Bombay High Court
Additional Collector Of Customs vs Mogul Lines Limited on 1 January, 1800
Equivalent citations: 1990(48)ELT349(BOM)
JUDGMENT Kania, J.
1. This is an appeal against the judgment of Pendse, J. dated 14th October, 1981, making the rule absolute in the aforesaid Miscellaneous Petition No. 28 of 1978 and setting aside the order of confiscation of the vessel as "Mohammadi" (referred to hereinafter as "the said vessel")
2. The respondent Company, a Government of India Undertaking, is the owner of the said vessel, which plies between the Persian Guild Ports and India. Appellant No. 1 is the Additional Collector of Customs, R. & I. Department, and appellant No. 2 is the Union of India. The said vessel arrived from Persian Gulf Port, with passenger and anchored in steam on 15th June, 1977. The officers of the Customs House boarded the said vessel land rummaged it in the presence of panchas, the Captain, the Chief Engineer and the third Engineer of the ship. During the search, the Customs Officers found one printed cotton cloth bag containing five paper adhesive tapes packets concealed behind the side of the main engine near the entrance leading to the engineer's mess room. Two similarly wrapped packets were recovered from the air- blowers in the petty officers toilet on the star boards side. On examination, it was found that these packets contained 290 wrist watches of foreign make and having a C. I. F. value of Rs. 39,100/- and market value of Rs . 78,200/-. These goods were seizes by the Customs Officers as smuggled goods liable to confiscation under the Customs Act, 1962. On inquiry it was found that no person on board the ship claimed the ownership of the aid goods. After the confiscation of the said goods, Customs authorities recorded statements of the Master of the vessel one Sultan, the Chief Engineer of the vessel one Burges, and the Chief Officer A. R. I. Peera and some other officers and crew members under Section 107 of the Customs Act. From the uncontroverted avertments sin paragraph 4 of the petition, it can be seen that the Master of the vessel in his statement stated that the said vessel was anchored in stream on 15th June, 1977. Prior to the arrival of the vessel at Bombay Port, he had mustered all the crew members, on 15-6- 1977, and warned them not to indulge in smuggling activities. Further he and the other officers and crew members had searched all possible places but nothing of any incriminating nature was found and he made a long entry to that effect. It may be mentioned here that Exhibit `A' to the reply to the show cause notice issued against the respondent is a copy of the telex message sent by the respondent to the Master of the said vessel for carrying out a thorough search of the vessel before its arrival at Bombay so that no contraband could be hidden or smuggled in the vessel. The Chief Engineer of the said vessel, Burges, stated that prior to the arrival of the vessel in Bombay, he dispatched the second Engineer, the third Engineer and the Senior Electrical Engineer to carry out for contraband gods in the engine room and he alloted places for search to different persons but nothing incriminating was found. The Chief Officer on Board, A. R. I. Peera has made a similar statement. None of these officers have been cross- examined by the Customs Officers who recorded the said statements. Thereafter, on 2nd July, 1977, appellant No. 1 issued a show cause notice to the respondents as the owner of the vessel land to the Master of the vessel and "any other owners of the goods under seizure". After setting out the aforesaid facts, the show cause notice called upon the aforesaid parties to show cause why penalty should not be imposed upon them for anauthorised import of the goods under Section 112of the Customs Act and also to explain why the said vessel should not be confiscated under Section 115 of the Customs Act. The respondent and the Master of the vessel by their Advocates' letter dated 30th August, 1977 showed cause against the said show cause notice. By the said advocates' said reply the respondents and the Master of the vessel explained that the said vessel belonged to a Government Company or undertaking and that all necessary and reasonable precautions had been taken by the owner against the misuse of the said vessel for the purpose of smuggling. It was also pointed out that precautions had been taken and searches were carried out by the Master with the help of his officers and crew members on board the vessel during the voyage. It was stated in the said letter that the respondent and the Master of the vessel did not know nor had any reason to believe about the existence of any of the said goods which were liable to be confiscated on board the said vessel. It is not necessary to set out reply in detail for the disposal of the appeal.
3. By his order dated 24th August, 1977 and issued on 26th November, 1977 appellant No. 1 ordered that the aforesaid watches which had been seized were confiscated under Section 111(a) and (f) of the Customs Act, 1962. There is no dispute regarding the correctness of this order of confiscation. Appellant No. 1 is further order that the said vessel be confiscated under Section 115(2) of the Customs Act, 1962. However, respondent No.1 as the owner was given an option to redeem the said vessel on payment of a fine of Rs. 50,000/-. Appellant No.1 did not impose any personal penalty on the Master of the ship or the owner of the vessel, on the ground that no sufficient evidenced had been brought against either of them for the imposition of personal penalty under Section 112 of the Customs Act. What was challenged before the learned trial Judge was the order of appellant No.1, in so far as sit related to the confiscation of the said vessel. The learned trial Judge held that in view of the finding of appellant No. 1 that the Master and the owner of the ship had no personal knowledge about the smuggling activities, it was difficult to hold that they had knowledge that the said vessel was used for carrying contraband within the meaning of Section 115(2) of the Customs Act. It was held that the observations of appellant No.1 that the Master and the owner of the vessel of the smuggling positively from the material on record that they had no knowledge of the smuggling activities were incorrect. On the basis of this conclusion, the learned trial Judge set asides the order for consideration of the said vessel.
