Customs, Excise and Gold Tribunal - Tamil Nadu
Fargo Marine Co. Ltd. vs Cc (Seaport) on 5 March, 2004
Equivalent citations: 2004(94)ECC437, 2004(176)ELT347(TRI-CHENNAI)
ORDER Jeet Ram Kait, Member (T)
1. This appeal is filed by M/s Fargo Marine Co. Ltd. against the order of the Commissioner of Customs (Sea) Chennai by which the Commissioner has confiscated the vessel m.v. Tiger Bridge valued at Rs. 8,48,11,500 under Section 115(2) of the Customs Act, 1962 with option to redeem the same on payment of fine of Rs. 85,00,000. By the said order, apart from confiscation of the vessel, the Commissioner has ordered confiscation of contraband gold, vehicle, foreign currency, waist belt, and cell phones etc. and penalties were also imposed on various persons. The ship has been released to the appellants on furnishing personal bond and bank guarantee. In the present appeal, we are concerned with only the confiscation of the vessel and imposition of redemption fine.
2. The brief facts for the purpose of deciding this appeal are that the appellants are the owners of the vessels m.v. Tiger Bridge (hereinafter referred to as the vessel) at the relevant time and Capt Georgios Perivolaris, was the master of the vessel. M/s James Mackintosh and Company Pvt. Ltd. B-1, No. 10 Judge Jambulingam Road, Chennai are the Indian agents of the owners of the vessel. Show cause notice dated 4.12.2001 was issued among others to the agents of the vessel and a copy of the order of adjudication was also issued to the agents among others.
2.1 On 13.6.2001, at about P.M., Police personnel in charge of B-1 North Police Station, Chennai intercepted a. Mahindra Jeep with Registration No. TN-02-C-4979 opposite to the Reserve Bank of India Sub-way, near Harbour and recovered 900 numbers of contraband gold bearing foreign markings and weighing 104.85 kgs valued at Rs. 4,35,84,048 (i.v.) & Rs. 4,66,89,705 (m.v.) from nine cloth belts kept concealed in a specially made cavity in the above-said jeep. This was followed by arrest of one Sadasivan, the occupant of the jeep alongwith one Ganesan the driver of the said jeep. On further enquiry three more accomplices viz. Rajan Patil @ K. Rajan, Abdul Nabi and Saleem were arrested. The contraband gold biscuits were seized on a reasonable belief that they were smuggled into the country without proper permit or licence. The said Sadasivan disclosed the complicity of one Kishore, Second Officer of the vessel, berthed in Dr. Ambedkar Docks on the same day at the Chennai Harbour and he was also apprehended by the Police with the help of Customs officers. On the following day i.e. on 14.6.2001 all the six persons were produced before the Hon'ble Addl. Chief Metropolitan Magistrate Economic Offence, Court-1, Egmore, Chennai by the Police Personnel and the Magistrate ordered transfer of the seized gold biscuits and the Mahindra Jeep used for smuggling of the gold to the Customs authorities and the same were taken over by the Customs under a mahazar. On interrogation of the above six persons, it came to light that two crew members of the said vessel viz. (1) RJ. Patel (2) H.L. Khalasi were involved in the smuggling and statements were obtained from them wherein they admitted that they were involved in the smuggling of the contraband gold. They also implicated one Kishore, second officer of the vessel. Statements were given by Sadasivan on 14.6.2001 wherein he has inter alia revealed the modus operandi adopted for smuggling of the gold and that he rendered the help in smuggling for a monetary consideration of Rs. 50,000. On 15.6.2001 R.J. Patel, Hirabhai Lalubhai Khalasi (H.L. Khalasi), Kishore, alongwith Abdul Nabi and Saleem were taken on board the vessel where the three crew members showed the actual placement of concealment of the 9 cloth belts containing 900 gold biscuits during its voyage from Singapore to Chennai. The gold was originally concealed in Rajan Patel's cabin as identified by Rajan Patel, Abdul and Saleem. Saleem in his further statement dated 16.6.2001 inter alia stated above the modus operandi adopted in smuggling, that one Jeo would send gold biscuits from Singpore to Chennai through persons working in ship and he (Joe) would contact him over cell phone and he has also disclosed the cell Phone numbers of the said Jeo and also other contact person viz. Ajeez Ahmed. He has also disclosed as to how he spent the consideration he had received in the smuggling, activity in which he was actively involved. Ganesan, driver of the Mahindra Commander Jeep bearing Regn. No. TN-02-C-4979 jeep, also in his statement clearly stated about the use of the Jeep for smuggling purpose and also about concealing the contraband gold in the three cloth belts after it was removed from the vessel secreted in the specially made cavity of the said Jeep and that it was when Sadasivan while coming from the harbour through the 8th gate that the local police officers intercepted and checked the jeep near the Reserve Bank sub-way. In his further statement dated 15.6.2001 Ganesan inter alia stated about the active involvement of Sadasivan in bringing money from Bombay for smuggling activities. Rajan Patil in his statement dated 14.6.2001 also stated about the involvement of Sadasivam in the smuggling activities.
