places under the charge of chief officer and chief engineer. without any materials on record, merely on the basis of recovery, the adjudicating authority has obviously initiated proceedings with pre-conceived bias against the appellants and therefore, the order of adjudication is vitiated. (ii) since no rules have been framed under section 115(2) of the customs act, the appellants cannot be expected to prove that they had taken precautions, as prescribed under the rules, which till date have.....
Judgment:
1. Appeals under Section 129A of the Customs Act, 1962 praying that in the circumstances stated therein, the Tribunal will be pleased to set aside the Order (Original) No. 4/83-R.D., dated the 30th September, 83 passed by the Additional Collector of Customs, Visakhapatnam.

2. These appeals coming up for orders upon perusing the records and upon hearing the arguments of Shri Venkateswaran, Advoctate of the appellant and upon hearing the arguments of Shri A. Vijayaraghavan, Departmental Representative for the respondent, the Tribunal makes the following order : 3. The above appeals are directed against the Order of the Additional Collector of Customs, Visakhapatnam in Order (Original) No. 4/83-R.D., dated the 30th September, 83, ordering confiscation of the vessel M.V.JAG DHIR, belonging to the appellant in Appeal No. 616/83 under Section,115(2) of 'the Customs Act, 1962 and imposing a redemption fine of Rs. 35,000 in lieu of confiscation and also imposing on each of the appellants, a penalty of Rs. 50,000 under Section 112 of the Customs Act, 1962. The brief facts relating to the appeal are as under :- 4. M.V. JAG DHIR, the vessel belonging to the appellant, M/s. Great Eastern Shipping Company Limited, Bombay, arrived at Port of Visakha-patnam on 16-8-82 from the Port of Vancouver (B.C.) via Singapore and on 17-8-82, Customs Officers started rummaging the same and the rummaging operations resulted in the recovery of the following goods from Hatch No. 6 in the ship.(a) Recovered from a rexine bag lying over the cargo (i) Johnie Walker Red Lable Scotch Whisky ... 9 Qrt. Bottles (ii) Black & White Scotch Whisky ... 4 Qrt.(b) Recovered from a cloth bag lying over the cargo (i) Johnie Walker Red Lable Scotch Whisky... 7 Qrts.

(ii) White Horse Scotch Whisky ... 1 Qrt.

(iii)Black & White Scotch Whisky ... 2 Qrts.(c) Recovered from a plastic bag lying over the cargo (i) National Panasonic Cassette Recorders Model No. RQ 2157 ... 2 Nos. (ii) Johnie Walker Red Lable Scotch Whisky .

... 1 Qrt. (iii)State Express Cigarettes 555 ... 200 pcs.

While digging the cargo, 2 more packages were recovered. On examination, the said packages were found to contain the following goods of foreign origin.

Scotch Whisky ... 24 Qrts.(ii)State Express Cigarette 7 ctns.

... 1400 pcs.Second package covered in cloth contained(i) J.W. Red Lable Scotch Whisky ... 5 qrts.(ii)White Horse Scotch Whisky ... 3 qrts.(iii)Black & White Scotch Whisky ... 3 qrts.(iv) VAT 69 Scotch Whisky ... 1 qrt.(v) State Express Cigarettes 555 ... 1000 pcs.

Besides these, search of the fan room also resulted in the recovery of the following goods of foreign orgin near the Air Trunking on the starboard side as under:(i) Kodak BKTRA 200 Pocket size camera 1 No.(ii) Dunhil Cigarettes 3 cartons 600 Nos.(iii) John Player special cigarettes 1 crtn. 200 Nos.

Further search on the vessel on 18-8-82, 19-8-82 and 20-8-82 resulted in the recovery of the following goods from the general places as detailed below :-----------------------------------------------------------------Date Place of recovery Description of the Qty goods recovered-----------------------------------------------------------------18-8-82 Recovered from the 1. Key chains 16 Nos.

roof panelling in the 2. Car Stereo Model 1 Nos.

AS 3020 unoccupied fitters 3. Marlboro cigarettes 200 pcs.

cabin.

4. White Horse Scotch Whisky 1 Qrt.

Recovered from the 1. National Panasonic 1 No. roof panelling petty Radio Cassette Recorder officers messoroem Model RQ 543 ADS19-8-82 Recovered from underneath 1. Car Stereo Cassette the main Engine bed on the Player with 2 band star board side.

Radio Model On 20-8-82 after a part discharge of muriate of Petash from Hatch No.6, digging operations of the cargo were undertaken against, which resulted in the recovery of the following goods of foreign origin...

5. The aforesaid goods were seized under cover of Mahazar attested by witnesses. The Master of the Ship, the appellant in appeal No. 1 of 84 and the crew members were examined under Section 108(1) of the Customs Act, '62 and their statements were recorded. On completion of investigations, show cause notices were issued to the appellants and others which eventually culminated in the orders now appealed against.

