Customs, Excise and Gold Tribunal - Mumbai
Chowgule Brothers Ltd. vs Commissioner Of Customs (Prev.) on 22 May, 1998
Equivalent citations: 1999(112)ELT280(TRI-MUMBAI)
ORDER J.N. Srinivasa Murthy, Member (J)
1. This is the party's appeal against the impugned Order No. 7/91-Goa (S/49-19/91-TS), dated 5-6-1991 of the Collector of Customs praying for setting aside the same, and also recovery proceedings under Section 148 of the Customs Act, 1962, against the appellant and for any other relief deemed fit.
2. The facts of the case are that on 29-5-1988 two foreign fishing trawlers Shang Fuh Nos. 11 and 12 arrived at the Marmugoa port from high seas with a catch of marine products for a final call for declaring the cargo for export and departure to a foreign port. They were chartered by M/s. Ocean Products & Shipping Ltd., Visakhapatnam. They appointed the appellant M/s. Choughule Brothers, Mormugoa as their local agents. On arrival of Trawlers agents filed the import manifest on behalf of the principal. In the general manifest of the Trawlers No. 11, 4615 boxes of assessed fish catch were declared as source bottom cargo, and in the general manifest of Trawler No. 12, 4601 boxes of assessed fish catches were declared as source bottom cargo without mentioning any weight. Entry inwards to both the Trawlers were granted on 30-5-1988. On 24-6-1988 both these trawlers around 11.00 p.m. left Marmugoa port surreptitiously by switching off the lights in the incessant weather without port clearance, without filing shipping bills, without paying cess on their catch. On enquiry with the signal station. The appellants reported by their letter dated 27-6-1988 as above and also without completing the legal formalities. Charters M/s. Ocean Products and Shipping Ltd., Visakhapatnam also informed by their letter dated 26-6-1988 that without port clearance fishing Trawlers have sailed off. Efforts made to trace them failed. Efforts were made through Coast Guards/Naval Authorities to locate the fishing trawlers and intercept them to any Indian Port for the purpose of assessing the catch and recover the cess due thereon, but did not materialise, and they made good their escape. Statements of Shri T.U. Kholkar, Manager of the appellant, Shri Anil Sabharwal of M/s. Ocean Products and Shipping Ltd., Visakhapatnam, were recorded under Section 108 of Customs Act, 1962. Statements of owner representatives of M/s. Tropi Trading Pvt. Ltd. and Masters of the fishing Trawlers of Singapore could not be recorded due to their non-availability.
3. M/s. Ocean Products & Shipping Ltd., Visakhapatnam are doing the business of fishing by foreign fishing vessel under a permit issued by Government of India, Ministry of Agriculture and Rural Development. As per the permit the charters are subject to all the Indian laws that apply to vessels under the Maritime Zones of India Act, 1987. The fishery Survey of India, Marmugoa, had issued a certificate dated 9-6-1988 addressed to Asstt. Collector of Customs through M/s. Ocean Products & Fishing Ltd., certifying that they had inspected the said Trawlers and cleared them. However, M/s. Ocean Products & Shipping Ltd., did not report about discrepancy in the catch as declared in the import general manifest and as per their estimate dated 22-6-1988. As per the declaration of the composition of the catch purported to have been given by the Indian skippers under study and the Taiwanee Skippers. The catch of fish on board of fishing Trawlers Shang Fuh Nos. 11 and 12 were 284.55 tonnes and 269.675 tonnes respectively. In the subject case the charters have orally declared the catch as worth Rs. 1.5 crores. M/s. Ocean Products & Shipping Ltd., Visakhapatnam did not file the shipping bill as regards the fish catch as a result of which the quantity of fish and the value of the same could not be ascertained. Hence the value declared by the charterers i.e. M/s. Ocean Products & Shipping Ltd., Visakhapatnam has to be relied upon. The cess amount has to be calculated as per Section 14(1)) of the Marine Products Export Development Authority Act, 1972 read with Government Notification, which has fixed the rate as 1 percent which works out to Rs. 1.5 lakhs on the purported cargo as declared by M/s. Ocean Products & Shipping Ltd. M/s. Ocean Products & Shipping Ltd. has secured the log books of both the fishing Trawlers on their arrival and did not produce the same to Fisheries Survey of India for verifying the catch, not was it produced to the customs authorities for Inspection. Those log books were removed from the fishing Trawlers and taken to Visakhapatnam and reported lost by M/s. Ocean Products & Shipping Ltd. The fish catch which has been exported out of India without complying the customs formalities and payment of customs duties i.e. cess is liable for confiscation under Section 113 of the Customs Act, 1962. However, said catch fish is illegally transported out of India and therefore is not available for confiscation. The fishing trawlers Shang Fuh Nos. 11 and 12 were used for illegal export of the fish catch and hence liable for confiscation under Section 115(2) of Customs Act, 1962. However, they are escaped, and cannot be seized and due process under the Act. By not obtaining the port clearance for the sailing of these fishing Trawlers, the Masters of the fishing Trawlers/Agents/Charterers have violated the provisions of Section 42 of Customs Act and thereby rendered themselves for penalty under Section 117 of the said Act. By illegally exporting the fish catch out of India, through the fishing Trawlers Shang Fuh Nos. 11 & 12. M/s. Ocean Products & Shipping Ltd., Visakhapatnam, M/s. Tropi Traders Pvt. Ltd., Singapore, appellant and the Masters of the fishing trawlers appear to have committed an offense under Section 113 of the Customs Act, 1962 rendering themselves liable for penalty under Section 114 of the Customs Act, 1962.
