Customs, Excise and Gold Tribunal - Mumbai
Shri Muk Tin Fui And Anr. vs Collector Of Customs (P) on 22 January, 1986
Equivalent citations: 1986(25)ELT982(TRI-MUMBAI)
ORDER K.S. Dilipsinhji, Member (T)
1. Shri Muk Tin Fui, Master of the vessel Ngan Chau and M/s. Hongkong Island Shipping Co. Ltd. the owners of the vessel have filed Revision Petitions to the Government of India dated 8-9-1980 and 11-12-1980 under old Section 131 of the Customs Act and these have been transferred to the Tribunal in terms of Section 131B ibid and are to be treated as appeals before the Tribunal.
2. The appeals are against the Order No. S/14-4- 742/74 Pint dated 1-10-1976 passed by the Collector of Customs (Preventive) Bombay levying a penalty of Rs. 1,00,000/- on Shri Muk Tin Fui and Rs. 50,000/- on M/s. Hongkong Island Shipping Co. Against this order, the appellants had filed appeals to the Central Board of Excise & Customs and the Board under their Order-in-Appeal No. 385A-387A of 1980 dated 22-2-1980 disposed of the appeals. The Board reduced the penalty amount from Rs. 1,00,000/-to Rs. 50,000/- in respect of Shri Muk Tin Fui while rejecting the appeal of M/s. Hongkong Island Shipping Co. These two parties filed applications to the Government which are now transferred as appeals.
3. The facts of the case are that the Customs officers searched the vessel s.s. "Ngan Chau" on 16-9-1974 and as a result of this search, they found a container under the cargo hatch No. 3 on port side of the vessel and seized therefrom and navigation light locking 166 packages. These packages were examined and they were found to contain dutiable and restricted goods like cassette tape recorders, radio cassette tape recorders etc. totally valued at Rs. 1,71,600/- CIF and Rs. 5,14,800/-at the market rate. Necessary investigations were made and after holding an inquiry, the Collector of Customs (P) passed the impugned order on 1-10-1976.
4. Shri Pochkhanwala, the learned advocate of the appellants submitted during the course of the oral arguments that the ship Ngan Chau left Hongkong on 10-7-1974 and was. bound for Singapore, Red Sea ports, Gulf ports and thereafter for Bombay. On the outward voyage, after leaving Singapore, the ship touched Cochin on 28-7-1974 and on the return voyage it arrived in Bombay on 9-9-1974. Shri Pochkhanwala drew our attention to para 3(b) of the original petition to the Government which contained the submission that at the port of Cochin on 28-7-1974, the Chief Officer Shri L. Man made an oral declaration to Cochin Customs regarding the 166 packages carried on board the vessel. However, this declaration was to the effect that about 45 tons of cargo was carried on board. This included the goods seized and confiscated subsequently at Bombay. This cargo was on the deck of the ship when she arrived at Cochin on 28-7-1974. The Customs officers had visited the ship at that time and they did not take any action regarding this cargo. In reply to our question, Shri Pochkhanwala submitted that he could not say whether the ship's call at Cochin on 28-7-1974 was for the purpose of loading or unloading cargo. When the ship arrived at Bombay on 9.9.1974, the agents of the vessel filed the Import General Manifest with the Customs House on 10-9-1974 as required by law and along with the IGM, a cargo summary was also submitted. The IGM and the cargo summary contained declaration of 166 cartons of cassettes etc. by way of specific mention. On 16-9-1974, the Customs officers searched the vessel and recovered 137 packages from cargo hatch No. 3 on port side and 29 packages in the navigation lights stores locker. These 166 packages were seized and statements were recorded and the proceedings for confiscation and levy of penalty were commenced. The advocate argued that at the time of seizure of these goods, the Custom House had already with it the IGM and the cargo summary. It was therefore not true to allege that the Customs officers had received information regarding smuggling and that they boarded the ship for search in pursuance of this fact. The Customs officers were already aware of the existence of these goods, through the IGM and the cargo summary. The only reason for the Customs officers seizing the 