2.2 V. Kishore, Second Officer of the Vessel in his statement dated 14.6.2001 inter alia stated about two people approaching him in Singapore about carrying the contraband to Chennai in the said vessel and that he was offered a consideration of US Dollar 500. He has also stated that the two persons had also mentioned the name of the other two crew members viz. R.J. Patel (Ratilal Jasmalbhai Patel) working as Able Seaman, and Khalasi working as Bosun and that the Singapore persons had also mentioned that the above-said two crew members are also with them in the smuggling activities and that they (Singapore persons) threatened him if he does not co-operate in the smuggling and that it was in these circumstances he reluctantly agreed to their proposal. He has also revealed details as to the quantum of gold one belt can contain as revealed to him by the said Joe.
2.3. R.J. Patel in his statement dated 15.6.2001 inter alia, stated about his own involvement in the smuggling activities and that he had showed the location where the gold biscuits were concealed in the present operation and also during the previous occasions. He had also shown the particular drawer below the bed in his cabin where the gold was kept concealed.
2.4. Hiralal Lalubhai Khalasi in his statement dated 15.6.2001 inter alia stated as to how the gold was concealed with the cabin of R.J. Patel and implicated R.J. Patel in the smuggling activities.
2.5. Shri Georgios Perivolaris Captain of the vessel in his statement dated 15.6.2001 stated inter alia that the Customs officers brought six persons on board the vessel about 11 A.M. on 15.6.2001 and informed him about seizure of 900 gold bars and the involvement of the crew members viz. (1) Kishore, (2) RJ. Patel and (3) H.L. Khalasi. He has also identified the crew members and in his presence the crew members admitted about bringing the contraband from Singapore to Chennai in the said vessel. He has also stated that the entire operations could have been executed by the said three crew members.
3. It was in the above circumstances the show cause notice was issued to various persons who were involved in the smuggling including the Indian agents of the Ship owners. After considering the replies given by the persons concerned, the adjudication order came to be passed whereby the Commissioner has confiscated the vessel with option to redeem the same on payment of fine as noted above and also imposed personal penalties under Section 112(a) & (b) of the Customs Act on various persons involved in the operation. No penalty was imposed on the captain of the Vessel, while penalty of Rs. 10,00,000 each was imposed on D.V. Kishore, the second officer of the vessel and H.L. Khalasi and R.J. Patel, the crew members.
4. Shri R.W. Walawalkar, learned Counsel appearing for the appellants at the outside invited our attention to Section 115(2) before the amendment in 1988 and also after the amendment. He has submitted that prior to the amendment the Section contained two conditions to be satisfied before the vessel could be exculpated from penal action. The first was that there should be knowledge of or connivance by the Owner/Master/Agents of the ship and the second was that all the above persons should have taken all such precautions against smuggling as may be specified in the rules. The Second condition was removed by the Finance Act, 1988. The effect of the amendment was that failure to take precautions as specified by the department was no longer a" reason for ordering confiscation of the ship. He contended that the learned Commissioner has lost sight of the second condition. He submitted that after the amendment in 1988 the only condition to be fulfilled was that of lack of knowledge on the part of the master of the vessel regarding concealment of contraband in the vessel. Therefore, on this score along, the impugned order is liable to be set aside so far his client is concerned, argued the learned Counsel. He further vehemently argued that none of the persons from whom statements have been obtained has implicated the captain of the vessel in regard to the knowledge of the captain of the concealment of contraband in the vessel. The learned Counsel also invited our attention to the following judgments in support of his argument for following the appeal.
