Union of India & Anr Vs. M/S Mustafa
& Najibai Trading Co., & Ors [1998] INSC 335 (16 July 1998)
S.C.
Agarwal, V.N. Khare S.C. Agrawal, J. :
ACT:
HEAD NOTE:
This
appeal, by special leave, has been filed by Revenue against the judgment of the
Bombay High Court dated may 14, 1987 whereby the High Court, while allowing
Civil Writ No. 6142 of 1986 filed by the respondents, has set aside the order
dated April 6, 1984 passed by the Collector of Customs (Preventive), Bombay
[hereinafter referred to as 'the Collector'] as well as the order of the
Customs, Excise and Gold (Control) Appellate Tribunal [hereinafter referred to
as 'the Tribunal'] dated November 26, 1985. By the said order of the Collector
dated April 6, 1984, which was affirmed in appeal by the Tribunal, goods valued
at Rs.59,53,560/- c.i.f. (Rs. 1,78,60,680/- at the Indian market rate) were
confiscated under clauses (d) and (f) of Section 111 of the Customs Act, 1962
[hereinafter referred to as 'the Act']. The gunny bags, white cloth wrappings,
wooden cases and the cartons which were used for keeping the seized goods were
also confiscated under Section 118(1) of the Act.
The
vessel, MANSCO-3, containing the said goods was confiscated under Section
115(2) of the Act but the owner of the vessel was given an option to redeem it
on payment of fine of Rs. 7,50,000/- within one month of the date of receipt of
the said order and personal penalties were also imposed under Section 112 of
the Act on respondent No. 2, the Managing Director of respondent No. 1 company
(the owner of the vessel) as well as on the Master of the vessel and other
persons.
In
September 1982 408 packets were consigned from Dubai to Afghanistan via Karachi and were shipped to Karachi on the vessel 'AMETHYST'. When the said vessel arrived at Karachi port the Government of Pakistan
refused clearance of the consignment and the goods remained in transit shed at Karachi port. On April 25, 1983 the Central Board of Revenue of
Pakistan allowed reshipment of the goods back to Dubai.
Thereafter
the vessel, MANSCO-3, was sent from Dubai to Karachi for unloading certain cargo at Karachi and to return to Dubai with the said consignment of 408
packets which had been detained at the Karachi port. At Karachi port 408 packets were loaded on the
vessel for the purpose of reshipment to Dubai. 971 packages of goods of Pakistan origin were also loaded on the said ship. MANSCO-3 left Karachi on August 16, 1983 but instead of proceeding to Dubai the vessel proceeded to Bombay. MANSCO-3 reached the outer anchorage of Bombay harbour on August 20, 1983.
From the outer anchorage the said vessel entered the inner anchorage on August 21, 1983 but was sent back to outer
anchorage on the same day. On August 22, 1983 M/s Regent Shipping and Trading
Company, the local agents of the shipping company which owned the vessel,
MANCO-3, contacted the Captain of the ship as well as the Bombay Port Trust
Pilot Station and the Bombay Port Trust Control. They were asked to deposit the
piloting charges by the Bombay Port Trust authorities. On August 23, 1983 piloting charges of Rs. 12,000/-
were paid to the Bombay Port Trust by the local agents and the ship was brought
into the inner anchorage of Port Mazgaon on August 23, 1983 at about 12.20 p.m. On
the morning of August 24, 1983 the officers of the Customs (Preventive) Wing
boarded MANSCO-3 and asked the Captain of the vessel to produce the crew list,
crew property list, store list and the Import General Manifest. The Captain of
the vessel could not produce any of the above referred documents. On
questioning the Captain the Customs Officers came to know that the Chief
Officer and the Chief Engineer of the vessel had left the vessel in a fishing
craft without completing the customs, health and immigration formalities and
had gone ashore when the vessel was at the outer anchorage.
Thereafter
the officers inspected the holds of the vessel and found a large number of
white cloth wrapped packages bearing the markings 'Star Dubai', Prince Dubai',
etc. They further found a large number of gunny covered packages bearing the
marking 'In Transit to Afghanistan via Karachi and Chamman' below the white cloth covered packages.
