Bombay High Court
Union Of India And Another vs Arebee And Company on 23 June, 1987
Equivalent citations: 1987(31)ELT636(BOM)
Author: S.P. Bharucha
Bench: S.P. Bharucha
JUDGMENT Daud, J.
1. This appeal takes exception to the making absolute of the rule quashing the penalty imposed under 5 orders issued under Section 116 of the Customs Act, 1962.
2. The respondents, "petitioners" in the writ petition, are Steamship Agents for Rajkumar Lines Limited, a shipping company, plying ships in India. That company's ship S. S. K. R. Ashok reached Bombay Port on June 6, 1967, the start being Calcutta. Its cargo was said to be less than that shown in the manifest submitted under the Customs Act. A person in charge of the ship satisfied the Customs authorities that the goods in the ship were not for export. The respondents, it is alleged, had passed a bond accepting their liability to pay the duty and penalty, if any. On 4th December 1973, the Customs authorities issued notices calling upon respondents to show cause as to why penalty should not be imposed upon them under Section 116 of the Customs Act. The respondents sought adjournments from time to time, and, apparently some sort of hearing was schedule for 15th October 1974, at which the respondents were not present. On 7th December 1974, the respondents addressed a letter to the Assistant Collector of Customs, which letter recited that the Rajkumar Lines had informed them about their office at Calcutta having caught fire. A request was made that the matter be kept pending for two months so as to enable the respondents to settle or sort out the matter through P. & I. Services with whom the vessel was insured. No reply was given to this communication, and on 18th January 1975 the Assistant Collector passed the impugned orders. Findings that the respondents had failed to account for the shortage he held them liable to penal action under Section 116 of the Customs Act. Double the total export duty payable was fixed as penalty and the respondents were called upon to pay the same. The respondents in their writ petition questioned the orders of penalty, contending that the action had been initiated by the Customs authorities after a great deal of time and this had prevented them from giving a proper explanation for the alleged short-landing. Next, it was contended that the show cause notices given to them were barred by the limitation prescribed under Section 28 of the Customs Act. Lastly, it was incumbent upon the Customs authorities to proceed against the principal and that had not been done. They had been picked up for being penalised, merely because of happening to be available at Bombay whereas their principal was at Calcutta. The appellants replied that Section 28 of the Customs Act did not apply and that in any case respondents had given the bond under which they were deemed liable. Their liability extended to making up for duty not paid. The requisite hearing had been offered. It was the respondents who had failed to turn up for that hearing before the Assistant Collector. In any case, the orders assailed could be impugned in appeal under the Customs Act itself, and, this not having been done, the court should not entertain the writ petition.
3. The learned Single Judge negatived the pleas urged on behalf of the appellants. He held that Sections 28 and 147 of the Customs Act applied. The Customs authorities had acted unjustly and inequitably. The rule was made absolute with parties were being left to bear their own costs.
4. Having heard Counsel, we find no substance in the appeal and dismiss the same for the reasons given hereafter. It is not necessary to go into the applicability or otherwise of Sections 28 and 147 of the Customs Act. Confining ourselves to the question as to whether the requirements of Section 116 of the Customs Act had been complied with, we find that the Assistant Collector did not act as required by the said section. To the extent relevant, Section 116 recites thus :
"If any goods loaded in a conveyance - are not unloaded at their place of destination in India, or if the quantity unloaded is short of the quantity to be unloaded at that destination, and if the failure to unload or the deficiency is not accounted for to the satisfaction of the Assistant Collector of Customs, the person-in-charge of the conveyance shall be liable......".
5. In the instant case, before the passing of the impugned orders on 18th June 1975, the respondents had offered an explanation for their inability to answer the charge of short-landing. The communication sent by them on 7th December 1974 recited that the respondents could not give a proper account in the absence of documents, which documents had been lost in the fire that had broken out in the office of their principal at Calcutta. This aspect of the matter has not even been touched upon by the Assistant Collector of Customs in the orders which were impugned by the respondents in the petition filed by them. The section requires the Assistant Collector to give a reasoned order, for, he can reach the satisfaction prescribed by that section, only after considering the material factors. In the instant case, the vessel steamed into Bombay Port in 1967. The show cause notice was given nearly 7 years later. A great deal of time intervened between the dates fixed for hearing and the passing of the order. In the meantime, a communication of some importance had been received. Yet the Assistant Collector chose to disregard it and passed a mechanical order reciting that there had not been a satisfactory account for the shortage. The satisfaction prescribed by Section 116 has not been properly reached. For compliance with that section, it was necessary to assess or scrutinise the reason given by the respondents. An order passed mechanically does not comply with the requirement of Section 116. On this short ground, the orders penalising the respondents cannot be sustained. That apart, we must hold that the learned Single Judge was right in holding that the appellants acted unjustly. Having waited for 7 years, they should have acceded to the short request for an adjournment made by the respondents in their communication dated 7th December 1974. If they did not want to wait, the respondents should have been so intimated before the passing of the impugned order.
6. There is no merit in the appeal and it is hereby dismissed.
7. Parties shall bear their own costs.