(a) Mogul Line Ltd. v. Addl. Collector, 1982 ELT 397 (Bombay) wherein it was held that to hold on the one hand by Additional Collector that the Master or owner of the ship had no personal knowledge about the smuggling activities and at the same time observe that the Master must have positive evidence to establish the lack of knowledge of the smuggling activities was obviously conflicting and contrary since it would establish a negative fact about the absence of knowledge by a leading positive evidence which was not possible and was therefore erroneous. The confiscation of the vessel was set aside.
(b) CARL F. Peters v. CCE, (Prev) Mumbai, 2001 (133) ELT 580 (Tri-Mumbai) wherein also in similar circumstances the confiscation of the vessel was set aside by the Tribunal found that there was no specific evidence of involvement of smuggling by the captain or the owner. This judgment had relied upon the Bombay High Court judgment in the case of Mogul Line Ltd. (supra).
(c) Indoceanic Shipping Co. Ltd. v. Addl. Collector, 1993 (64) ELT 196 (Bom). He has particularly referred to para 5A of the said judgment wherein it was held that the only case made out against the petitioners is that they had failed to keep independent watchmen to watch activities of the crew members. That is hardly any reason to rope in the petitioners under the said Section 115(2).
(d) Hong Kong Island Shipping Co. Ltd. v. Addl. Collector, 1986 (10) ECC 232 (Bom) : 1986 (26) ELT 35 (Bom) wherein it was held that confiscation of the vessel was not sustainable when neither knowledge of Master regarding contraband nature of articles nor his failure to take sufficient precautions against use of vessel for smuggling of goods established.
5. Shri V.T.K. Nayanar, learned JCDR on the other hand submitted that this is a case where 900 gold bars weighing about 105 kgs were smuggled into the country against the law. He has submitted that the fact of concealment of contraband in the cabin of one of the crew members and its removal from the cabin and transportation in Mahindra Jeep is admitted by one and all. Though the captain of the vessel was not implicated by any one else involved in this case, the use of the vessel for concealment and conveyance of the contraband in established by evidence on record. Since he was not implicated by others, he was not penalised under Section 111(d) & (e) of the Act and since the vessel was admittedly used for smuggling purpose and the captain having failed to take sufficient precautions to desist the crew members from involving in smuggling, the conveyance was confiscated and hence the impugned order in perfectly in order. He has also invited our attention to para 22 and 35 of the impugned order wherein the modus operandi adopted for smuggling the contraband was revealed by the Second Officer of the vessel and also by the two crew member viz. R.J. Patel and H.L. Khalasi. He has also invited our attention to para 16 of the impugned order wherein Saleem Abdul Rahim Khan, employee of M/s Moonship Chandelling in his statement has categorically stated the same vessel was also used for smuggling on earlier occasions also. The learned JGDR also pressed into service the following judgments:
(a) Great Eastern Shipping Co. Ltd. v. UOI, 2002 (150). ELT 1403 (Del), para 21, wherein the Hon'ble High Court observed that" A high standard is always applied for the proof of a positive fact while the standard of preponderance of probability is sufficient to prove a negative fact... ... ... ..The search as alleged to be conducted by the Master and the Chief Officer of the vessel cannot be held to be a search as a reasonable and prudent man would do and the facts of the case establish this conclusion. The mere fact that the master of the vessel or owners of the vessel were not shown to have been privy to the smuggling of contraband goods would not be sufficient to exclude the operation of Section 115(2) of the Act. He has also referred to Para 23 of the judgment.
(b) Capt. Jens Warner v. CC, (Prev.) Mumbai, 1998 (99) ELT 324, wherein in similar circumstances the Tribunal had held that confiscation of the vessel under Section 115(2) was well founded.
6. We have carefully considered the rival submissions and gone through the case records and perused the various case laws cited by both the sides. As noted above, in the present appeal, we are concerned with the legality or otherwise of the confiscation of the vessel in question. We find that in the instant case, use of the cabin of one of crew members of the vessel viz. R.J. Patel for concealing the contraband gold from Singapore to Chennai and latter shifting the contraband from the vessel to Mahindra Jeep from where it was recovered by the Police is an admitted fact. We also find that none of the persons including the second officer of the vessel and the two crew members who gave statements regarding their involvement in the smuggling of the contraband gold anywhere in their statement has implicated the master of the vessel. Be that as it may, in the present case, the short question arising for our determination is whether the Captain of the Vessel has complied with the provisions of Section 115(2) of the Customs Act. It is therefore, necessary to appreciate the said Section as it stood at the relevant time which for convenience of reference is reproduced below:
"(2) Any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner "himself, his agent, if any, and the person in charge of the conveyance or animal."