6. The learned counsel appearing for the appellants contended, inter alia :- (i) Paragraph 15 of the Show Cause Notice proceeds on the basis of an assumption that the Master, Chief Officer and Chief Engineer of the vessel colluded with the crew and allowed them to smuggle contraband goods by carrying them in the said vessel and allowing the crew to secrete the goods in the places under the charge of Chief Officer and Chief Engineer. Without any materials on record, merely on the basis of recovery, the adjudicating authority has obviously initiated proceedings with pre-conceived bias against the appellants and therefore, the order of adjudication is vitiated.

(ii) Since no rules have been framed under Section 115(2) of the Customs Act, the appellants cannot be expected to prove that they had taken precautions, as prescribed under the Rules, which till date have not been framed and so the confiscation under Section 115(2) is bad in law.

(iii) Proceedings under Section 112 of the Customs Act are penal in nature and therefore, unless the appellants as owner or master had any knowledge of the contraband goods or had connived at the keeping or concealment of the same, imposition of personal penalty would not be legally tenable.

(iv) The adjudicating authority has not given a finding that the appellants were in any way concerned in the concealing, harbouring and possession of the contrabands and therefore, should have exonerated the appellants of the charge under Section 112 of the Customs Act.

(v) The appellants were not permitted to cross examine the officer who issued the show cause notice which besides being violative of the principles of natural justice has caused prejudice to the appellants.

(vi) When the adjudicating authority has on the same materials exonerated the Chief Engineer and the Chief Officer and dropped the charges against them on the same reasoning, the appellants also should have been exonerated and the lower authority is in error to have adopted a different yardstick in evaluating the evidence against the appellants.

7. The learned Departmental Representative repelling the contentions of the appellants submitted that the contraband goods in question were detected from different places in the vessel, such as, Hatch No. 6, Fan Room, Cabin of Crew Members, Roof panelling etc., during the rummaging operations. The goods were kept neatly packed and in the circumstances, knowledge on the part of the Master can easily be presumed. It was further urged that no knowledge as a proposition of law or mens rea is necessary to bring home the charge of confiscation under Section 115(2) of the Customs Act and imposition of penalty under Section 112 of the Customs Act. It was urged by the Departmental Representative that under Section 11 l(f) of the Act, dutiable or prohibited goods required to be mentioned under this regulations in an import manifest or manifest report are liable to confiscation if they are not so mentioned and under Section 112, any person who in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111 shall be liable to a penalty.

A combined reading of Sections 111 and 112 would make it clear that any commission or omission oh the part of a person in relation to any goods which would render such goods liable to confiscation would attract a penalty on the person concerned. In the instant case, contraband goods admittedly have not been mentioned in the import manifest and are therefore, liable for confiscation under Section 111 of the Act. This confiscation is the result of a omission or commission on the part of the master of the vessel and therefore, the Master is liable for penalty under Section 112 of the Act. It is an admitted case that the officer who investigated the matter has beed cross-examined by the appellants and the officer who issued the show cause notice did not do any investigation at all except issuing the show cause notice and under such circumstances the appellants would not be entitled to cross-examine the officer who issued the show cause notice nor can the appellants plead any prejudice for denial of the same. So far as the confiscation and the consequent redemption fine imposed on the appellants under Section 115 of the Act are concerned, there is a presumption against the appellants under Section 115(2) of the Act and the burden of establishing that transport of contraband goods was without the knowledge of the appellants is on the appellants as per Section 115(2) of the Act. The mere plea of the appellants that they gave instructions to the crew and also circulated instructions cautioning them against induging in smuggling would not amount to discharging the onus of proof cast on them under Section 115(2) of the Act. The Departmental Representative finally urged that though the Chief Engineer and the Chief Officer have been exonerated, it is open to the adjudicating authority to find the appellants guilty under Sections 112 and 115 of the Customs Act on the materials available on record.

8. We have carefully considered the various submissions of the appellants herein. Even though, the show cause notice proceeds with the allegation that there was collusion on the part of the Master and the other members of the crew, it does not mean that the adjudicating authority has already entertained a pre-conceived bias against the appellants. A scrutiny of the show cause notice would only indicate that what was sought to be put against the appellants was the materials collected during the investigation warranting an enquiry related to confiscation and penalty. Therefore, we reject the contention of the appellants that the show cause notice proceeds with a pre-conceived bias against the appellants. Likewise, the plea of the appellants that the denial of an opportunity to cross-examine the officer who issued the show cause notice is violative of the principles of natural justice is also not legally tenable. The materials on record clearly indicate that the investigating officer who conducted the investigation has not only offered himself for cross-examination but also has been indeed cross-examined at length. When the officer who issued the show cause notice has not done any act of investigation but has merely issued the show cause notice, no purpose would be served in the appellants cross-examining the officer because even according to the Department, the officer who issued the show cause notice does not know personally anything about the recovery of the contraband or the connected investigation. We therefore, reject this contention of the appellants also as devoid of merits.

