1. The Revision Application filed before the Govt. of India against the Order-in-Appeal No. S/49-3/80 Oil dated 21st April, 1981 passed by the Collector of Customs (Appeals) Bombay statutorily stood transferred to the Tribunal for being heard as an appeal.
2. The Deputy Collector of Customs, Bombay imposed a penalty of Rs. 29,453/- on the appellants under Section 116 of the Customs Act, 1962 (to be hereinafter referred to as the Act) for the shortage in landing of lubricating oils of various grades. Being aggrieved with the order, the appellants preferred an appeal before the Appellate Collector.
Before the Appellate Collector, the appellants contended that a show cause notice was issued to the appellants after a lapse of more than ten years and therefore it was barred by time under Section 28 (1) of the Customs Act. It was also urged before the Appellate Collector that even if Section 28 is not applicable, the show cause notice issued after a lapse of ten years should be treated as time barred. It was further urged before the Appellate Collector that the vessel after discharging cargo at Bombay port proceeded to Calcutta port and discharged the lubricating oil there. The Calcutta Port authorities had penalised the appellants for short delivery and they had paid Rs. 1,608/-. It was contended that the shortages noticed at Calcutta port included the shortages at Bombay port. Since they had already paid the penalty, they should not be penalised again.
3. The learned Appellate Collector held that the appellants had failed to establish that the cargo discharged at Calcutta port included the shortage noticed at Bombay port. The learned Appellate Collector however did not record any finding with regard to the limitation urged by the appellants. He rejected the appellants appeal as unsubstantiated.
4. In their Revision Application as well as during the hearing of this appeal the following grounds have been urged.
(1) The Assistant Collector of Customs (Preventive) Calcutta called upon the appellants to show cause why penalty should not be imposed under Section 116 (a) of the Act in respect of shortage in excess of permitted ocean wastage limit. The appellants showed cause against the said cause notice. By an order dated 17-12-1964, the said Asstt.
Collector imposed a penalty of Rs. 1,608/- and the appellants duly paid the said amount.
(2) After a lapse of more than ten years, a show cause notice dated 19th October 1974 was issued to the appellants but the said show cause notice was not received by the appellants. They received a reminder dated 27-12-74 calling upon them to reply to the show cause notice within 15 days and by their letter dated 30-1-75 they requested the Asstt. Collector of Customs, Oil Unit to keep the matter open and to allow sufficient time to process the matter as the matter had come up after over ten years.
(3) The Appellate Collector ought to have held that the notice issued on 19-10-74 was barred by limitation.
(4) The Appellate Collector ought to have held that since the appellants had not been served with the show cause notice, no proceeding could be held in pursuance of the said show cause notice and the order passed by the Dy. Collector was without jurisdiction and mis-conceived in law.
(5) The learned Appellate Collector ought to have held that since the matter was old it was unfair and unjust to impose any penalty upon the appellants.
(6) The learned Appellate Collector ought to have held that in any event, the act of delay was an extenuating factor to discharge the applicants from liability for any penalty or at any rate to make the applicants liable only for a penalty of a nominal amount.
(7) The penalty under Section 116 should be treated as duty and therefore Section 28 is attracted and the demand made after six months is barred.
(8) The officers of the Govt. should be vigilant and they should not be allowed to sleep over a matter for over ten years and then demand penalty which would amount to violation of principles of natural justice.
'(1) that the Act does not prescribe any period of limitation for imposing penalty under Section 116 of the Act.
(3) There is no evidence to establish as to the quantity manifested and the quantity discharged at Calcutta.
(4) There is no evidence that the quantity discharged at Calcutta included the quantity found short at Bombay port.
(5) The Govt. is not interested in appropriating illegally the money due to a citizen or a Company.
(6) In the matter of imposing penalty on the steamer agent the practice followed was balancing of various items and thereafter notices are issued to the steamer agents often consisting of several items and when reconciliation was not possible, penalty proceedings are initiated. This balancing takes considerable time and it was done in the interests of the steamer agents and therefore the delay in issuing the show cause notice and that the delay had not resulted in denial of the principles of natural justice.
Finally, Shri Gidwani submitted that if the appellants could produce documentary evidence to establish that there had been no shortlariding or shortage in landing of the manifested quantity the department is prepared to accept and remit the penalty.
6. After the arguments were heard on 30-11-84, Shri B.N. Das learned advocate for the appellants took time till 7-12-84 to produce the evidence to establish that the cargo said to have shortlanded at Bombay had been discharged, at the port of Calcutta.
7. On 7-12-84, Shri Das however did not appear but sent written submissions through one Shri Ramakant Yadav. He however did not produce evidence to establish the discharge of cargo at Calcutta port.
8. I have carefully considered the submissions made on both sides and also perused the records of the case.
9. Section 116 authorises the Asstt. Collector of Customs to impose a penalty not exceeding twice the amount of duty that would have been chargeable on the goods not unloaded or the deficient goods if the steamer agent fails to satisfy the Asstt. Collector as to the quantity unloaded falls short of the quantity to be unloaded at destination. The appellants at no stage disputed as to the short of quantity unloaded at Bombay port. The unloading took place on 21-6-63. Show cause Notice was issued to the appellants on 19-10-74. The appellants at one stage contended that they had not received the show Cause notice. But in their letter dated 30-1-75 addressed to the Asstt. Collector, the appellants had stated that the show cause notice dated 19th October 1974 had not been misplaced. Therefore their contention that they had not received the show cause notice or that the proceedings based on such a show cause notice is not maintainable in law cannot be accepted.