166 packages was that the itinerary of the ship did not include Bangkok while the 166 packages were meant for Bangkok. The Customs authorities therefore concluded that these goods were not meant for Bangkok and were probably meant for smuggling at Bombay. Shri Pochkhanwala added that even Bombay was not originally on the itinerary of the ship as there was no cargo meant for discharge at or loading from Bombay. The ship called at Bombay on 9-9-1974 only for supply of provisions. Referring to the Collector's order, the advocate argued that it was not correct on the part of the Collector to hold that 166 packages were intended to be smuggled into the country even though they were declared as same bottom cargo. In this behalf, the advocate referred to the evidence of the Customs officer Shri S.R. Gajjar as incorporated in the Collector's order. Continuing his argument, the advocate stated that the Collector had at best found an intention to smuggle goods but intention was not a crime and it could not be punished. Therefore, there was no scope for confiscation of the goods and hence the levy of penalty on the Master and the Ship owners was bad. The advocate referred us to the grounds of the 'petition which covered these facts. Referring to Para 10 of the Board's order in appeal, the advocate further argued that the Board did not accept the contention that the goods were in transit. This was because it was not shown that the goods had been loaded at Hongkong for discharge at Bangkok through intermediate ports. With reference to the Board's finding, the advocate contended that the goods in transit implied that the goods were not meant for discharge and hence such goods were saved from the provisions of the Customs Act or the Imports and Exports Control Act. He further argued that these Acts did not reguire that the details of the transit cargo should be shown specifically. The advocate read out Section 53 of the Customs Act relating to transit of goods in the same vessel. He further argued that; the requirements of Section 53 of the Customs Act did not enjoin the destination of the transit cargo to be shown. The Custom House had accepted the IGM of the ship in toto as required under Section 30 of. the Customs Act and this implied that the Proper Officer was satisfied about the correctness and the completeness of the IGM. Shri Pochkhanwaia read Sections 30 and 31 and added that the IGM was not amended. In reply to a question from the Bench, the advocate stated that he did not know whether the E.G.M. of the ship mentioned these packages. However, he added that during the course of the hearing of the first appeal before the Board, the appellants had relied on several decisions regarding the liabialityof a vesselto confiscation under Section 115 in the absence of any mens rea and the liability of the owner to penalty under Section 112. The advocate stated that the Board did not consider these submissions. The advocate referred us to the decision of the Bombay High Court in the case of GARWARE Shipping Co. 1984(15) ELT 375 and submitted that he would rely on this judgment. The advocate was informed that this judgment of the single judge of the Bombay High Court had been superceded by the decision of the Bench of the Bombay High Court in the case of Moghul Lines Ltd. and Ors. v. A.K. Dutt and Anr. vide decision in Appeal No. 57/1979 dated 5-10-1982. As per the decision of the Division Bench, the steamer owners were expected to exercise reasonable precautions against their vessels being used for the purposes of smuggling. Shri Pochkhanwaia took up the alternative plea that the steamer owners had issued a circular and this was pasted on the notice board of all the ships belonging to this Company, enjoining directions against the mis-use of the ships in smuggling of contraband. The advocate submitted that the Customs authority did not controvert this fact. He, therefore submitted that in the circumstances of the case, Section 115 was not attracted and therefore the ship was not liable to confiscation. Similarly, he argued that the owners of the ship, were not a party to the smuggling and hence they were not liable to penalty under Section 112. The Collector in his order had held that