6.1 On a reading of the above provisions, it is clear that a duty is cast on the owner to prove that the conveyance was used without his knowledge for purpose of smuggling. Owner includes, his agents/incharge of the vessel viz. master/captain.
7. The thrust of the argument of the learned Counsel for the appellants is that after the amendment to Section 115(2), the only condition to be fulfilled by the in-charge of conveyance was that the smuggling has taken place without his knowledge and that the earlier condition requiring the owner/in-charge to take all precautions against the use of the conveyance of smuggling activities, has been deleted. The learned Counsel therefore pleaded that the adjudicating authority has lost sight of the amendment and hence he has proceeded to confiscate the vessel. Examining this plea, we observe that excepting the statement of the Captain of the vessel wherein he has mentioned that he had always warned the officers and crew not to indulge in smuggling activities, no proof whatsoever has been brought on record as to what was the effective measures he had taken to ensure that the vessel is not used for smuggling activities. As the person in-charge of the conveyance (vessel) he could have physically searched the cabins of the crew members before its voyage from Singapore, to Chennai, to ensure that no contraband was hidden anywhere in the vessel for his own satisfaction. It was not as if that the cabin from where the gold was recovered was not accessible to him. There is no plea that there was at least a cursory check effected by the captain to ensure that there was no contraband hidden in the cabin of the vessel, more particularly when it was sailing between very sensitive ports viz. Singapore to Chennai. It is also not as if the Captain of the vessel did not know that smuggling take place using ship/vessel. It is also not as if the Captain did not know what were his responsibilities in regard to taking adequate steps to ensure that the vessel of which he is in-charge, was not used for smuggling. Merely stating that the Captain had warned all the officers and crew members not to indulge in smuggling is not enough to escape the rigour of Section 115(2). Therefore, a prudent man can only think that there was no sincere effort on the part of the captain of the vessel to ensure that his vessel was not used for the purpose of smuggling. We note from the judgment of the Hon'ble High Court of Delhi in the case of Great Eastern Shipping Co. Ltd. (supra) that the Court had considered Section 15(2) before and after its amendment. In para 21 of their judgment, the Hon'ble High Court observed that a high standard is always applied for the proof of a positive fact while standard of preponderance of probability is sufficient to prove a negative fact. The Court has further held that reasonable precautions was not taken by the master of the vessel to ensure that no contraband goods was secreted on board the ship. The Court has also held that mere display of notices warning the members of the crew and officers on board the vessel is not sufficient to prove absence of knowledge or connivance and the petitioners had to lead positive and cogent evidence to displace or discharge the onus cast on them. In the present case, the warning as alleged to have been given by the captain of the vessel to his officers/crew members cannot be held to be a search as a reasonably and prudent man would do. Therefore, in the present case the burden of proving absence of knowledge or connivance on the part of the captain of the vessel is therefore, not discharged by him. Exonerating the Captain of the vessel/owner/agent of the owner under Section 112 as they were not shown to have been privy to the smuggling of contraband would not be sufficient to exclude the operation of Section 115(2) of the Act, as held in para 21 by the Hon'ble Delhi High Court in the case of Great Eastern Shipping Co. Ltd. (supra). The Hon'ble High Court of Delhi in the noted case has also referred to the judgment of the learned Single Judge in the case of Mugul Line Ltd. v. Addl. Collector (supra). Therefore, the view taken by the Division Bench, Hon'ble Delhi High Court in the case of Great Eastern Shipping Co. (supra) is required to be preferred to decide the present case. Further the Tribunal in the case of Capt Jens Warner v. CC, 1995 (99) ELT 324 wherein the Tribunal found that contraband gold of a substantial quantity similar to the one in the present case, was recovered from places which are accessible to or capable of a inspection by the master of the vessel and yet not even to cursory check was exercised by the master of the vessel and it was held that the master of the vessel has not discharged the responsibility casts on him under Section 115(2) of the Act In the present case also, as noted above, huge quantity of gold was secreted in the cabin of one of the crew members (R.J. Patel) of the vessel and nothing prevented the Captain from checking the cabin to ensure that it is free from any contraband goods. Moreover, this vessel was used in Smuggling of gold repeatedly on earlier occasions also.