9. The contention of the appellants that Section 115(2) cannot be invoked in the absence of rules prescribing precautions to be taken by the owner or the person in-charge of the vessel, is also not tenable because even if rules have not been prescribed regarding the precautions to be taken, if a vessel is found to be transporting contraband goods, the vessel will be liable for confiscation under law unless the owner of the person in-charge of the conveyance proves that it was so used without his knowledge or connivance. In the instant case, this onus of proof statutorily cast on the appellants has not been discharged. The mere ipsi-dixit of the Master that he circulated necessary instructions to the crew members against indulging in smuggling activities and giving other instructions would not help the appellants in any way. It is relevant to note in this context the ruling of the Supreme Court reported in 1983 E.L.T. 1392 in the case of Indo China Steam Navigation Co. Ltd. v. Jasjit Singh, Additional Collector of Customs, Calcutta and others wherein the Supreme Court had occasion to interpret the true scope and effect of Section 52A of the Sea Customs Act, 1878 (8 of 1878) vis-a-vis Section 167 (12A) of the Act. Section 52A of the Sea Customs Act, 1878 prohibited entry of the vessel so constructed, adopted, adjusted, altered or fitted as to conceal goods which would entail confiscation of the vessel under Section 167(12A) of the Sea Customs Act. The Supreme Court held that it was intended to put an end to illegal smuggling which has the effect of disturbing very rudely the national economy of the country, and the ratio-decidendi of the railing of the Supreme Court is that mens rea it not a sine-quo-non for confiscation of the vessel in such circumstances. Likewise, we find under Section 115(i) of the Customs Act, the various circumstances under which a vessel or a conveyance could be confiscated without any mens rea on the part of the owner or the person in-charge of the same. No doubt, under Section 115(2), if the owner of the conveyance or the person in-charge of the same is able to prove that the conveyance was used without his knowledge or connivance, there cannot be any confiscation, but, in the instant case, we are not satisfied that the appellants have satisfactorily established that the huge quantity of contraband goods recovered from the ship were without the knowledge of the Master. We, therefore, uphold the order of confiscation of the vessel by the adjudicating authority under Section 115(2) of the Customs Act, 1962 and the consequent redemption fine imposed on the appellants.

10. Regarding the penalty imposed on the appellants under Section 112 Of the Customs Act, 1962, the learned Counsel for the appellants relied upon the judgment of the Bombay High Court in the case of Misc.

Petition Nos. 1984 and 2048 of 79 between Garware Shipping Corporation Ltd. v. J.H. Joglekar, Additional Collector of Customs (Prev.) Bombay.

P.R. Swant, Master of the vessel, "RISHI VISWAMITRA" and Anr. v. J.H.Joglekar, Additional Collector and Anr., and contended that Section 112 of the Act makes it clear that personal penalties can be imposed provided the owner or the Master of the ship does any act or omits to do any act or omission which would render confiscation of the goods under Section 111 of the Act. No doubt the ruling of the Bombay High Court, relied upon by the learned counsel for the appellants is to the effect that Section 112 pre-supposes that the act or failure on the part of any person is with prior knowledge of the existence of the goods on the vessel and in the absence of any knowledge of the existence of the goods, it is impossible to imagine that the owner or the Master would be required to file any import manifest or any import report setting out the list of such goods. We are not going now into the question of the applicability of ratio of the ruling of the Bombay High Court to the facts and circumstances of this case because on factual analysis we are inclined to take the view in the instant case that the finding of the adjudicating authority under Section 112 of the Customs Act against the appellants is not maintainable. As rightly contended by the learned counsel for the appellants, when the adjudicating authority has clearly exonerated the Chief Engineer and the Chief Officer with reference to the charge under Section 112 of the Act, he should, on the same reasoning, have exonerated the appellants also. The adjudicating authority, in other words, cannot adopt different standards or yardsticks for evaluation of the same circumstances and material, one in favour of the Chief Engineer and Chief Officer and the other against the appellants: If the adjudicating authority had thought on factual analysis of the situation that the evidence on record would not warrant a finding against the Chief Engineer and the Chief Officer under Section 112 of the Act, we see no reason as to how he could feel pursuaded to find the appellants herein guilty of Section 112 on the very same evidence. Apart from it, the adjudicating authority appears to have exonerated the Chief Engineer and the Chief Officer on the ground that they could not be considered as person-in-charge of the vessel and, therefore, they cannot be proceeded against under the Customs Act. In our opinon to bring home the charge under Section 112 of the Customs Act, the question as to whether a person was or was not in charge of the vessel has no relevance. The mere fact that the Master was in-charge of the vessel could not be the foreground on the basis of which he could be found guilty of an offence under Section 112 if the circumstances concerned do not warrant the same. In this view of the matter, we exonerate the appellants of the charge under Section 112 of the Customs Act, in the facts and circumstances of this case and set aside the impugned order in respect of the same.

11. We, therefore, affirm the finding of the adjudicating authority in respect of the confiscation of the vessel and consequent redemption fine but set aside the personal penalty of Rs. 50,000 imposed on each of the appellants under Section 112 of the Customs Act, 1962. The appeal is thus partly allowed.


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