the owners had failed to discharge the burden under Section 115(2). The advocate referred to the Collector's finding in this behalf. These were to the effect that the owners had failed to take notice of the warning of smuggling sent by their agents in Bombay, and the involvement of their ships in smuggling and the failure of the owners to reply to the agents' warnings. The advocate argued that the Collector's reliance on the past conduct in levying penalty on the owners was not correct. In a similar case, the advocate submitted that regarding a sister ship belonging to the same shipping Co. the Board had set aside the order of penalty levied by the Collector on the owners of the ship and the Tribunal had decided this appeal vide. the Tribunal's order No. 1198-99/85 dated 7-10-1985. In the present case, the owners were not at all involved with the smuggling and hence the penalty on the owners was not justified. Though the Customs had general information that the vessels belonging to this steamer Co. were indulging in smuggling, there was no nexus between the owners and the master or the Chief Officer and the Board had reversed the order of the Collector in that earlier case. The advocate pleaded that the same benefit should be extended to the present case. He further submitted that even if the intention of smuggling would be presumed, the same was treated as having been abandoned when the IGM was filed with the Custom House mentioning the same bottom cargo. There was no attempt or actual smuggling. In the present case, the Chief Officer of the ship had been held guilty and there was no nexus with him and the owners. The show cause notice proposed penalty on the Master and the Collector also levied a penalty on him. The arguments submitted by the advocate on behalf of the owners would apply similarly to the appeal preferred by the Master. In addition, the advocate mentioned that the CPM had exonerated the Master after going through the evidence. The Magistrate's order was passed on 25-1-1.978 which was after the Collector's order dated 1-10-1976. The Magistrate had passed the order after relying on the provisions of Section 138A regarding presumption of culpable mental state. The department filed an appeal to the High Court against the Magistrate's judgment and the Bombay High Court dismissed the appeal on 2-10-1978. Thus, the Bombay High Court and the Magistrate held that the Master was innocent of the charge. The advocate submitted that the High Court's decision was binding on the Tribunal and the Board. He relied on this behalf on the judgment of the Supreme Court in the case of Corporation of the City of Nagpur v. Ramchandra and Ors. vide 1981(2) SC 714. The ratio of this judgment laid down that propriety demanded that the department should follow judicial decisions.
5. Advocate Shri A.J. Rana submitted that under the provisions of Section 157 of the Customs Act, the Central Board of Excise & Customs had made Import Manifest (Vessels) Regulations 1971. and as per Clause 3 of these regulations, the necessary declarations in the prescribed forms were required to be filed. Shri Rana read Clause 3 of the regulation. Clause 5 contained the manner of declaring the cargo. Under sub-Clause (2) only the specific items were required to be mentioned even if the cargo was in transit. The goods seized and confiscated by the Customs did not find a mention in sub-Clause (2). Taperecorders were not required to be specifically mentioned. The IGM and the cargo summary as filed by the steamer agents mentioned 166 cartons. Therefore, the steamer agents had complied with the aforesaid regulations. There was therefore no justification for conning to the conclusion that the goods were meant for smuggling into India. The findings of the Collector were that the goods were intended for smuggling into Bombay. This was only his belief and there was no evidence for this purpose. When the ship touched Cochin on the outward voyage on 28-7-1974, the manifest was filed in the same form. Therefore, the goods do not become prohibited goods under Section 111(d) of the Customs Act and therefore they were not liable to confiscation. Shri Rana therefore submitted that the Collector's order be set aside.