The appellants were issued with a reminder requiring them to reply within 15 days but after a lapse of a month they requested for some time according to the appellants but then the Department had contended that they had not received any such reply. The appellants have not produced any acknowledgement for their letter dated 30th January 1975.
In the circumstances, the contention of the appellants that they had made a request to give them some time to send their reply to the show cause notice has not been substantiated.
10. It was the contention of the appellants after the ship discharged the cargo at Bombay port it sailed to Calcutta port and discharged the remaining cargo. The Asstt. Collector had issued a show cause notice for short discharge and after the receipt of their reply he imposed a penalty of Rs. '1,608/-. As this penalty was in respect of the cargo shortlanded at Bombay also and therefore the appellants cannot be again called upon to pay a penalty.
11. There is no merit in this contention. The appellants could have produced a copy of the manifest which would show the quantity loaded and the quantity required to be delivered at different ports. The appellants have also not produced out-turn reports issued by the Calcutta port. They have further not produced any other document to establish the total quantity of the cargo unloaded at Calcutta port.
The appellants were issued with the show cause notice as early as 19th October 1974. Ten long years have elapsed and the appellants have not chosen to produce documentary evidence to establish that the cargo found short at Bombay was discharged at Calcutta port. As has been stated earlier after the arguments were heard, one more opportunity was given to the appellants to produce necessary proof regarding the discharge at Calcutta of the cargo required to be discharged at Bombay.
The appellants failed to adduce' any evidence. In the circumstances the contention of the appellants that the penalty imposed by the Customs authorities at Calcutta was in respect of the shortlanded cargo at Bombay port also had not been substantiated.
12. The legal contention of the appellants that the demand of penalty is barred under Section 28 of the Act is stated to be rejected. Section 28 relates to payment of duties not levied, short levied or erroneously refunded. It has nothing to do with the penalty demanded. The contention of the appellants that penalty under Section 116 should be considered as a duty is unacceptable. The duty payable in respect of the shortlanded goods is taken into consideration for the purpose of quantifying the amount of penalty liable to be imposed on the steamer agents under Section 116. The Act nowhere prescribes a period of limitation for imposing the penalty under Section 116. In the circumstances the contention of the learned advocate that the demand is barred under Section 28(2) of the Act is" not tenable and the same is rejected.
13. The appellants had contended that it would be unreasonable and unjust to call upon them to account for the shortlanded goods after a period of ten years and then to impose penalty for not accounting amounts to denial of principles of natural justice. Shri Gidwani for the Department had explained the practice prevailing in the Customs House in the matter of imposition of penalty on the steamer agents. He had submitted that the various claims and counter claims are balanced and this procedure of balancing takes time and it is only when reconcilation was not possible, show cause notices are issued calling upon the steamer agents to show cause against the imposition of penalty for not landing of the loaded quantity. Though there may be some justification for not issuing a show cause notice to the steamer agents immediately after the receipt of the outturn report from the Port Trust authorities the issue of show cause notice cannot be unreasonably delayed and the period of ten years under any circumstances cannot be considered reasonable. The penalty proceedings are always considered as quasi-criminal proceedings. The accounting contemplated under Section 116 is accounting for goods shortlanded at the place of destination.
The steamer agents cannot be called upon to account for the shortlanded goods after a lapse of several years. Though the Act does not prescribe any period of limitation for imposing a penalty under Section 116 the department cannot take its sweet time to impose the penalty contemplated under Section 116. Under Section 27 of the Act a refund claim made after the expiry of six months/one year from the date of payment of duty cannot be allowed unless the duty had been paid under protest or paid provisionally under Section 18 of the Act. Further, duty not levied, shortlevied or erroneously refunded cannot be demanded after a lapse of six months except where the non levy, short levy or erroneous refund was by reason of collusion or any wilful mis-statement or suppression of facts by the party and in that case the period of demand would be five years. Thus, the maximum period contemplated under the Customs Act is only five years.
14. Even though Section 27 and 28 are not applicable to the demand under Section 116, the period of limitation prescribed under those sections cannot be altogether ignored. As has been observed earlier, even though the Act does not prescribe a period of limitation for imposing a penalty under Section 116 of the Act the same in my opinion cannot be done if the steamer agents had not been called upon to account for the shortlanded quantity within a reasonable time. The reasonable time looking to the scheme of the Customs Act cannot exceed five years from the date of discharge of cargo from a vessel except in exceptional circumstances such as where there is no dispute at all as to the quantum shortlanded. Even in such cases the department would not be justified in imposing a heavy penalty.
15. In the instant case the submission of Shri Gidwani that there had been delay on account of balancing of various items had not been seriously disputed by the appellants. The appellants have taken an extreme position namely that they had accounted for the shortlanded goods at Calcutta port but they had failed to establish that they had discharged at Calcutta port the quantity found short at Bombay port.
They were issued with a show cause notice and also a reminder. Still they did not choose to send any reply. The appellants to some extent are guilty of latches. The penalty imposed by the Dy. Collector appears equivalent to the duty payable on the shortlanded goods. Though demand was made after a lapse of ten years, considering the latcheson the part of the appellants and the false plea taken by them regarding accounting of the shortlanded cargo, I am not inclined to set aside the whole of the penalty imposed on the appellants. However, I reduce the penalty amount from Rs. 29,453/- to Rs. 14,000/-. The appellants shall be granted consequential relief.