Customs, Excise and Gold Tribunal - Mumbai
G.P. Volkart Ltd. vs Collector Of Customs on 16 May, 1986
Equivalent citations: 1987(10)ECR96(TRI.-MUMBAI), 1986(26)ELT824(TRI-MUMBAI)
ORDER K.S. Dilipsinhji, Member (T)
1. M/s G.P. Volkart Ltd. have filed an application dated 9-5-1980 under old Section 131 of the Customs Act to the Government of India and this has been transferred to the Tribunal in terms of Section 131-B ibid and has to be treated as an appeal before this Tribunal. The appeal is against the Order No. S/14-779/76 Pint dated 12-10-1977 of the Additional Collector of Customs (Preventive) Bombay as modified by the Order No. 227A of 1979 dated 26-11-1979 of the Central Board of Excise & Customs under which m.v. Henriette Maersk has been confiscated by the Addl. Collector under Section 115(2) of the Customs Act and permitted to be redeemed on payment of a fine of Rs. 2,00,000/- in lieu of confiscation.
2. On behalf of the appellant Kum. Manjula Sen briefly dealt with the facts of the case relating to the arrival of the ship in Bombay harbour and its rummage on 29-12-1976 and 30-12-1976 resulting in recovery of various foreign goods on both those days totally valued at Rs. 2,38,816/-at the local market rate. These facts led to the investigations, issue of the show cause notice and the determination of the offence under the impugned order of the Addl. Collector dated 12-10-1977. The Addl. Collector confiscated the goods absolutely under Section 111(d) and (f) of the Customs Act, 1962, confiscated the ship under Section 115(2) of the C.A. and allowed its redemption on payment of a fine of Rs. 2,00,000/- and levied a penalty of Rs. 10,000/- on the Master of the vessel and Rs. 5,000/- each on two crew members S/Shri George M. Valanzona and Primo Perus Jr. The Master and the Company filed an appeal to the Board against the confiscation of the vessel and the levy of the penalty of Rs. 10,000/- on the Master and the Board in the Order-in-Appeal reduced the penalty from Rs. 10,000/-to Rs. 5,000/- while upholding the other part of the Addl. Collector's order. No appeals were filed by the two crew members. The Revision Application now an appeal to the Tribunal, would therefore lie against the confiscation of the ship and the levy of the redemption fine of Rs. 2,00,000/- in lieu of its confiscation. Kum. Sen stated that for the purposes of confiscation of the vessel under Section 115, two ingredients were necessary, one was the knowledge of the owner of the vessel or his agent and the other was the failure of each of them to take all precautions against the misuse of the vessel in transporting smuggled goods in accordance with the rules to be specified in this behalf. Kum. Sen contended that so far as the owners were concerned they had no knowledge regarding the smuggling of the goods by the ship. As regards the Master, he had taken all the precautions and he had no knowledge of the smuggling of the goods on board the ship. Hence she submitted that Section 115 was not attracted in the circumstances of the case. Coming to the facts of the case, she contended that while the ship Henriette Maersk was in Khor-ramshahr prior to the ship's arrival in Bombay, there was transhipment of 800 tons of cargo from the sister ship Torben Maersk. This transhipment took place while both the vessels were anchored in the stream and for this transhipment 60 labourers were engaged for six days. These labourers together with the two crew members pilferred the goods meant for transhipment at Khorrarnshahr and for discharge at Kuwait. The two crew members had admitted their guilt in the statements recorded by the Customs officers on 29-12-1979, - 30-12-1979 and 31-12-1979 under Section 108 of the Customs Act. However, they retracted from these statements alter about six months while they were being prosecuted in a criminal case. All the same, the two crew members were convicted in 1977 and no appeal was filed against the Magistrate's order. These facts showed that the smuggling was done entirely by the two crew members and that the Master of the ship was not. aware of the smuggled goods on board his ship. Therefore, the confiscation of the ship under Section 115 was not correct. Kum. Sen further contended that there were two legal points invoked in tins appeal. One was the fact that no notice was issued to the owners of Henriette Maersk before its confiscation as required under Section 124 of the Customs Act and hence the order of confiscation was bad from this point of view. The second point was that if the notice addressed to the agents in this behalf could be treated as sufficient, the same was issued after the expiry of six months period as stipulated under Section 110(2) of the Customs Act, and hence the confiscation of the ship was not legal. Therefore from this point of view also the confiscation of the ship was illegal and she requested that the same be set aside. In the end, she contended that the Addl. Collector's finding that the smuggled goods could not be related to the cargo meant for discharge at Kuwait was not correct. The consignees of the goods at Kuwait had filed the claims for the goods shortlanded there and she referred to the statements of such claim in the paper book on behalf of the various importers. She further contended that the Master had taken all the precautions against the misuse of the ship and he had taken rounds of the ship and given warnings to the crew members against indulging in smuggling. She, there-tore, requested that the appeal be allowed.