6. The Learned Senior Departmental representative contended that the Collector's order was based on certain circumstances which were mentioned in his order. These were hand written entries in the shipping order for the aforesaid packages, different writing and superimposed writing and the tampering with these documents in the manner as mentioned in the Collector's order. Besides, the Master had given nil cargo declaration in the certificate dated 9-10-1974 even though 137 packages were found in a container stored on the deck. Besides, 29 packages out fo 166 were found stored in navigational lights locker which was not a normal place for storing the cargo. The mate's receipt, tally sheets and B/L were not available in respect of 166 packages while these documents were available for other transit cargo. These circumstances along with the fact that the alleged destination of the goods was Bangkok which was not on the itinerary of the ship were the circumstances which were taken into account by the Collector in coming to the conclusion as contained in his order. The 166 packages were valued at Rs. 5,14,800/- at the market price and this was not a small sum. Shri Pal drew our attention to the intention behind incorporating Section 53 in the Customs Act as reported in T.P. Mukerji's Commentary on Customs Act - 3rd edition page 172. He reiterated that this section was a new provision and it made it clear that there was prohibition on the bringing or taking of goods into or out of India as per this Section. The Collector had given a categoric finding in treating the goods as smuggled. The goods in transit under Section 53 should be bonafide commercial cargo which is not the case in the appeal under consideration. The absence of B/L relating to these goods and the tampering with the other documents showed that the cargo was not meant for bonafide purposes. The Master had the knowledge of the goods and yet he gave nil cargo declaration certificate at the time of the arrival of the ship in Bombay. Besides 29 packages had been concealed in the navigational light locker and this was not the bonafide place for storage. As regards the appellant's reliance on an earlier identical case decided by the Tribunal under their Order No. 1198-99/85 dated 7-10-1985, Shri Pal submitted that the two cases were identical in a way. Shri Pal also drew our attention to Section 38 under which the Customs Officer was given powers for production of documents and to ask questions. As regards the appellant's plea that the magistrate had acquitted the Master, Shri Pal pleaded that prosecution and adjudication were seperate proceedings and the judgment of the Bombay High Court in Petition No. 1004/81 dated 14-2-1985 in Maniklal's case held this point of view. It was therefore not necessary for the departmental authorities to go by the verdict of the magistrate completely. He drew our attention to Section 127 of the Customs Act in this behalf. He also read Para 11 of our Order No. 1198-99/885 dated 7-10-1985 to show the culpability of the Master. He pleaded that the same view should be upheld in the present case. Shri Pal also drew our attention to para 12 of the Board's order-in-appeal highlighting the role of the Master and the Chief Officer. Shri Pal submitted that the same arguments will apply to the role of the owners of the ship. He, therefore, pleaded that both the appeals should be rejected.
7. Shri Rana contended in reply that the Bombay High Court's decision in exonerating the Master was competent and could not be doubted as the High Court had come to the aforesaid finding after consideration of the evidence. Though the decision in a criminal case was not binding in civil matters, he had only urged the propriety of accepting such a decision so that the two authorities did not take contradictory views in similar circumstances. Bhoormal's case laid down the same ratio. As regards the contention of Shri Pal that the transit goods should be normally commercial cargo, Shri Rana urged that Section 53 did not incorporate any definition of commercial cargo. Similarly, the regulations also did not define commercial cargo. He, therefore, reiterated his plea of allowing the appeals.
8. We have examined the arguments advanced by both the sides. The important question which calls for determination is the liability to confiscation of 166 packages of consumer goods valued at Rs. 1,71,600/-CIF seized from the vessel "Ngan Chau" on 16-9-1974. The appellants contend that a correct IGM was filed for the cargo of the vessel on 10-9-74 which was within 24 hours of the arrival of the vessel on 9-9-1974. In the IGM, the seized goods were shown as retention cargo. The details of the retention cargo were not required to be given and the mere mention of the number of packages of such cargo should have sufficed. The appellants draw sustenance for their argument by citing Rule 5(2) of the Import Manifest (Vessels) Regulations, 1971. They also adduced the argument that the same