Bombay High Court
Mackinnon Mackenzie & Co. Ltd. vs Board Trustees And Others on 1 January, 1800
Equivalent citations: 1988(15)ECC317, 1987(32)ELT617(BOM)
JUDGMENT Pendse, J.
1. This is an appeal preferred by the original petitioners - M/s Mackeinnon Mackenzie & Company Limited, against the order dated February 3, 1983 passed by the learned Single Judge on Writ Petition No. 249 of 1983 summarily rejecting the petition, on the ground that the interference is not called for as the petition, on the ground that the interference is not called for as the petitioners had merely challenged the show cause notice issued by the Assistant Collector of Customs, Manifest Clearance Department. After hearing counsel for all the parties, we indicated that we were inclined to set suggested that instead of remitting back the petition before the learned Single Judge for hearing, it would be desirable that the petition itself is heard on merits. By consent of parties, we decided to adopt the course suggested and we informed the parties that if so desired they can file affidavits in support of their respective claims. Accordingly, on behalf of Port Trust, affidavit sworn on November 9, 1987 by H. I. Naik is filed and taken on record. Accordingly, we allow the appeal, set aside the order dated February 3, 1983 passed by the learned Single Judge and issued rule on Writ Petition No. 249 of 1983. By consent of the parties, the petition is taken on board and called out for hearing.
2. The facts giving rise to the filing of this petition on January 28, 1983 are not in dispute and are required to be briefly stated to appreciate the grievance of the petitioners. The petitioners are a Company carrying on business as agents for foreign vessels calling at the Port of Bombay. The petitioners were agents in respect of foreign vessel s. s. "Arteage" and the said vessel called at the Port of Bombay in the second week of October, 1980. As required under the Customs Act, 1962, the petitioners filed Import General Manifest bearing No. 1291 on October 14, 1980 with the Customs authorities. The Import General Manifest detailed the cargo meant for discharge at Bombay Port. The cargo, inter alia, consisted of about 14 fibre board kegs of Trifuloperzine HCL - BP, required for use in pharmaceutical products, meant for discharge at the Port of Bombay for the consignees and the consignees were M/s. Smith Kline & French (I) Ltd., Bangalore. The clearing agents for the consignees were M/s. Jesia Mistry & Company, Bombay. The said 14 kegs were listed at Item No. 56 on the Import General Manifest. The vessel discharged the cargo on about 3rd week of October, 1980.
3. The Clearing Agents of the consignees went to take delivery from Bombay Port Trust Office but were able to trace only 5 kegs in the shed - lock fast. The goods are stored in the shed - lock fast when the goods are precious and are requested to be stored either by the consignees or by the ship agents. In the present case, neither the consignees, nor the petitioners had requested the Port Trust authorities to store the goods in shed - lock fast and it is not known how the goods travelled to shed - lock fast. It is also not in dispute that the Port Trust authorities did not prepare any tally sheets while the goods were discharged from the vessel. The petitioners received letter dated February 26, 1981 from the clearing agents pointing out that the possession of 5 kegs out of 14 kegs was secured from the shed - lock fast and the remaining 9 kegs could not be traced by the Port Trust authorities. The Port Trust authorities prepared on out - turn report on May 27, 1981, inter alia, stating that 9 kegs were short -- landed. On January 14, 1981, the petitioners informed the Port Trust about the non - availability of 9 kegs and advised that a search should be undertaken to find out where the goods were misplaced. The Port Trust authorities were also requested to lodge complaint with the police, if necessary. The Port Trust authorities did not bother to send any reply. The petitioners thereupon sent several letters requesting the Port Trust authorities to trace the missing kegs but to no avail. Finally on August 12, 1981, the Deputy Manager, Docks, informed the petitioners that the clearing agents cleared 5 kegs on payment of Port Trust charges although not a single keg is recorded in the landing tally. The letter further recites that remaining 9 kegs were accordingly out - turned on May 8, 1981. The petitioners then addressed letters to the Deputy Manager, Docks pointing out that the missing kegs are not traceable at the vessel's other ports of call and the shortage of 9 kegs has resulted in a claim of Rs. 4,84,791.48 and the Customs claim, in the like amount will be received and, therefore, the Port Trust authorities should undertake further investigation to trace the missing kegs. The petitioners also served a detailed notice on the Chairman of the Bombay Port Trust but failed to receive any response.
4. By notice dated November 6, 1982, the Assistant Collector of Customs informed the petitioners that as per the out- turn report furnished by the Bombay Port Trust, 9 kegs were short - landed and, therefore, the petitioners should account for the goods and failure to do so would lead to imposition of penalty under Section 116 of the Customs Act. On receipt of this notice, the petitioners filed the present petition to challenge the issuance of the show cause notice. Mr. Venkiteswaran, learned counsel appearing on behalf of the petitioners, submitted that the show cause notice is based only upon the out - turn report prepared by the Bombay Port Trust authorities and this out - turn report was prepared without existence of any tally sheets and shed delivery orders. Mr. Venkiteswaran submits that the entire procedure as regards preparation of tally sheets, out - turn report, etc. was considered in the case of Shaw Wallace & Company Limited v. Assistant Collector of Customs and others reported in 1986 (25) Excise Law Times 948 and in that case it was accepted on behalf of the Port Trust authorities that the tally sheets or the landing sheets are prepared by the authorities, while the cargo is discharged from the vessel, and the out - turn report is prepared on the basis of the tally sheets and shed delivery orders. After preparation of tally sheets which exhaustively refer to the cargo which was unloaded, the goods are transferred to the shed and shed delivery orders are prepared when the cargo is removed by the consignees. Mr. Venkiteswaran submits and, in our judgment, with considerable merit that in the present case it is an accepted position that tally sheets were not prepared by the Port Trust authorities and out -- turn report is prepared only on the basis of what was stated in the Import General Manifest and the fact that the delivery of 5 kegs was taken by the consignees. The learned counsel urged that in these circumstances the out - turn report is without any value and the show cause notice based on such out - turn report must be quashed. The submission is correct and deserves acceptance. The Import General Manifest sets out that 14 kegs were to be discharged at Bombay Port and out of these 14 kegs, 5 kegs were in fact handed over to the consignees. It is the case of the Port Trust authorities that as 9 kegs were not handed over, it must be presumed that they were short -- landed. It is impossible to accede to this submission because in the first instance, the Port Trust authorities failed to prepare tally sheets and secondly, it is not unusual that the cargo after being discharged from the vessel is pilfered and the Port Trust authorities are unable to take steps to prevent such theft. Indeed, we are surprised to find how 5 kegs delivered to the consignees were kept in the lock - fast. It is not possible for the Port Trust authorities to claim that 9 kegs were short - landed merely because the Port Trust authorities had failed to discharge the duty of preparing the tally sheets and were unable to point out as to where the remaining 9 kegs disappeared. In our judgment, the sole basis of the show cause notice being out - turn report which is entirely defective, the Customs authorities were clearly in error in commencing proceedings against the petitioners. It is, therefore, necessary to strike down the show cause notice because the authority issuing show cause notice had no jurisdiction to do so in absence of any material to sustain the contents of the out - turn report.
5. Accordingly, petition is allowed and show cause notice dated November 6, 1982, a copy of which is annexed as Ex. ` o ' to the petition is struck down. In the circumstances of the case, there will be no order as to costs. It is made clear that the show cause notice is struck down authorities to proceed with the hearing of the show cause proceedings in respect of other items set out in the Schedule.