8. The case law cited by the learned Counsel for the appellants in the matter of Indoceanic Shipping Co. Ltd. v. Addl. Collector (supra) would not help them inasmuch as in that case the master of the vessel had filed necessary declaration of the goods and it was the crew members who were found guilty of having removed and sold the goods and it was in those circumstances it was held by the learned Single Judge that confiscation of the vessel under Section 115 was not justified. Similarly the reliance of the learned Counsel for the appellants on the decision of the Tribunal in the case of CARL E Peters v. CC, 2001 (133) ELT 580 also will not help them, as in that case provisions of Section 115 was not discussed and the case related to confiscation of improperly imported goods and imposition of penalty for the same. Further, in that case, it was found that the master of the vessel on being questioned had stated that he had posted two officers, one on the gangway and one on deck to carry out checks of persons coming on board the ship, whereas in the present case excepting the ipse dixit of the captain that he had warned the officers not to indulge in smuggling activities, no evidence has been brought on record to ensure that the vessel was not used for smuggling activities. The reliance in the judgment of the learned Single Judge in the case of Hong Kong Island Shipping Co. v. Addl. Collector, 1986 (10) ECC 232 (Bom) : 1986 (26) ELT 35 (Bom) would also not help the appellants as in that case the failure of the master of the vessel to make sufficient. precautions has not been established.
9. As could be seen from the brief narration of facts, the activity as in the present case was a part of well organized international smuggling racket and the vessel involved in the present smuggling was also involved on earlier occasions as revealed by Saleem Abdul Rahim Khan employee of M/s Moonship Chandelling and as stated by one of the crew members viz. R.J. Patel in his statement dated 15.6.2001. The retractions given by various persons can only be taken as an afterthought as is usually attempted to in all such smuggling activities and the Commissioner has rightly rejected the same. Needless to say that smugglers are enemies of the society and the illicit wealth emerging from smuggling creates economic imbalances, inequality and insecurity in society apart from social problems, and therefore, no leniency is called for in such cases. In the present case for a value of the vessel of Rs. 8,48,11,500 the redemption fine of Rs. 85,00,000 imposed works out to 10% of the value of the vessel, which cannot be considered as excessive or harsh warranting any reduction.
10. In view of our discussion and finding as above, we do not find any reason to interfere with the order passed by the lower authority and we upheld the confiscation of the vessel and imposition of redemption fine. The appeal thus fails and is accordingly dismissed.
S.L. Peeran, Member (J)
11. I have carefully considered the order prepared by my learned brother but I am unable to agree with the findings in view of the fact that Section 115(2) of the Customs Act, 1962 has been amended and the learned Member has proceeded on the basis that owner of the vessel had knowledge of its being used for the purpose of smuggling. The facts of the case clearly disclosed that captain of the vessel did not know that smuggling took place by using the ship, vessel. It was some of his crew who had utilized the vessel for the purpose of smuggling of gold etc. As has been brought out by learned brother in his order, the goods were seized from the jeep which was seized in the town. On an identical facts, the Hon'ble Bombay High Court in the case of Hong Kong Island Shipping Co. Ltd. v. Addl. Collector of Customs (Preventive) Bombay and Ors., 1980 (26) ELT 35 has held that confiscation of a vessel is not sustainable and the owner of the vessel or the agent or master of the ship had no knowledge of vessel being used for the purpose of smuggling. In the present case, it was shown that the master of the vessel had also taken all precautions to safeguard that smuggling did not take place. It is not possible to show the master has not taken any precautions and that master had full knowledge in the smuggling and the owner had knowledge of the same. Further, I notice that in the case of Indoceanic Shipping Co. Ltd. v. Addl. CC (P), 1993 (64) ELT 196 (Bom.) has held that master of the vessel is not responsible for removal and sale of contraband goods by crew members as individuals and, therefore, the order of confiscation was set aside. In the case of Mogul Line Ltd. v. Addl. CC Bombay and Ors., 1982 ELT 397 (Bom.). It has been held that negative fact cannot be established by master that he had no personal knowledge about smuggling activity which was hot possible and, therefore, the order of lower authority was held to be erroneous. The Tribunal in the case of CARL F. Peters v. CC (Prev.) Mumbai, 2001 (133) ELT 580 (Bom.) has also noted that there was no specific evidence of involvement in smuggling by the captain or the owner and, therefore, it was held that such order of confiscation of the vessel cannot be upheld. The finding of the Tribunal in para-4 of the order is noted herein below:
"4. We are not able to agree with either of these conclusions. The master, on being questioned, had said that he had posted two officers, one on the gangway and one on deck, to carry out checks of persons coming on board the ship. When any ship is in port, a number of persons come on board in connection with various purposes for which the ship is deployed. They would include persons concerned with provisioning the ship, representative of the owner, representative of various Government agencies, some persons required to carry out repairs to the ship or equipment on it, employees of companies connected with loading and unloading cargo etc. It would not be practicable to ensure that unless the identity of each visitor and the genuineness of the purpose for which he wants to enter the ship is established, they must not be permitted to board it. That the efforts involved and the time taken would defeat the purpose for which the persons visit the ship. It is not possible to agree that if such precautions had been taken, smuggling would not have taken place. Smugglers all over the world use ingenious methods to smuggle goods, and have frequently overcome difficulties caused by vigilance of customs and law enforcement officials. The fact that in the case before us, 200 pieces of gold were recovered by accident by member of the crew from the ship, after, it was rummaged by the officers of the Directorate of Revenue Intelligence, following the discovery of gold from Kaizer Hussein is a telling example."
12. All these judgments support the plea of the learned counsel. As the revenue has not established that the owner of the vessel or the captain had positive knowledge of smuggling taking place with the use of the vessel, therefore, the order of confiscation of the vessel is required to be set aside. My learned brother has made certain observations in Para-8 of his order pertaining to the economy of the country on account of smuggling. There cannot be two opinions on smuggling having affected the society. But the question in the present case is as to whether the vessel which was supposed to have been utilized for smuggling of gold and other contraband items could be confiscated in the absence of any proof of the captain having knowledge of said vessel being used for smuggling. Therefore, the observations are not pertinent with regard to facts of the present case. Even the fact that statement given by some of the involved persons with regard to vessel having been used on earlier occasions would not influence the fact of order of confiscation of the present vessel. The said statements have been resiled as shown by the counsel in his arguments and they are not material for taking into consideration the fact confiscation of vessel in question. In that view of the matter, I set aside the impugned order and allow the appeal.
13. It is also noticed that the learned Commissioner in the impugned order has specifically held that M/s. James Mackintosh & Co. Pvt. Ltd. a local agent of the vessel had no role to play in the smuggling operation. By exonerating the said agent and the master of the vessel from liability under Section 112 of the Customs Act, therefore, it shows that both the master and captain of the vessel had not done or omitted to do any act or abetted the doing or omission of such act which would render the goods liable to confiscation under Section 111 or had acquired possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 of the Customs Act. The Finance Act, 1988 amended Section 115 (2) and removed the second condition. In other words, the failure to take precaution as specified by the department was no longer a factor and reason for ordering confiscation of the vessel. The Commissioner's order that no precaution was taken by the captain of the vessel to safeguard that smuggling was not done by use of vessel is not in terms of amended section 115(2) of the Customs Act. The finding is erroneous and requires to be set aside. In view of the above legal position, I set aside the order of the learned Commissioner against the appellant by following the appeal.
POINTS OF DIFFERENCE In view of difference of opinion between the Members, the following question is referred to Third Member for determining the same:
"Whether the appeal is required to be dismissed as held by Member (T) for the reasons recorded in his order OR Whether the appeal is required to be allowed as held by Member (J) for the reasons recorded in his order".
C.N.B. Nair
14. I have perused the records and heard both sides with regard to the difference of opinion stated above.
15. The difference has arisen about the substantiality of the confiscation of a vessel for its having been used for smuggling (gold in the present case). Finding of the adjudicating authority is at para 71 of the impugned order. I read that para for convenience of discussion.