Having
regard to the markings it appeared to the officers that the goods were meant
for shipment to Afghanistan and the Captain had port clearance
for Dubai from Karachi and not for Bombay. The customs officers also came to know that the vessel had on its own
attempted to come to the inner anchorage of Bombay harbour even before Bombay
Port Trust charges were paid and without being escorted by the Port Trust Pilot
and that there was a direction by the harbour pilot to go back to the outer
anchorage. The 408 gunny packages bearing the markings 'In Transit to Afghanistan via Karachi and Chamman' were found to contain VCRs, Video Cassettes,
Car Cassettes Players, textiles, TV sets. All these packages originated from Dubai and were valued at Rs.56,21,320/-
c.i.f. and Rs. 1,68,63,960/- (market value). The other packets found in the
vessel contained ready-made garments, PVC pipes, footwears, aluminium utencils
packed in 971 packing and were valued at Rs. 3,32,240/- c.i.f. and Rs
9,96,720/- (market value) and the said goods originated from Pakistan. The Customs Officers recorded the
statements of the Captain of the vessel as well as the representative of the
local agents at Bombay. Since the captain and the local
agents did not take any steps to file the Import general Manifest and other
documents for the purpose of voyage to Bombay, the Customs Officers seized all the 1379 packets found on board of the
vessel. After completing the investigation Show Cause Notices dated December 31, 1983 were issued by the Assistant
Collector of Customs, R & I, Bombay. A reply dated February 19,1984 to the said Show Cause Notice was
submitted on behalf of M/s Mustafa & Najibai Trading Co., Dubai, respondent
No. 1, the owners of MANSCO-3 and respondent No. 2 the Managing Director of
respondent No. 1. The Captain and others sent their replies to the Show Cause
Notice on February 20,
1984. After holding an
inquiry the Collector passed the order dated April 6, 1984 for the confiscation
of the goods that had been seized, valued at Rs. 59,53,560/- c.i.f. and Rs.
1,78,60,680/- at the Indian market rate under clauses (d) and (f) of Section
111 of the Act as well as for confiscation of the gunny bags, white cloth
wrappings, wooden cases and the cartons which were used for keeping the seized
goods under Section 118(1) of the Act. MANSCO-3 was ordered to be confiscated
under Section 115(2) of the Act but the owner of the vessel was given an option
to redeem it on payment of fine of Rs.7,50,000/- within one month of the date
of receipt of the said order. A personal penalty of Rs. 3,00,000/- was imposed
on Mustafa Najibi, respondent No. 2, the Managing Director of respondent No. 1,
and a penalty of Rs. 2,00,000/- was imposed on Abdul Rahim Kharti, the master
of the vessel.
Personal
penalties were also imposed on certain other persons, viz, Mohammed Yousef Abdulla,
M/s Aero Maritime Ltd., Karachi, Ramesh Amritlal Shah, Abedin Ghadialy,
Ramanlal P. Pandya and Dawood Sharafuddin Kaldane. Feeling aggrieved by the
said order of the Collector, an appeal C.D. (Bom.) A No. 548 of 1984 was filed
by Abdul Rahim Khatri, master of the vessel MANSCO-3 and C.D. (Bom.) A No. 549
of 1984 was filed by M/s Mustafa & Najibi Trading Co., respondent No. 1 and
Nuruddin Nustafa, respondent No. 2, Managing Director of respondent No. 1. Both
these appeals were dismissed by the Tribunal by order dated November 26, 1985. Feeling aggrieved by the said
order of the Tribunal, Writ Petition No. 6142 of 1986 was filed in the Bombay
High Court by M/s Mustafa & Najibi Trading Co., respondent No. 1, the
owners of the vessel MANSCO-3, Nuruddin Mustafa, respondent No. 2, the Managing
Director of respondent No. 1 company, and Mahmood Mohmed Abrahim Benzad,
respondent No. 3 herein, who claims to be the owner of some of the packages
which had been shipped from Dubai to Karachi and which were seized from
MANSCO-3 by the customs authorities at Bombay port and were ordered to be
confiscated. The said Writ Petition has been allowed by the High Court by the
impugned judgment. Hence this appeal.
