Customs, Excise and Gold Tribunal - Mumbai
G. Ioannis, Tentous Shipping Co. Ltd., ... vs Commissioner Of Customs on 28 April, 2003
Equivalent citations: 2003(159)ELT674(TRI-MUMBAI)
JUDGMENT Gowri Shankar, Member (T)
1. These five appeals are against the order of the Commissioner of Customs, Mumbai, ordering confiscation of ship Orient Shreyas under Section 115(2) of the Act with an option to redeem it on payment of fine of Rs. 2.5 crores and imposing penalties under Section 112 and 114 of varying amounts on the other appellants. The ship was owned at the relevant time by Tentous Shipping Co. Ltd., a Cypress company, and was on time charter to Orient Express Line. At the relevant time, the ship was sailing between the ports of Mumbai and Arabian Gulf. The ship called at Mumbai on 2nd October, 1995, having arrived from Dubai. Rummaging of the ship that took place between 2nd and 5th October, which resulted in the recovery on 3rd of 4000 tolas of gold and recovery on the 5th October of US$ 25,00,000. It is on his finding that the appellants were concerned with smuggling of these goods that the Commissioner has confiscated and imposed penalties.
2. Half of the gold was kept in cloth belt inside a drum which is turn was in the fan room, we are told, is part of the engine room and houses fans which used to blow in order to cool the engines. The remaining gold was found in the housing of the crane on the duck. The currency was found concealed in the tally room.
3. In reply to the notice, the owner had taken the plea that the ship was on time charter by Orient Express Lines from 1995 onwards and that she and her crew were therefore subjected to the control of the owner of the ship in regard to the state of affairs but with the orders of the charterer. The Commissioner has not dealt with this point but merely cited the provisions of Section 115(2) of the Act in order to say that liability of the owner, his agent and person in charge of the conveyance under this provision is joint. This is no answer. During the period when the ship is on a time charter, it and the crew are placed at the disposal of the charterer for a fixed period. During this period, the orders are given to the captain of the ship by the charterer or his representative. The nature of the cargo to be taken on the ship ought to be determined by the charterer. We do not find it possible to say that the provisions of Section 115(2) would result in saying that the owner of the vessel is liable in a situation where he has no control over the ship or of the crew. We therefore do not find him liable to penalty. The same consideration would also apply to NLS Agency India Pvt. Ltd., who was the agent at Mumbai of the owner.
4. The contention on behalf of Orient Express Lines, the charterer, in the memorandum of appeal (not represented at the hearing) is that there is no evidence whatsoever to show that it was concerned in any manner with the smuggling of the goods. This contention has to be accepted. There is nothing in the evidence in the proceedings which consist besides the panchnama and the statement of G. Ioannis, the master of the vessel, or of R. Konstantinos, or the P. Christos, electrician, to implicate the charterer. Christo says in his statement that he was given the gold by a stranger who was in Dubai and asked him to carry it on return for 1000 Dollars. His statement on the face of it is highly improbable and difficult to believe. However be that as it may, he does not implicate anyone else in his activities. Penalty therefore is also not imposable on the charterer.
5. As we have recorded above, the foreign currency was found in the tally room of the ship. This tally room, we are told, is where the employees of the port trust are sitting together to take load of the cargo. The conclusion that the Commissioner draws from the fact that the employees of the Stevedores had access to this room that the Stevedore is liable for penalty is unsustainable. It is true, as he says, that a stranger cannot board and leave a packet containing Rs. 25.25 lakhs in the tally room. However, there is not the slightest material to suggest that the currency was left by any employee of this Stevedoring company. Penalty therefore was not imposable on Stevedoring agency. That takes us to the role of the master of the vessel. The Commissioner has relied to great extent upon the admissions made by him that there were no particular checks carried out while the ship was at Dubai, in order to prevent the ingress of any unauthorised person. He has noted that it was physically impracticable to check the entry of every person coming on board the ship. We do not necessarily agree with this finding. However the laxity on the part of the master is by itself not is not liable for penalty to be imposed. We are of the view that for that to be done for some other specific knowledge by him for the act of smuggling. There is nothing to show that the master was involved in the smuggling nor his employees.
6. The departmental representative emphasises the case law that the Commissioner has relied upon in coming to this conclusion with regard to penalty. In Mansuk C. Bhatt v. CC 1988 (34) ELT 230, the Tribunal remanded the matter for determining the liability to penalty of the owner of the ship. The Supreme Court judgment in Indo-China Steam Navigation Co. Ltd. v. Jasjit Singh, Additional Collector of Customs, Calcutta and Ors. 1983 ELT 1392 was concerned with Section 52A of the Sea Customs Act, 1878 corresponding to Section 115(1)(a), rendering liable to confiscation a ship or vessel which has been specially constructed or adapted. In N.V. Chidambaram and Ors. v. CC 1987 (29) ELT 601, the Tribunal found that, having regard to the magnitude of the volume of contraband goods on the ship from which it was recovered, it cannot be said that the master could not have had any knowledge of the smuggling and confirmed penalty on him. Those circumstances do not apply in the case before us. In Sriyansh Woollen Mills (Pvt.) Ltd. v. CC 1990 (46) ELT 190, the Tribunal held that responsibility for filing of import manifest was on the person in charge of the conveyance carried. The Tribunal held that the importer is liable to penalty in the absence of direct evidence of wrongful importation. The Commissioner does not cite existence of such situation. Penalty therefore was not imposable on the master.
7. Different consideration would apply with regard to liability confiscation of goods. Sub-section (2) of Section 115 reads as follows:-
"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.
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 exceeding the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be."
The master was directly in charge of the ship. It is not contended before us that the master was a callous youth with no experience in sailing having no knowledge about the smuggling of the goods. He was 55 years old, and could not have become the captain without sufficient experience, knowledge and skill. The ship was regularly sailing between Gulf ports and India. Despite this, the master has not taken any precaution. Even nominal in order to check the smuggling of the gold, he has not issued any instructions to his staff nor did he take the elementary precautions of even verifying or subjecting to check persons came on board. He must not be expected to say that every person cannot be checked. However some minimum precaution ought to be taken. There has been a callous disregard by the master of the vessel in his master elementary precautions. In the light of this, we do not find it possible to question the Commissioner's conclusion that the ship was liable to confiscation. Even if the facts are such that, there is no personal involvement or knowledge by the master, this does not lead to the conclusion that the burden of proving that the ship was not liable to confiscation would be upon the owner, his agent or master. This burden, in our view, has not been disbursed. The ship was therefore liable to confiscation.
8. Having regard to the facts of the case, we reduce the fine from Rs. 2.5 crores to Rs. 1 crore.
9. Appeal C/786 allowed in part. Other appeals allowed.