4. Show-cause notice was issued to (a) M/s. Ocean Products & Shipping Ltd., Visakhapatnam, (b) M/s. Tropi Trading Pvt. Ltd., Singapore, (c) M/s. Chougule Brothers, Mormugoa (appellant), (d) Shri Y.H. SHII RONG Master of Fishing Trawler Shang Fuh No. 11 and Shri WN YN BHNG Master of Fishing Trawler Shang Fuh No.12. Reply was received from the appellant and M/s. Ocean Products and Shipping Ltd. and hearing was fixed on 12-10-1988. Manager of the appellant Company submitted arguments. On considering the available material on record on 26-10-1988. Additional Collector of Customs and Central Excise, Goa passed the order, and cess of Rs. 1.5 lakhs was demanded from M/s. Ocean Products and Shipping Ltd., and penalty of Rs. 2 lakhs was imposed on it. Personal penalty of Rs. 2,5 lakhs each was imposed on the Masters of Fishing Trawlers Shri Y.H. SHII RONG and Shri WN YN BHNG under Section 114 read with 117 of the Customs Act, 1962. Two fishing Trawlers were confiscated with redemption fine of Rs. 1 lakhs cash to be paid by M/s, Tropi Trading Pvt. Ltd., Singapore who failed to produce them before customs authorities, within 2 days of receipt of the order or communication about the fine levied thereunder whichever is earlier. No penalty was imposed on the appellant, liability under Section 148 of Customs Act, 1962 was fixed (will be there), on 27-2-1990, by notice the Asstt. Collector of Customs (P) Vasco-da-Gama, Goa, demanded from the appellant to pay the penalty of Rs. 5 lakhs imposed on the Masters of two fishing Trawlers, who failed to pay the same, within 15 days (fifteen) from the date of receipt of notice, failing which recovery proceedings under the Customs Act, 1962 will be instituted. On 21-5-1990 reply was given through the Counsel stating to recover the same from M/s. Ocean Products & Shipping Ltd., 70-A, Krilampudi Layout, Visakhapatnam 520 023, who were the charterers owners of the two fishing trawlers, available in India. Appellants were appointed by them as agents for the above trawlers. The fishing trawlers were in the custody of the customs area. The appellants had filed entry inwards to them without their knowledge, trawlers left the port, without clearance. The appellants are not liable to pay penalty imposed on the Masters, of fishing Trawlers, for their illegal acts. If they pay, they will be doing wrongful act, prohibited under the Indian law. The appellants are not holding any amount for the said fishing trawlers. If any amount is paid on their behalf, it amounts to violation of FERA. Appellants have not given undertaking to pay the penalty on behalf of masters of fishing trawlers, under Section 42 of Customs Act, 1962. Appellants are sending the demand notice to the owner/charterers for payment of penalty. Appellants are not liable to pay the penalty for masters of fishing trawlers. Appealable orders are sought for, before initiating the recovery proceedings. In response to that the Asstt. Collector of Customs (P), Vasco-da-Gama, issued a letter dated 1-6-1990 fixing liability under Section 148 of the Customs Act, on the appellant for paying the personal penalty of two masters of the two fishing trawlers under Section 148 of Customs Act, 1962 that appellant was appointed and accepted as the local agents of the vessels, on their arrival, in terms of Section 148 of Customs Act, 1962 and appellant is liable to discharge all obligations imposed on the Masters of the vessels by or under the said Act, and to penalties and confiscation which are incurred in respect of the said vessels. Appealable order in respect of the personal penalty is already received by the appellant on 1-11-1988 a copy of which sent, is also received on/2-3-1990 by the appellant. The appeal preferred against the above communication was dismissed on 5-6-1991, holding as appeal is not maintainable, on the ground 1-6-1990 letter is not an appealable order. Hence this appeal.