3. S.D.R. Shri Pal contended in reply that the ship was not rummaged in a routine course. The Customs received a definite information that there were smuggled goods on board the ship and the seizures had been made of smuggled goods on 29-12-1979 and 30-12-1979. These goods were secreted in various places on board the ship. If the Master had taken rounds and had been a little diligent in exercising the care, he would have discovered at least some of the goods which were seized by the Customs authorities. However, the Master had been exonerated by the Board. Coming to the confiscation of the vessel under Section 115(2) of the Customs Act, Shri Pal submitted that both the owner and the Master had to prove that the ship was used without their knowledge for carrying smuggled goods. The master wanted to escape from his responsibilities in this behalf and therefore he had put up two crew members to own the guilt regarding the smuggling of the goods. This would have saved the ship from confiscation. There was no evidence to show that the goods were pilferred from the regular consignments meant for Kuwait by the two crew members. The goods were part of the same bottom cargo from Khorramshahr to Kuwait and in case the same was not discharged at Kuwait, it was required to be declared to the Customs authorities in Bombay in terms of Section 30. The Master had failed to make such declaration and Shri Pal drew our attention to the Addl. Collector's findings in this behalf in his adjudication order. As regards the two legal issues raised by the Learned advocate of the appellant, Shri Pal submitted that both these technical objections had been fully answered by the Board in their Order-in-Appeal. Besides, the show cause notice relating to the confiscation of the goods and the ship was exhibited on the notice board of the Customs House and this would further answer the technical point raised by the appellant's advocate. Shri Pal further relied on the Supreme Court's decision in the case of Collector of Customs, Madras v. D. Bhoormal 1983 ELT 1546 (S.C.) - AIR 1974 SC 859 and contended that proceedings for confiscation of the contraband goods were proceedings in rem and the goods can be confiscated without proceeding against any person and without ascertaining who the real owner was and who was Concerned in their illicit import. Hence, the confiscation of the smuggled goods valued at Rs. 2,38,816/- was correct and accordingly the confiscation of the ship was also legal. Besides, no evidence was produced to show that the owners of the ship had taken precautions against the misuse of their ship in smuggling. So far as the liability of the two members of the crew was concerned and their conviction in a criminal offence, Shri Pal submitted that this would not absolve the appellants from their responsibility and shift the same to the two crew members. Shri Pal argued that the criminal proceedings and the departmental adjudication were independent of each other and he relied on this behalf on the decision of the Bombay High Court in the Writ Petition No. 1004/81 decided on 14-2-1985 in the case of Maneklal Pukhraj Jain v. The Collector of Customs, Bombay. Shri Pal further contended that the retraction of the statements by the two crew members need not be accepted by the adjudicating authority and he relied in this behalf on the decision of the Kerala High Court in the case of Kollatra Haji Abbas 1984 (15) ELT 129. Shri Pal reiterated that the Master was fully aware of the presence of contraband goods on board the ship and he had failed to declare the same to the Customs authorities. Hence the confiscation of the ship was correct and the fine in lieu of confiscation was not beyond the statutory limit prescribed under Section 115 nor was it excessive or harsh. In view of these circumstances, Shri Pal urged that the appeal be rejected.
4. In reply, Kum. Sen contended that there was no attempt to remove the smuggled goods by the owner or the agent as wrongly argued on behalf of the respondent. The ship arrived in the Bombay harbour on 26-12-1976. The rummaging party of the Customs officers did not board the ship till 29-12-1976. If the owners had the knowledge of the smuggled goods on board the ship and if they wanted to remove the same, they could have done so within this period. The owners did not have any knowledge and there was no evidence to prove their knowledge. The goods were not a part of the same bottom cargo as held by the Addl. Collector. Referring to the Chief Officer's statement as incorporated in the Addl. Collector's order, Kum. Sen pointed out that the Master of the vessel had conducted the search of the ship and smuggled goods had been recovered from the spare crew cabins and these goods were thrown overboard at high seas as there were no claimants. Besides, no report of the pilferrage of the cargo at Khoramshahr was made to the Master or the"Chief Officer either by the members of the crew or by the stevedores at Khoramshahr. Hence there was no question of declaring these goods as required under Section 13. She further contended that the confiscation of the ship without giving notice to the owners as required under Section 124 of the Customs Act was bad in law. The owners were a well known party and they could have given the notice easily. There was no evidence to show that the Master had the knowledge of the smuggled goods on board the ship. Referring to the letters of explanation of the two' crew members addressed to the Addl. Collector of Customs (Preventive), Kum. Sen contended that these explanations were not believable and showed the Customs officers in a bad light as using force and coersion in recording the statements from the two crew members. In addition, other crew members were also involved in the smuggling and their names were mentioned as Alfredo Arizafa Deck-in-charge, Ernesto Tutor Carpentar and Edwardo Rlcafrente A.B. Seaman. Kum. Sen finally relied on the decision of this Tribunal in the case of Blossom ECR 1985 page 379 and urged that the benefit of the ratio of the decision should be extended to the present appeal.