"As regards M/s James Mackintosh & Co. Pvt. Ltd., it is clearly seen that they do not figure anywhere in the statements given by the staff of M/s Moonlight Chandling and the crew of M.V. Tiger Bridge and as they had come into picture only at the time of executing a bond for the vessels and in the absence of any implication by the persons who admitted to have committed the smuggling it can be concluded that he had no role in this smuggling operation. As regards the vessel M.V. Tiger Bridge, the ratio envisaged in Mogul Line Ltd. v. Additional Collector of Customs, Bombay, 1982 ELT 397 (Bom) does not apply as it is seen from the statements of the persons involved in this smuggling operation that they had smuggled gold on earlier occasions also. Thus is evident that the owners of the vessel have not taken sufficient precautions of desist the crew from involving in smuggling activities. It is also seen that the smuggled goods find no place in crew's effect declaration nor in any manifest declaration. Thus, I hold the vessel M.V. Tiger Bridge liable for confiscation under Section 115(2) of Customs Act, 1962 for being involved in this smuggling operation and also the owners liable for the action of their employees" (emphasis added).
16. It is the contention of the Ld. Counsel for the appellants that confiscation of the vessel could not be made for the above stated reasons. Ld. Counsel has submitted that Section 115(2) of the Customs Act, as it stood at the relevant time, did not permit confiscation of a vessel for failure on the part of its owners to take precautions against its use in smuggling by the crew members. He has pointed out that the proviso under Section 115(2) relating to confiscation of a vessel for failure to take precaution against the use of the vessel for smuggling had been deleted under the Finance Act 1988. The effect of the deletion of the proviso, according to the Counsel, is that an owner of a vessel could save the vessel from confiscation if he is able to show that he himself, or his agent or person in charge of the vessel did not have knowledge of the use of the vessel for smuggling activities or had not connived at the smuggling activity. The Ld. Counsel has emphasised that, in the present case, there is no allegation or finding that the owner of the vessel, his agent or the master of the vessel had any knowledge of the smuggling activity or had connived at smuggling activity. He also pointed out that, on the contrary, it was the evidence that the captain of the vessel was not even aware of the smuggling activity. The crew members who had been apprehended for their involvement in the smuggling had also not named the vessel's owner or agent or master of the vessel for involvement or having knowledge of smuggling. In these circumstances, Ld. Counsel has submitted that the confiscation of the vessel upon the finding recorded in the order was beyond the provisions of Section 115(2) of the Customs Act as it stood at the relevant time and, therefore, Ld. Member (J) was right in reaching the conclusion that the confiscation of the vessel was not sustainable. Ld. Counsel has pointed out that as against this, the finding of Ld. Member (T) is that the appellant had failed to exercise effective precaution to prevent the smuggling in question. He has submitted that in view of the amendment of Section 115(2), failure to take precaution did not make the vessel liable to confiscation.
17. Ld. SDR has drawn my attention to the detailed findings recorded by Ld. Member (T) in para 7 of his order about the insufficient precaution taken by the owner of the vessel or his agent or the master of the vessel and submitted that the impugned order was right in confiscating the vessel. She also drew my attention to para 51 of the impugned order dealing with the assessee's defence about the failure to take precaution.
18. A plain reading of sub-section 115{2) of Customs Act, 1962 as it stood at the relevant time (after amendment in 1988) makes it clear that, upon it being shown that a conveyance (ship) was used for smuggling without the knowledge or connivance of its owner, his agent or master, its liability to confiscation can be overcome. The provision for confiscation of the vessel for failure to take sufficient precaution against its use for smuggling stood deleted under the Finance Act, 1988. The offence for which the vessel in question remains confiscated took place in 2001, much after the amendment of Section in 1988. Finding in the impugned order (para 71), makes it clear that there is no evidence that the smuggling of gold in question, had taken place with the knowledge of the owner of the vessel, his agent or master of the vessel. Therefore, I am in agreement with Ld. Member (J) that the confiscation ordered under the impugned order is contrary to the provisions in Section 115(2). The finding is, therefore, not sustainable and is required to be set aside and the appeal allowed with consequential relief, if any.
19. Having recorded my opinion on the reference as above, the appeal is returned to the original Bench for passing final order.
MAJORITY ORDER In terms of majority order, the impugned order is set aside and appeal is allowed with consequential relief, if any.