We
have heard Shri M.S. Usgaonkar for the Union
of India and Ms. A.J. Rana, the learned
counsel for the respondents.
As
mentioned earlier, the orders passed by the Collector and the Tribunal, which
have been quashed by the High Court, involve:-
(i) confiscation
of the goods which were found in MANSCO-3 during the course of inspection of
the vessel by the customs authorities on August 24, 1983 and had been seized;
(ii) confiscation
of the vessel, MANSCO-3; and
(iii)
Imposition of personal penalties on respondent No. 2, the Managing Director of
respondent No. 1 company and on the Master of the vessel.
We
will first take up the matter of confiscation of the goods. As indicated
earlier, the goods were ordered to be confiscated in exercise of power
conferred under clauses (d) and (f) of Section 111 of the Act which are
reproduced as follows :- "111. Confiscation of improperly imported goods,
etc.-The following goods brought from a place outside India shall be liable to
confiscation:- (d) any goods which are imported or attempted to be imported or
are brought within the Indian customs waters for the purpose of being imported,
contrary to any prohibition imposed by or under this Act or any other law for
the time being in force;
(f)
any duitable or prohibited goods required to be mentioned under the regulations
in any import manifest or import report which are not so mentioned;" The
expressions "Import", "Import manifest", "India"
and "Indian Customs Waters" are defined in Section 2 of the Act in
the following terms:- "2(23). 'Import', with its grammatical variations
and cognate expressions, means bringing into India from a place outside India." "2(24). 'Import manifest' or 'import report' means the
manifest or report required to be delivered under Section 30." "2(27).
'India' includes the territorial waters of
India." "2(28). 'Indian Customs
Water' means the waters extending into the sea upto the limit of contiguous
zone of India under section 5 of the Territorial Waters Continental Shelf,
Exclusive Economic Zone and other Maritime Zones Act, 1976, (80 of 1976) and
includes any bay, gulf, harbour, creek or tidal river." In Section 30 of
the Act the following provision is made with regard to delivery of import
manifest in the case of a vessel or aircraft:- "30. Delivery of import
manifest or import report.-(1) the person-in- charge of a conveyance carrying
imported goods shall, within twenty-four hours after arrival thereof at a
customs station, deliver to the proper officer, in the case of a vessel or a
aircraft, an import manifest, and in the case of a vehicle, an import report,
in the prescribed form:
Provided
that,-
(a) In
the case of a vessel bay such manifest may be delivered to the proper officer
before the arrival of the vessel;
(b) if
the proper officer is satisfied that there was sufficient cause for not
delivering the import manifest or import report or any part thereof within
twenty-four hours after the arrival of the conveyance, he may accept it at any
time thereafter.
(2)
The person delivering the import manifest or import report shall at the foot
thereof make and subscribe to a declaration as to the truth or its contents.
(3) If
the proper officer is satisfied that the import manifest or import report is in
any way incorrect or incomplete, and that there was no fraudulent intention, he
may permit it is to be amended or supplemented." Regulation 3 in the
Import Manifest (Vessels) Regulations, 1971 [hereinafter referred to as 'the
Import Manifest Regulations'] framed under Section 157 of the Act, as in force
at the relevant time, required that the import manifest must be delivered in
duplicated and should cover all the goods carried in a vessel and shall consist
of :-
(i) a
general declaration in form I,
(ii) a
Cargo declaration in form II,
(iii) a
Vessel's Stores List in form III,
(iv) a
list of the private property in the possession of the Master, Officers and crew
in form IV.
In
Regulation 5(1) of the Import Manifest Regulations it was provided that the
cargo declaration shall be delivered in separate sheets in respect of each of
the following categories of cargo, namely,
(a) cargo
to be landed,
(b)
Unaccompanied baggage,
(c) goods
to be transshipped, and
(d) same
bottom or retention cargo.