5. We have examined the submissions made on both the sides. So far as the confiscation of the ship under Section 115(2) is concerned, it is seen that there is no allegation in the show cause notice or any finding in the Addl. Collector's order that the owners of the ship were aware of the smuggling of the goods. So far as the Master is concerned, there is also no evidence in this behalf. On the other hand, the penalty levied on the Master by the Addl. Collector of Customs has been set aside by the Board on appeal. We find that this order is correct as there is no evidence to implicate the Master in the import of the contraband goods valued at Rs. 2,38,816/- which were seized from the ship. Therefore the question which remains to be decided is whether the owners or the Master was required to take any precautions as mentioned in Section 115(2) and whether such precautions were taken. It is also admitted that no rules have been framed as envisaged by Section 115(2). During the course of the arguments in the appeal, the learned advocate of the appellants referred to the Calcutta High Court's decision in the case of J.D. Crighton & Co. AIR 1969 Calcutta 260. Similarly, the Learned Senior Departmental Representative referred to the decision of the Calcutta High Court in the case of Raghav Prasad Misra v. Collector of Central Excise & Customs. However, we observe that the decisions in this behalf have been very well summed up by the Hon'ble Bombay High Court in the judgment in the case of Moghul Lines Ltd. and Ors. v. A.K. Dutt and Anr. Appeal No. 57/1979 decided by the Revision Bench. The ratio of this decision is that even though no rules had been framed under Section 115(2) it does not absolve the Master from taking precautions against smuggling. But these precautions need only be what could reasonably be expected of him, particularly having regard to the other heavy responsibilities of the Master. Therefore, each case has to be decided on its own merits. Coming to the facts of the present case, it is seen that there had been a large scale pilferrage of the goods during the course of the transhipment involving the crew members and the stevedores labour. It is not possible that this fact was not known to the Master or the Chief Officer. The goods were also recovered from so many different places on board the ship. It is further admitted that prior to the arrival of the ship in Bombay harbour, the captain had searched the ship and goods were recovered which were unclaimed goods thrown into the sea. Therefore these facts show that no proper precautions were taken by the Master against the misuse of the ship. In these circumstances, we find that the contention of the learned advocate that there is no case for confiscation of the ship under Section 115 is not correct. Smuggled goods have been recovered from the ship and there has been a clear violation of Section 115. For the liability of ship to confiscation under this Section it is not necessary to establish the knowledge of the Master or the owners. We are fortified in our conclusion on the basis of the Calcutta High Court's decision in a similar matter in the case of Everett Orient Line v. Jasjit Singh AIR 1959 Calcutta 237. In this judgment, the Hon'ble Calcutta High Court observed that for an offence to be committed which would render the vessel liable to confiscation, the knowledge, intent or complicity of the owners was immaterial. In the opinion of the Calcutta High Court such questions were only mitigating circumstances not irrelevant when considering the punishment. Thus Section 115 nowhere requires the knowledge of the Master or the Owner to be established to render the ship liable to confiscation. Accordingly, we find that there is no substance in the appellant's contention that Section 115 would not apply in the circumstances of the present case. One technical objection raised by the appellants in the appeal and also at the earlier stages of the same case is that the owners of the vessel were not given the show cause notice as required under Section 124 of the Customs Act even though the 'owners were a well-known party. The fact that the owners of the ship were not given a notice for its confiscation is borne out by the show cause notice. But the conclusion drawn by the learned advocate of the appellant on aforesaid basis does not necessarily follow from that fact. The learned advocate is completely oblivious of the fact that under Section 147(3) of the Customs Act the steamer agents namely the appellants in this case were expressly authorised by the owners to be their agents in respect of all or any purposes of this Act. Therefore, the requirements of Section 124 have been fully complied with and Kum. Sen's submissions in this behalf are not tenable. Besides, it is a common knowledge that the steamer agents execute the bond for the purposes of Sections 41 and 42 of the Customs Act undertaking to file the Export General Manifest within seven days' of the departure of the ship and to account for the cargo imported by the ship earlier for the purpose of explanation and levy of penalty under Section 116 of the C.A. In these matters also the Master of a vessel acts on behalf of the owners including the discharge of the liability under Section 116. No objection is taken in such circumstances and the agents have the necessary authority on behalf of the Master or the Owners in discharing the responsibility. The learned advocate has also chosen to forget this fact while arguing the appellant's case. Yet further legal objection taken by the advocate in the appeal is that the confiscation contravenes the requirement of Section 110(2) of the Customs Act. It is seen that the ship was not seized and retained by the Customs, but was allowed to go away. There is no application of Section 110(2) of the Customs Act. So far as the issue of the show cause notice is concerned, this is done under Section 124 of the Customs Act and no time limit is prescribed by this Section. The arguments of the learned advocate in this behalf are also mis-placed. In view of these circumstances, we find no merits in the appeal of M/s G.P. Volkart Ltd. and we reject the same.