Bombay High Court
Varun Shipping Co. Ltd. vs Deputy Collector Of Customs And Ors. on 6 August, 2002
Equivalent citations: 2002(6)BOMCR718, (2002)4BOMLR421, 2003(154)ELT34(BOM), 2003(1)MHLJ118
Author: J.P. Devadhar
Bench: V.C. Daga, J.P. Devadhar
JUDGMENT J.P. Devadhar, J.
1. In this petition, the petitioners have challenged the orders passed by the Customs Department levying penalty of Rs. 36,214/-under Section 116 of the Customs Act, 1962 on account of shortlanding of cargo.
2. The brief facts having bearing of the subject matter of the present petition are as follows :
At the relevant time the petitioners were owners of the vessel namely "ARYA DOOT" which had called at the port of Kandla in the last week of April, 1976 carrying on 20,171,79 m.t. of High Speed Diesel (HSD) for discharge at Kandla. On arrival of the vessel at Kandla and prior to the discharge of the cargo, the material on board the vessel was measured by Ullages and as per the ullage measurement report prepared by the Surveyor/representative of the petitioner and representative of the Receiver/consignee, the quantity in the vessel was 20092.367 M.T. which is short of 79.427 M.T. from the manifested quantity. The said shortage is within the permissible limits. Thereafter, the entire cargo was discharged from the vessel and the cargo tanks of the vessels were inspected and dry tank certificate was issued thereby indicating that the entire quantity of the cargo in the tank were totally discharged and the tank was found empty and dry.
3. Nearly after 6 years of the discharge of the cargo, the respondents purported to issue show cause notice dated 16-1-1985 calling upon the petitioner to show cause as to why action should not be taken against the petitioners under Section 116 of the Act for the alleged shortlanding of 341.117 M.T. which was quantified on the basis of shore tank outturn report. The petitioners replied to the show cause notice and contended that the proper method to measure the quantity discharged is on the basis of ullage measurements and not on the basis of shore tank measurement. It was contented that as the shortage noticed under the ullage report was within the permissible limit, no action under Section 116 of the Customs Act is called for. However, by an order dated 30th August, 1985, the Deputy Collector of Customs imposed penalty of Rs. 36,214/- on the petitioner by holding that the petitioner failed to give satisfactory explanation for the alleged shortage noticed in the outturn report. Being aggrieved by the aforesaid order, the petitioner filed an appeal before the Collector of Customs (Appeals), Bombay, who by his order dated 22nd September, 1987 confirmed the order of the adjudicating authority and dismissed the appeal filed by the petitioners. Being aggrieved by aforesaid orders, the petitioner has approached this Court by filing this Writ Petition.
4. Mr. Gomes, learned Counsel appearing on behalf of the petitioner submitted that in the light of the decisions of this Court in the case of Shaw Wallace and Co. Ltd. v. Assistant Collector of Customs reported in 1986 (25) E.L.T. 968 (BOMBAY) as well as the decisions of this Court in case of J. M. Bakshi v. Deputy Collector of Customs in Writ Petition No. 3641 of 1987 (since reported in 2002(4) Mh.LJ. 823), G. P. Dave and Sons v. The Collector of Customs and Ors. in Writ Petition No. 1451 of 1988 (since reported in 2002(4) Mh. LJ. 906) and South India Corporation (Agencies) Ltd. v. The Additional Collector of Customs in Writ Petition No. 1644 of 1988 decided on 6th August, 2002, no penalty can be levied on the basis of outturn report and the orders impugned in the petition are liable to be quashed and set aside. There is no dispute that the penalty under Section 116 of the Customs Act has been levied upon the petitioner by taking the shortage noticed in the outturn shore tank measurement and not on the basis of the quantity as per Ullage measurement. In the decision referred to hereinabove, this Court has held that the quantity in the vessel at the time of the discharge of the cargo measured on the basis of Ullage measurements is a scientific method and the same should be taken into consideration for determining the actual quantity discharged by the vessel and the shore tank measurement taken at the shore tank which is situated far away from the port should not be taken into account for the purpose of determining the shortage of the discharged cargo. In the instant case, admittedly the impugned orders have been passed by taking into account the shore tank measurement and not the ullage measurement. In the light of the aforesaid decisions of this Court with which we concur, the orders impugned in this petition are liable to be quashed and set aside.
5. Another contention was raised on behalf of the revenue that this Court has no jurisdiction to entertain the petition because the goods were discharged at Kandla and the adjudication order was passed at Kandla falling within the jurisdiction of Gujarat High Court. This submission is also without any merit because, in the instant case, the appellate order challenged in the petition has been passed by the authority at Bombay. In a similar case, being Writ Petition No. 3641 of 1987 J. M. Baxi and Co. v. Dy. Collector of Customs, since reported in 2002(4) Mh.LJ. 823 decided today i.e. 6-8-2001, we have held that if a part of the cause of action has arisen within the jurisdiction of this Court, then the Writ can be entertained by this Court. In the present case, the appellate order challenged in the petition was passed at Bombay and accordingly this court will have jurisdiction to entertain the petition.
6. The decision of the Apex Court in the case of British airways PLC v. Union of India which has been relied upon by the revenue, is distinguishable on facts inasmuch as the issue as to whether ullage measurement or the shore tank measurement should be taken into account for levying penalty under Section 116 of the Customs Act was not an issue before the Apex Court.
7. For all the reasons set out hereinabove, we quash and set aside the orders impugned in this petition.
Accordingly, Rule is made absolute in terms of prayer Clause (a) and (b) of the petition. The respondents are directed to refund the amount of the penalty deposited by the petitioner within 4 weeks from today. However, in the facts and circumstances of the case, there will be no order as to costs.