The
Collector held that the seized goods had been imported into India without an
import licence and hence in contravention of the prohibition imposed under
Section 3 of the Imports and Exports (Control) Act, 1947 and clause 3 of the
Imports (Control) Order, 1955 and were, therefore, liable to confiscation under
Section 111(d) of the Act and that the goods were also liable to be confiscated
under Section 111(f) of the Act because there was failure on the part of the
Master of the vessel MANSCO -3 and the agents of the owners of the vessel at
Bombay to file the Import General Manifest as required under Section 30 read
with the Import Manifest Regulations within 24 hours of the arrival of the
vessel in the port Bombay. The submission of the respondents that the goods
were not meant for being unloaded in India and being 'same bottom cargo' they
were covered by clause 11(e) of the Import (Control) Order and no import licence
was required for bringing them in this country, was rejected by the Collector
on the ground that under the Import Manifest Regulations same bottom cargo or
retention cargo carried on a vessel has to listed on a separate sheet in the
Import Manifest which has to be delivered in the manner laid down in Section 30
of the Act within 24 hours of the arrival of the vessel in any customs port in
India and that no import manifest indicating the goods as same bottom cargo was
delivered under Section 30 of the Act. In the absence of an import manifest
listing the goods as same bottom cargo, the said goods, which had crossed the
territorial waters of India, had to be treated as having been imported into
India in view of the definition of 'Import' contained in Section 2(23) of the
Act and, therefore, they were liable to be confiscated under Section 111(d) of
the Act since there was no import licence authorising their import.
On
behalf of the respondents reliance was placed on clause (b) of the proviso to
Section 30(1) of the Act and it was submitted that it provided for a situation
where the Import General Manifest is not delivered within 24 hours of the
arrival of the vessel at the port and enables its acceptance by the proper
officer at any time thereafter. The submission was the words "may accept"
in the said proviso should be read as "shall accept". Reliance was
also placed by the respondents on sub-section (3) of Section 30 of the Act
which provides that the Import Manifest may be permitted to be amended or
supplemented by the proper officer if he is satisfied that the Import Manifest
is in any way incorrect or incomplete and that there was no fraudulent
intention.
The
Collector, however, rejected the said contention on the view that there is
nothing on record to show that the Master of the vessel MANSCO-3 or its agents
in Bombay at any time filed the manifest or thy had at any time made a request
for being permitted to file the manifest and that in the absence of the
manifest the question of request being entertained for amending or
supplementing the manifest under Section 30(3) of the act does not arise.
While
dealing with the contention based on the provisions of Section 30(3) of the
Act, the Collector considered the question whether the voyage of the vessel
MANSCO-3 to Bombay was bonafide and found that the said voyage was not bonafide
having regard to inconsistencies in the statements of the Master of the vessel
and the other crew members and the agents of the owner regarding the purpose of
the visit of the vessel to Bombay. It was pointed out that Aabdul Khatri in his
statement had said that he received a telex from the owners of the vessel from
Dubai asking him to proceed to Bombay to take 125 tons cargo for Dubai and
further that the radar and V.H.F. sets of the vessel MANSCO-3 were not working
and they were to be repaired at Bombay port.
As
regards the explanation based on the telex message that the vessel was directed
to proceed to Bombay to load cargo for Dubai, the Collector has pointed out
that Ramesh Shah, Director of M/s Regent Shipping and Trade Pvt. Ltd., the
local agents of the owners of the vessel at Bombay, in his statement dated
August 24, 1983, had stated that a telex was received in his office on August
16, 1983 from Dubai saying that the vessel MANSCO-3 was sailling from Karachi
and was expected to reach Bombay on August 18, 1983 and that the vessel was
proceeding to Bombay as the radar and V.H.F. sets of the vessel were out of
order and they were to be repaired at Bombay. He had further stated that he did
not have any intimation regarding the cargo to be lifted by the vessel MANSCO-3
at Bombay and no cargo had been kept ready by
him for loading. Abedin Abdul Hussain Ghadiali, another Director of M/s Regent
Shipping and Trade Pvt. Ltd., in his statement dated August 24, 1983, mentioned
about repair of radar and V.H.F. which showed that both Ramesh Shah and Abedin
Abdul Hussain Ghadiall, the Directors of the local agents at Bombay, did not
have knowledge that the vessel had arrived at Bombay for lifting cargo for
Dubai. Mohammed Yousuf Abdulla, who claimed to be the promoter of M/s Regent
Shipping and Trade Pvt. Ltd., in his statements dated August 25, 1983 and September 7, 1982, had made conflicting and inconsistent statements. Relying
upon the statement of Ramesh shah, the Collector held that no cargo was
available at Bombay for being shipped on board the
vessel MANSCO-3 and the agents at Bombay would not have been in a position to arrange for 100 to 150 tons of
cargo which the Master of the vessel had been instructed to lift from Bombay.