5. In support of the appeal, the Learned Counsel for the appellant has argued that the appellant was authorised by the Master of Vessels only to carry out all the formalities regarding the clearance of the vessels as per the letter dated 29-5-1989 to Asstt. Collector of Customs, Mormugoa. There is no authority to pay "the penalty amount. There is no contravention of any provision of the Customs Act by the appellant. Without his knowledge the vessels have left the port in the night. He has immediately informed the concerned authority after coming to know of the same. There is no show-cause notice to him regarding the liability under Section 148 of the Customs Act, 1962. There was no fixation of the same in the order-in-original dated 25-10-1988. There was no scope to be aggrieved to file the appeal, which has arisen in the communication dated 1-6-1990 only and he has filed the appeal. The appeal was tenable in view of the pending proceeding before the Appellate authority as per the order dated 10-8-1990 1994 (72) E.L.T. 174 is relied upon. The ld. DR has strongly supported the orders-in-appeal and original, by submitting that 1-6-1990 is only a letter of communication and not an order or decision.
6. Perused Sections 42 and 148 of the Customs Act, 1962 and the appeal memorandum, impugned order, dated 1-6-1990 communication, and the documents at serial Nos. 5 to 10 of the Index to the appeal, and 1994 (72) E.L.T. 174. Section 148 of the Customs Act, 1962 deals with the liability of agent appointed by the person in charge of a conveyance. According to it, where this Act requires anything to be done by the person in charge of conveyance, it may be done on his behalf by his agent. An agent appointed by the person in charge of conveyance and any person who represents himself to any officer of customs as an agent of any such person in charge, and is accepted as such by that officer, shall be liable for the fulfillment in respect of the matter in question of all obligations imposed on such person in charge by or under the Act or any other law for the time being in force, and to penalties and confiscations, which may be incurred in respect of that matter. Section 42 of the Act deals with no conveyance to leave without written order by the proper officer, which is the responsibility of the person in charge of conveyance, which has brought any imported goods or has loaded any export goods at a customs station.
1994 (72) E.L.T. 174 in the case of Aravind V. Bhagat v. Collector of Customs, Madras, under Sections 122, 128, 129A of Customs Act, 1962, it is held that Enforcement of Terms of bond against a surety not an order in adjudication under the Act, and therefore not appealable under Section 129(1)(a) of the Customs Act, 1962 (para 5, 6) - Civil liability incurred by the CHA by being a guarantor to the importer; end use bond can be enforced by the department in the manner known to laws. It cannot be short circuited by the department by purporting to pass an adjudicating order.
6. As per the orders-in-original F. No. 11/23/1988-Pr, dated 25-10-1988 of the additional Director of Customs and Central Excise, Panaji, Goa, the charge against the appellant is narrated in Paras 11 and 12 on page 6 of the order that:
"By not obtaining the written order i.e. port clearance for the sailing of the fishing trawlers, the masters of the fishing trawlers/agents/charters have violated Section 42 of Customs Act, 1962 and thereby rendered themselves for a penalty under Section 117 ibid."
"By illegally exporting the fish catch out of India through the fishing Trawlers Shang Fuh Nos. 11 and 12 M/s. Ocean Products & Shipping Ltd., Visakhapatnam, Tropi Trading Pvt. Ltd., Singapore, M/s. Chougule Bros., Mormugoa and the Masters of the fishing appear to have committed an offense under Section 43 of Customs Act, 1962, rendering themselves liable for penalty under Section 114 of the Customs Act, 1962."
As per para 13, show cause notices is issued to them on the same line. Para 15 narrates the reply to it by M/s. Ocean Products & Shipping, Visakhapatnam, Mr. K.U. Kholkar, Manager of M/s. Chougule Brothers, attended personal hearing on 13-10-1988. It is observed in the operative portion of the order of Additional Collector that "Although I do not impose any penalty separately on M/s. Chougule & Bros., Mormugoa their liability under Section 148 of the Paragraph number as per certified copy. Customs Act, 1962 will be there". So from the above it is clear that the Additional Collector for the first time has shown his mind in the operative portion of the order about the applicability of Section 148 of Customs Act, 1962 on the appellant.