packages were on board the ship when the ship called at Cochin on its outward voyage on 28-7-1974. The ship was boarded by the Customs officers at Cochin at that time and the Customs authorities had refrained from taking any action against these packages. Subjecting these arguments to scrutiny it is seen that there was no documentation like the B/L or mates' receipt to cover 166 packages of contraband goods. These were claimed to be destined for Bangkok. The ship was not going to Bangkok and therefore the claim that this cargo was meant for Bangkok has to be taken with a pinch of salt. If indeed the claim is to be conceded, for the sake of argument, the goods should have been transhipped at Singapore which was the next port of call of the ship from Hongkong. Otherwise, the owner of the goods would have had to pay a higher amount of freight charges. In that case, there was no justification for the goods to remain on board either when the ship called at Cochin on 28-7-1974 or at Bombay on 9-9-1974. Furthermore, in that case, the B/L would have been necessary to effect the transhipment. No such B/L was produced. In fact, it has been admitted that no B/L was available vide the statement of Shri Muk Tin Fui, Master of the ship on 11-9-1974. Besides, there was tampering of the documents as mentioned in the Collector's order. The transit manifest for Hongkong-Bangkok cargo was admitted to have been signed by the Master only after leaving Cochin vide his statement dated 20-9-1974 i.e. when the ship arrived at Cochin on 28-7-1974 no such document was available. This further confirms the Collector's findings that there had been tampering with the documents to provide legal cover to the 166 cartons shown as consigned for Bangkok. The shipping order produced by Mr. LoMan in the name of M/s. Hongkong Island Shipping Co. Ltd. does not appear to be genuine. Besides it shows tampering with the date of the shipping order. The Chief Officer had been working in that capacity for more than 4 years and he was well aware of the need for proper documentation for the cargo carried on board the ship. Therefore the failure to have proper documentation is very significant. It leads to inescapable conclusion that the cargo was not meant for Bangkok as made out to be. As regards the filing of the manifest and the acceptance of the same, it is to be seen that the delivery of the manifest has to be given to the Proper Officer in the Custom House. The fact that this was accepted and admitted would not imply that there was correct declaration of cargo on board the ship. In fact, the form of the Import Manifest prescribed under Import Manifest (Vessels) Regulations 1971 lays down declaration about various items. The proviso to Rule 5 lays down that details relating to the nature of the same bottom cargo and the number of packages should be declared. It is not the appellant's argument that the nature of the cargo consisting of luxury goods like tape recorders was declared in the IGM. It is therefore seen that there was no full compliance with the aforesaid regulations. Besides, the goods are prohibited in terms of Section 3 of the Imports and Exports (Control) Act 1947 as amended read with Imports (Control) Order 1955 as amended and this prohibition is deemed to have been imposed under Section 11 of the Customs Act. The provisions of Section 53 of the Customs Act are also subject to the provisions of Section 11. Therefore, in the absence of a correct declaration, the goods become prohibited and they are correctly ordered to have been confiscated. The manner of showing the goods also leaves no doubt about the fact that the cargo was not bonafide: It is therefore immaterial that the intention of the Chief Officer or the Captain was frustrated when the Manifest was filed in the Custom House. This does not affect the fact that the goods have been correctly confiscated.
9. As regards the appellant's plea that the ship Ngan Chau was not liable to confiscation under Section 115 as there was no mens rea on the part of the owners, it is seen that the master of the ship was very much involved in this case of smuggling. The ship has been confiscated under Section 115(2) of the Customs Act. No mens rea is required for ordering such confiscation vide AIR 1959 Calcutta 237 in the case of Everret Orient Lines v. Jasjit Singh. The decision of the Bombay High Court in the case of Garware Shipping.Co. 1984(15) ELT 375 has been superseded by the decision of the Bombay High Court in the case of Mughul Lines and Ors. as pointed out by us during the course of the arguments. Therefore, this decision is also of no avail to the appellants. The market value of the goods is more than the amount of fine levied in lieu of confiscation of the vessel and therefore there is no illegality in the Collector's order for the levy of the fine. This part of the order is correct. As regards the Collector's order of levying a penalty of Rs. 50,000/- on M/s. Hongkong, Island Shipping Co. Ltd. who