The
explanation that the vessel MANSCO-3 was brought to Bombay for repairing or
radar and V.H.F. sets was also not accepted by the Collector in view of the
statement of the Captain of the vessel dated August 25, 1983 wherein he had
confirmed that the Radar was out of order even when the vessel left Dubai and
repairs to the Radar were carried out at Karachi before the vessel left that
port and that the V.H.F. set was also in working order when the vessel left
Karachi port and according to Mirza Beg, Cadet on board the vessel, this
equipment went out of order only when the vessel was about 100 to 150 nautical
miles from Bombay. The Collector held that the voyage of the vessel MANSCO-3
from Karachi to Bombay was neither to have the radar and V.H.F.
equipments
repaired, nor was it for lifting 100 to 150 tons of cargo from Bombay as stated
by the Captain and that the real purpose of the visit of the vessel MANSCO-3 to
Bombay was known only to the owners of the vessel at Dubai, the agents at
Karachi and Mohamed Yousuf Abdulla who were in constant touch with each other
over telephone and through telex and that it could not be said that the voyage
was bonafide and there was no fraudulent intention. In this context, the
Collector pointed out that in order to make the voyage look bonafide a large
number of cartons containing very cheap quality of goods of Pakistani origin
which could not have any market in Dubai were also placed on board the vessel
and the packages containing electronic goods and textiles which bear markings
to show that they were in transit to Afghanistan were kept hidden below the
packages containing cheap quality Pakistani goods. The Collector also referred
to the fact that the agents at Karachi even after having informed the Captain
that he was to sail for Bombay chose to give him a port clearance for the port
of Dubai in a sealed cover which casts serious doubt about the bonafides of the
voyage since such practice is not indulged in by shipping companies engaged in
regular and bonafide shipping operations and this irregularity on the part of
agents of the owners of the vessel MANSCO-3 at Karachi lent support to the view
that the intention of the owners, the agents in Karachi and the Master and the
persons controlling the affairs of the agents firm in Bombay were fraudulent.
It was also observed that the Captain of the vessel MANSCO-3 after arrival at
the outer anchorage of the Bombay harbour on August 20, 1983 surreptitiously
and without getting in touch with the control tower of the Bombay Port Trust
and without completing the Port Trust formalities brought the ship to the inner
anchorage which would not have been done in case his intention was bonafide.
It was
urged on behalf of the respondents that the Captain brought the vessel inside
the inner anchorage on his own because his wife was not feeling well and he was
running short of provisions. The said explanation was, however, not accepted by
the Collector on the view that the purpose for which the Captain entered the
inner anchorage was obviously other than the sickness of his wife or shortage
of provisions on board the vessel because in his evidence on February 25, 1984
during the course of cross-examination the Harbour Pilot Captain Mavin Kurve
had deposed that when he boarded the vessel MANSCO-3 on seeing it anchored in
an unauthorised spot in the inner anchorage he was told by the Captain that
there was nothing seriously wrong with his wife and that she was feeling better
and as regards the shortage of provisions, the Collector observed that in case
the Captain was short of provisions and was not able to convey the message to
the total agents because of the breakdown of V.H.F. equipment shortly before
the arrival of the vessel in Bombay harbour, the Captain could have requested
the harbour pilot Captain Mavin Kurve to convey the message to his agents
through the Bombay Port Trust Control Tower and that instead of taking this
course, the Captain chose to send two senior officers on board the vessel,
viz., the Chief Engineer and the Chief Officer, without completing Customs,
Health and Immigration formalities, on a fishing craft in a manner which is
highly irregular from the customs angle since instances of lakhs worth or
precious metal being smuggled by people by carrying it on their person are not
uncommon and that these two crew members after contacting Mohammed Yousuf Abdulla
disappeared and remained away from the vessel for quite some time. Having
regard to the aforesaid facts and circumstances, the Collector recorded the
finding that the intentions of the owners of the vessel MANSCO-3, the Captain
and the agents, including Mohammed Yousuf Abdulla, were fraudulent and,
therefore, the question of exercising the discretion for extending the period
for filling the import manifest as provided under Section 30(1) of the Act or
for considering amendment or supplementation of the manifest would not arise
even if a request would have been made for such extension of the time limit for
filling of the manifest or for its amendment.