8. After the above order, it is only on 27-2-1990, Asstt. Collector of Customs (P), Vasco-da-Gama, Goa called upon the appellant to pay the personal penalty of Rs. 2,50,000/- each, imposed on the masters of two fishing trawlers, who have failed to pay the same tile, then, on behalf of the masters, either directly in the Customs Treasury, Mormugoa or send by way of draft drawn in favour of Asstt. Chief Accounts Officer, Customs House, Mormugoa, within 15 days from the date of receipt of the letter, failing which action will be initiated under Customs Act, 1962. Even in this letter, Section 148 of Customs Act, 1962 is not applied to the appellant. This was replied on 21-5-1990 by the appellant through the Counsel, making out the case in paras 3 and 4 that -"M/s. Ocean Products & Shipping Ltd., Visakhapatnam appointed the appellant as agents of two fishing Trawlers owned and chartered by them at the material time, penalty may be recovered from them, due from the Masters of two fishing trawlers. The appellants had filed the entry inward of the fishing Trawlers only, which was in Customs area under Customs control. They had left without knowledge of appellants, without port clearance. Appellant cannot be held responsible for payment of penalties imposed on the Masters of two fishing Trawlers for their illegal acts. By paying such penalties amounts to wrongful act under the Indian law, and contravention of FERA. Appellants are not holding any funds or accounts of the said two Trawlers nor such any undertaking as required under Section 42 of Customs Act, 1962 for paying of penalty on behalf of Masters of two fishing Trawlers Shang Fuh 11 and 12. The notice of demand may be vacated. Appealable orders may be issued before recovery proceedings to enable to file appeal." On the basis of the above demand notice and reply of the appellant. Asstt. Collector of Customs, Haji Bunder, Vasco-da-Gama, states on 1-6-1990 replied the liability of the appellant under Section 142(C) of Customs Act, 1962 stating that "on arrival of the Trawlers appellant was appointed and accepted as their local agent by the Masters under Section 148 of Customs Act, 1962, according to which appellant was liable for the fulfillment of obligations imposed on the said Masters by or under the said Act or any other law for the time being in force and to penalties and confiscations which are incurred in respect of the said matter, and made a fresh demand to comply the requirement of 25-5-1990 letter. Appealable order (order-in-original) is received on 1-11-1988 by the appellant, and copy of it was also received on 2-3-1990 by the appellant." The appellant preferred an appeal to Collector of Customs (Appeals), Bombay against the above, which ended in the impugned order. As per para 4 of the said order, 1-6-1990 letter is termed as demand notice, or continuation of the order in original dated 15-10-1988 where the liability under Section 148 of the Customs Act was fixed on the appellant. Before the impugned order, in appeal No. 8/90 of the appellant the same Collector has passed and issued an order on 10-8-1990 on the basis of 1-6-1990 communication, and impugned order is the continuation order in appeal No. 7/91 issued on 5-6-1991. Both requires consideration to decide the correctness of impugned order.
9. In paras 23 and 24 of the orders-in-appeal No. 8/90 issued on 10-8-1990, the Collector of Customs (Appeals), Bombay has clearly held that "the obligations of the appellant in the case of limited import and that the main obligation for complying with all the customs formalities and for payment of customs duty and cess is that of M/s. Ocean Product and Shipping Ltd., who have hired two impugned vessels viz. Shang Fuh No. 11 & 12, automatically engaged their masters YH Shri Rong and YN Bhng. The breach of customs formalities and fleeing of impugned vessels without payment of duty/cess and without taking port clearance, would imply that the penalties imposed by customs on the two masters of the two aforementioned vessels is that of the principals, who engaged the vessels i.e. M/s. Ocean Product and Shipping Ltd. The role of the appellant is limited". In para 25 recovery from the appellant was stayed for 6 months under 1-6-1990 letter and lower authorities at Mormugoa were instructed to initiate recovery proceedings against the principal M/s. Ocean Products & Shipping Ltd., and report the result within a period of 6 months, to decide whether any further action is necessary or warranted in this matter or not. Then in appeal No. 7/91 the impugned order was issued on 5-6-1991, in para 5, it is observed that the customs authority of Goa could not recover the amount from the charterers M/s. Ocean Product and Shipping Ltd., and stay period was over, further proceedings were taken up by calling the appellant for personal hearing. On 22-3-1991 and thereafter passed the impugned order after hearing parties on 9-5-1991 and 10-5-1991; paras 16 to 36 are the contentions of both sides, both on maintainability of appeal and on merits. In the course of discussion under the heading of findings in paras 37 to 44, it is held that 1-6-1990 is not an adjudicating order on which appeal cannot lie, and 25-10-1988 order-in-original of Additional Commissioner is an appealable order, against the appellant which has become final, as appellant has failed to prefer appeal in time, being an aggrieved person. How far it is correct is to be seen.
10. From the above, it is clear that 1-6-1990 communication is only a demand notice, and not an adjudication order. The principal Ocean Products and Shipping Ltd. has failed to pay the penalty of masters, and appellant being its local agent has become liable to pay it. The appeal against such a demand notice is not maintainable. 25-10-1988 adjudication order received by the appellant on 1-11-1988 speak the liability of appellant, for payment of penalty of masters as local agent, for which appellant was naturally aggrieved. For having failed to appeal against it at proper time, now his filing the appeal on 1-6-1990 demand notice cannot come to his rescue. The appeal cannot be maintained. The contention of the department has to be and is upheld. Hence we pass the following order.
ORDER For the reasons discussed above the appeal is not maintainable. It is rejected.