Bombay High Court
A.P. Moller Singapore Pvt. Ltd. And Anr. vs Assistant Director, Directorate Of ... on 2 September, 2003
Equivalent citations: 2004(174)ELT156(BOM), 2004(1)MHLJ1028
Author: J.P. Devadhar
Bench: V.C. Daga, J.P. Devadhar
JUDGMENT
J.P. DEVADHAR, J.:
1. Short point that arises for consideration in this Writ Petition is, whether the adjudicating authority is justified in confiscating the vessel in question, even after holding that neither the owner of the vessel nor the master of vessel, are liable for any penal action?
2. The facts in brief are that the petitioners are owners of vessel "m. v. MAERSK CLEMENTINE". On 7-2-1989 the said vessel was searched by the officers of the Directorate of Revenue Intelligence (D.R.I.). On search, it was found that 1895 pieces of gold biscuits valued at Rs. 7,22,83,922/- were kept concealed in the ceiling of one of the unoccupied cabin (Engineer 'A' on 'B' Deck). The said 1895 gold biscuits were seized under a panchanama for action under the provisions of the Customs Act, 1962. During the course of investigation, a number of crew members on board the vessel were interrogated and their statements were recorded. In his statement recorded under Section 108 of the Customs Act, 1962 Mr. Leonardo Vilarico, the chief cook of the vessel, stated that during the ship's stay at Dubai, he met one Mr. Agha and Mr. Eric Pinto, representatives of the shipping agents and at their instance, he smuggled the gold to India on the vessel's voyage to India. In his statement recorded under Section 108 of the Customs Act on 11-2-1989 and 14-2-1989, the Captain of the vessel stated that before the vessel arrived in Bombay, he had conducted inspection of the entire vessel for contraband on 6-2-1988 along with Chief Engineer and Chief Officer and that the investigation did not reveal anything to show that the contraband gold was stored in the vessel. On completion of the investigation, a show cause notice was issued and by the impugned order dated 28-9-1990 the seized gold was confiscated and a penalty of Rs. 1,00,000/- was imposed on Leonardo Villarico, chief cook under Section 112(b)(i) of the Customs Act. By the said order, the Collector of Customs (Preventive) ordered the confiscation of the vessel under Section 115 of the Customs Act with the option to the owners to redeem it on payment of fine of Rs. 10,00,000/-. Challenging the said order insofar as it pertains to the confiscation of the vessel, and redemption fine is concerned, the present petition is filed.
3. Mr. Ramabhadran, learned Advocate appearing on behalf of the petitioners submitted that once it is held that the owner of the vessel or the master of the vessel is not involved in the smuggling, it was not open to the Adjudicating authority to confiscate the vessel. He submitted that in the absence of any finding that the negligence on the part of the master of the vessel in not replacing the keys of a cabin even after the knowledge that one of the master keys of that cabin is misplaced has direct nexus with the smuggling of gold, the vessel in question could not be confiscated. Mr. Ramabhadran relying upon the Judgment of this Court in the case of Additional Collector of Customs v. Mogul Lines Ltd. reported in 1990(48) E.L.T. 349 (Bom.) submitted that once the adjudicating authority has found that the owner/master of the vessel are not involved in the act of smuggling and has not levied any personal penalty on the Master of the ship or the owner of the vessel, then, there was not ground on which the vessel could be confiscated under Section 115(2) of the Customs Act. Accordingly, he submitted that the order confiscating the vessel be quashed and set aside.
4. Mr. R. V. Desai, learned Senior Advocate appearing on behalf of the respondents, on the other submitted that the findings recorded by the adjudicating authority is that the lapse on the part of the Company or the master of the vessel in not taking immediate steps to change the lock, even after noticing that a duplicate key to the cabin is misplaced is totally condemnable and, therefore, the adjudicating authority was justified in confiscating the vessel. According to Mr. Desai, as soon as it was noticed that the duplicate key of the cabin was misplaced, it was obligatory on the part of the Captain of the vessel to replace the lock so that no undue advantage is taken from the duplicate key, which is misplaced. He submitted that this lapse on the part of the Company/Captain has resulted in the smuggling of gold into India. Therefore, it was submitted, that the confiscation of the vessel is justified and no interference is called for in this Writ Petition. Strong reliance is placed on the decision of the Apex Court in the case of Union of India v. Mustafa and Najibai Trading Co. , wherein confiscation of the vessel was upheld by the Apex Court.
5. Having heard the learned Counsel on both sides, we are of the opinion that in the facts and circumstances of the case, the confiscation of the vessel under Section 115(2) of the Customs Act is wholly unjustified. Under Section 115(2) of the Customs Act, any conveyance used as a means of transport in the smuggling of any goods is liable for confiscation, unless the owner of the conveyance proves that it was so used without the knowledge and connivance of the owner himself, his agents, if any, and the person in charge of the conveyance. In the present case, admittedly, the adjudicating authority has not recorded any findings that the conveyance was used as a means to transport the smuggled goods with the knowledge or connivance of the owner, agent or the Captain of the vessel. Under the circumstances, the confiscation of the vessel under Section 115(2) of the Customs Act cannot be sustained.
6. It appears that the adjudicating authority purported to confiscate the vessel on the ground that appropriate precautionary steps had not been taken to prevent the smuggling of the goods on board the vessel. It is pertinent to note that prior to the amendment of Section 115 of the Customs Act with effect from 13th May, 1988, a vessel was liable to be confiscated even if it was proved that there was a lapse on the part of the owner to take appropriate precautionary steps. However, that provisions has been deleted with effect from 13th May, 1988. The present case pertains to the period after the amendment of Section 115 of the Customs Act. Therefore, the confiscation of the vessel on the ground that the owner or the Captain of the vessel have not taken sufficient precautionary measures, cannot be a ground for confiscation of the vessel.
7. It was contended by the Counsel for the Revenue, that the negligence on the part of the Company/Captain in not replacing the lock of the cabin even after being noticed that the duplicate key has been misplaced, was sufficient to confiscate the vessel under Section 115(2) of the Customs Act. We are unable to agree with this submission, because, in the absence of a finding that the negligence on the part of the owner or the Captain of the vessel was with a view aid or abet the act of smuggling, no action could be taken against the owner of the vessel or the master of the vessel. In the present case, having found that there is no nexus between the negligence and the act of smuggling, the adjudicating authority has not levied any penalty on the owner/captain of the vessel. There is no finding recorded in the order in original that negligence on the part of the owner/Captain was deliberate with intent to facilitate the smuggling activity. Under these circumstances, it is not possible to uphold the confiscation of the vessel.
8. Heavy reliance was placed by the Counsel for the Revenue on the decision of the Apex Court in the case of Union of India v. Mustafa and Najibai Trading Co. . In our opinion, the said decision is totally distinguishable on facts. In that case, it was held that there was a lapse on the part of the Captain of the ship in not filing the Import General Manifest (IGM) and that the failure to file IGM was with fraudulent intention and, therefore, confiscation of the vessel as well as the penalty levied upon the owner of the vessel was upheld. In the present case, no such finding has been recorded. On the contrary, it is clearly held that no penalty can be levied on the owner or Captain of the vessel. Therefore, in the absence of a finding that the owner/master of the vessel had knowledge or connived with the act of smuggling, the vessel in question could not be confiscated under Section 115 of the Customs Act.
9. In the result, the petition succeeds. Rule is made absolute in terms of prayer Clause (a) with no order as to costs,
10. The bank guarantee executed by the petitioners at the time of the admission of the petition is cancelled and the same be returned to the petitioners within 4 weeks from today.