4. The submission of Mr. Rege, the learned Counsel for the appellant, is that in view of the provisions of Section 115 of the Customs Act, it is not enough merely to show that the Master as well as the owner of the vessel had no knowledge that the goods were being smuggled on the vessel in question, in order to prevent a vessel in which contraband goods are found being smuggled from being confiscated. It was urged by him that the burden was on the owner of the vessel in such case to show positively that it was used as a conveyance for carrying smuggled goods or contraband goods without the knowledge or connivance of the owner himself of the Master.
5. It is the correctness of the aforesaid submission which has to be examined in the light of the facts of this case. Section 115 of the Customs Act deals with confiscation of conveyances. In view of the definition in sub-section (9) of Section 2 of the Customs Act, it is clear all that a vessel or a ship would be included in the definition of the term "Conveyance" for the purposes of that Act. Sub-section (2) of Section 115, which is the material sub-section, for our purposes, reads as follows:
" (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 land that each of them had taken all such precautions against such use as are for the time being specified in the rule:
Provided that where any such conveyance is used for the carriage of goods or passengers for hire, the owner of any conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine not exceedings the market price of the goods which are sought to be smuggled or the smuggled goods, as the cases maybe.
Explanation.-In this section "market price" means market price at the date when the goods are seized."
Section 112 of the Customs Act refers to "Penalty for improper importation of goods etc.". A perusal of the relevant portion of sub- section (a) of that section shows that penalty maybe imposed under that section upon any person who, in relation to any goods does or omits to do any act, which act or commission would render such goods liable to confiscation under Section 111 or abets the doing or commission of such an act. Sub-section (b) of the said section, which also deal with imposition of penalty, is not relevant for our purposes. WE may make it clear that we do not wish to go into the question as to whether the conclusion of the learned trial Judge that appellant No. 1 was wrong in proceeding on the footing hat the Master and the owner of the vessel must lead positive evidence to show that they had no knowledge of the smuggling activities was incorrect, because irrespective of that conclusion the order passed by the learned trial Judge must be upheld. On a plain reading of sub-section (2) of Section 115, it is clear that, in a case like the, what the owner of the vessel has to show, in order to avoid confiscation, is that it was used as a means of transport in the smuggling of goods without his knowledge or connivance or the knowledge or connivance of Master of the vessel. It is not always necessary that the owner must lead positive evidence as much. It is always open to him to demonstrate that on the facts and circumstances of the case, it can be sufficiently established that the owner of the ship and he Master of the case, it can be sufficiently established that the owner of the ships and the Master of the ship had no knowledge of or connivance in the ship being used for transporting smuggled goods. On the facts of the present case, as set out in the petition, which remained uncontroverted, it is seen that before the vessel arrived at the Bombay Port, the Master of the ship had gathered a the crew members and warned them not to indulge in smuggling. Further he and the other officers and crew members had searched all possible places in the ship but nothing incriminating was found and the Master made a long entry to that effect. Statement of the Chief Engineer shows that he had allotted some officers to search the Engine room. None of these persons have been cross-examined nor has the correctness of these statements been challenged by the Customs Officers. As far as the owners is concerned, as we have pointed out, the owner had sent a telex message before the arrival of the said vessel in Bombay Port that it should be thoroughly searched so that no contraband goods could be concealed on it. In these circumstances, it is quite clear that the Master of the vessel and the owner had taken all reasonable precautions to see that the vessel was not used for conveying smuggled goods or contraband goods into the Port of Bombay. In this connection we may point out that it is open to the Central Government to frame Rules under Section 115 of the Customs Act laying down the precautions which must be taken against a sea-going vessel being used for transporting smuggled goods. No such rules have been framed even till today. Hence it can not be said that in this case nay precautions prescribed by any rule was not taken. Thus, in our opinion, the order passed by Appellant No. 1 confiscating the said vessel is an order which could not have been reasonably passed on the facts on record and clearly shows non-application of mind on his behalf. The learned Judge was justified in setting aside the said order.
6. We may mention that we find considerable support for the view which we area taking the judgment of a Division Bench of this Court in Appeal No. 57 of 1979 Mogul Line Ltd. & Ors. v. A. K. Dutt and another - 1990 (45) ELT 382 (Bom.) where on more or less similar facts a similar conclusion was arrived at.
7. In the result the appeal fails and is dismissed with costs.