The
Tribunal, while confirming the order of the Collector regarding confiscation of
goods under clauses (d) and (f) of Section 111 of the Act, has considered the
evidence that was produced before the Collector. The Tribunal did not accept
the explanation offered by the owners and master of the vessel that the vessel
MANSCO-3 had come to Bombay from Karachi for lifting another 100 to 125 tons of cargo from Bombay for Dubai and for repair of Radar and V.H.F. equipment. The Tribunal
has referred to the statements of Ramesh Shah and Abedin Abdul Hussain Ghadiali,
the two Directors, and Mohammed Yousuf Abdulla, the promoter of M/s Regent
Shipping and Trade Pvt. Ltd., the local agents of the owners of the vessel at
Bombay that they had no information that the ship was coming to Bombay for loading
additional cargo and that they had not arranged any cargo to be located and has
held that if the vessel's voyage from Karachi to Bombay was for avowed purpose
of lifting 100 to 125 tons of cargo there was no reason for the Bombay agents
to deny knowledge. The Tribunal has pointed out that they have not merely
denied the knowledge but were categorical that they have no such information
and no cargo had been arranged. In so far as repair of V.H.F. equipment was
concerned, the Tribunal found that it was working at the time the vessel left Karachi till it was about 150 nautical
miles away from Bombay and, therefore, the question of the
vessel salling to Bombay for repair of the V.H.F, could not
be true. As regard repair of Radar the Tribunal has taken note of the statement
of the Captain of the vessel that the radar was out of order even when the
vessel sailed from Dubai and that some repairing of the radar were carried out
at Karachi and for want of time the entire repairs could not be carried out,
and has observed that if the repairing of the radar was so important as to
require the vessel to be sent from Karachi to Bombay no reason was forthcoming
as to why the vessel did not wait at Karachi for carrying out full repairs and
that the repair theory was invented for the purpose of the case. On the basis
of the circumstances set out in sub-paras (i) to (xvii) of para 23 of the
judgment the Tribunal has concluded that the voyage of the vessel for Karachi
to Bombay was not for the avowed purpose of repair of Radar and loading of
additional cargo of 100 to 125 tons and that the vessel's entry in Bombay port
was for clandestine disposal of 408 packages containing electronic and textile
goods of foreign origin.
As
regards the non-filing of Import Manifest at Bombay the Tribunal has pointed
out that the explanation offered by the Captain was that he was under the
belief that customs formalities would be attended to by the local agents, while
Ramesh Shah, one of the Directors of the local agents, had stated that since no
cargo was to be unloaded he thought it was not necessary to file the Import
General Manifest and has held that the Captain was an experienced Captain who
knew his responsibilities and on earlier voyage he did file a 'NIL' manifest at
another port and in his statement recorded on September 2, 1983 the Captain had
stated that he was aware that the manifest has to be delivered to the customs
immediately when the vessel enters the customs area even if the vessel comes in
Ballast and that, therefore, there was no good reason for the Captain to be
under the impression that the agents would attend to the customs formalities
and that the explanation of Ramesh Shah that no Import General Manifest was
required to be filed because no cargo was to be unloaded at Bombay was also not
based on any reasonable ground. The Tribunal rejected the contention based on
clause (b) of the proviso to sub-section (1) of Section 30 of the Act on the
view that not only no manifest was filed but there was not even a request for
accepting the manifest after the expiry of 24 hours after arrival of the vessel
at the Port of Bombay. The Tribunal did not accept the contention that in view
of sub-section (3) of Section 30 of the Act it was the responsibility of the
customs officer to inform the Captain or the agents to file the manifest and
that non-delivery of the manifest could not have been made a ground for
confiscation of the cargo. The Tribunal held that Section 30(3) is an enabling
provision which only confers a power on the proper officer to permit the
manifest being amended or supplemented if the manifest is any way incorrect or
incomplete and that it was not the case of the respondents herein that they had
filed a manifest which was incorrect or incomplete. The Tribunal, therefore, held
that since neither the Master of the vessel nor the agents of the owners of the
vessel MANSCO-3 at Bombay filed the Import General Manifest, there was a clear
violation of Section 30 of the Act and since violation of the provisions of
Section 30(1) of the Act was intentional, the Collector committed no error in
ordering the seizure of the goods under section 111(f) of the Act.