are the owners of the vessel, it has been pleaded that the owners are not liable to any penalty. It has been urged that if there was any offence, it was committed by the master and the chief officer and that the owners were innocent. Even the Trial Magistrate had found only the Chief officer guilty. The department's appeal to the High Court had been dismissed. It has been urged that the ratio of the High Court's decision should be followed in the quasi-judicial proceedings before the departmental authorities. Besides it has also been urged that in case of a sister ship belonging to the same Company, the Board had set aside the order of penalty on the owners and reliance had been placed on the Board's order in this behalf which came up before the Tribunal for consideration in our Order No. 1198-99/85 dated 7-11-1985. The appellants have therefore urged that no penalty should be levied on the owners and that the Collector's order of penalty should be set aside. Considering these submissions it is seen that a penalty under Section 112 can be levied if a person is either concerned with improper importation of the goods or who acquires possession or deals in these goods etc. knowing that they are liable to confiscation. Though the Collector has not specified the sub-section under which penalty has been levied the facts of the case show that it has been levied under Section 112(a) of the Customs Act. The question would therefore arise as to whether the owners did anything which would render the 166 packages liable to confiscation or omitted the doing of such an act. There is no evidence to suggest that the 166 packages were shipped with the knowledge of M/s. Hongkong Island Shipping Co. Ltd. The improper declaration of the packages also cannot be ascribed to that Company. It was the duty of M/s. New India Maritime Agency P. Ltd. or the Master of the vessel to file a correct 1GM of the vessel. If therefore there was any incorrect declaration, the responsibility could not be ascribed to M/s. Hongkong Island Shipping Co. Ltd. Besides, it is seen in the orders of the Collector and the Board that there was no evidence to show that 166 packages in question were shipped with the connivance of the owners. The Board in their Order dated 22-2-1980 have observed that considering the role of the Master and the Chief Officer it is quite clear that the unauthorized transactions could be only under the instructions from the owners of the ship. The Board therefore confirmed the Collector's order in coming to the aforesaid conclusion. The Board discussed the evidence on the basis of which the Collector found the owners concerned in the unauthorised importation of 166 packages. However, we find that there is no evidence regarding the direct complicity of the owners in the unauthorised importation of the 166 packages and therefore it is not legitimate to presume that the shipment of these 166 packages should have been under the owner's instructions. The shipping order from the owners does not appear to be genuine and there is no evidence that this was signed by any responsible officer in M/s. Hongkong Island Shipping Co. Ltd. At best, it appears to be a crude attempt of the Captain and the Chief Officer to provide some legal covering to 166 packages and this type of document cannot implicate the owners of the ship in this act of smuggling. Besides, there is a great deal of force in the appellant's contention that in the case of another ship of the same lines, the Board had set aside the order of penalty imposed by the Collector on the owners, vide our Order No. 1198-99/85 dated 7-10-1985 considering these aspects we find that the levy of penalty of Rs. 50,000/- on M/s Hongkong Island Shipping Co. Ltd. under Section 112 of the Customs Act is not justified and we set aside the same.
10. As regards the appeal of the Master Shri Muk Tin Fui, it is seen that he is very much concerned with the unauthorised importation of 166 packages of contraband goods. His exoneration by the magistrate and the dismissal of the department's appeal by the High Court do not have any relevance to the levy of the penalty on the Master. The Learned SDR has rightly opposed the contention of the appellant in this behalf while relying on the judgment of the Bombay High Court in the case of Maniklal U. Jain. This judgment is more specific to the case in question than the Supreme Court's decision in the case of City of Nagpur v. Ram-chandra and Ors. relied on by the appellants. The Master had been a party to the unsuccessful attempts to provide legal cover to 166 packages. He has already been shown leniency by the Board who reduced the penalty amount from Rs. 1,00,000/- to Rs. 50,000/- on the Master. No further leniency is due to him. Therefore, we turn down his plea and reject the appeal.
11. The orders of the Collector and the Board are modified to the extent mentioned above and the appeals of Shri Muk Tin Fui and M/s. Hongkong Island Shipping Co. Ltd. are otherwise rejected.