With
regard to the confiscation of goods under Section 111(d) of the Act, the
submission of the respondents before the Tribunal was that import of good takes
place only when the goods imported in the vessel are unloaded and get mixed up
with the mass and reliance was placed n decisions of High Courts wherein the
expression "import" had been construed.
The
Tribunal rejected the said contention and has observed that the American
doctrine of "original package" which holds that importation is not
over so long as the goods are still in the original package has no application
in this country in view of the decision of this Court in State of Bombay v.
F.N. Balsara,
1951 SCR 682. Relying upon the decision of this Court in Radhakrishan v. Union
of India, 1965(2) SCR 213, the Tribunal held that importation of goods is
complete when the goods have crossed the customs frontier. The decisions of the
High Courts on which reliance was placed by the respondents were held to be
inapplicable on the ground that they were given in the context of the
particular provision under consideration and not in the context of Section
111(d) of the Act. The Tribunal also observed that admittedly the goods were
prohibited goods which required import licence to import into India and
admittedly no such import licence was obtained and that there had been
violation of the Import and Export (Control) Act, Import (Control) Order and
the provisions of the Act.
The
High Court, while exercising its jurisdiction under Articles 226 and 227 of the
Constitution, has reversed the concurrent findings of fact recorded by the
Collector and the Tribunal regarding the avowed purpose of the voyage of the
vessel MANSCO-3 from Karachi to Bombay, viz., picking up additional cargo and repair of Radar.
Disagreeing with the findings recorded by the Collector as well as the
Tribunal, the High Court has accepted the explanation offered by the owners and
the master of the vessel MANSCO-3 for its coming to Bombay from Karachi. The High Court has held that there was nothing to show
that there was any fraudulent intention on the part of the owners of the
vessel, the Captain and the agents at Karachi in the vessel MANSCO-3 coming to
Bombay from Karachi.
Shri Usgaonkar
has assailed the said view of the High Court and has urged that in interfering
with the findings of fact recorded by the Collector as well as the Tribunal,
the High Court has exceeded the jurisdiction vested in it under Articles 226
and 227 of the Constitution inasmuch as the findings recorded by the Collector
and the Tribunal do not suffer from any infirmity which could justify
interference by the High Court. The said contention, in our opinion, must be
accepted.
While
exercising its jurisdiction under Articles 226 and 227 of the Constitution it
is not open to the High Court to re-appreciate the evidence produced before the
subordinate tribunal and on the basis of such re- appreciation of the evidence
to arrive at a finding different from that recorded by such tribunal. The
finding of fact recorded by the subordinate tribunal can be interfered with by
the High Court only if it is found to be based on no evidence or if such a
finding can be regarded as perverse. The high Court cannot convert itself into
a court of appeal. Reference, in this context, may be made to the decision of
this Court in Collector of Customs, Madras & Ors. v. D. Bhoormall, 1974 (2)
SCC 544, wherein it has been said:- "Even if the Division Bench of the
High Court felt that this circumstantial evidence was not adequate enough to
establish the smuggled character of the goods, beyond doubt, then also, in our
opinion that was not a good ground to justify interference with the Collector's
order in the exercise of the writ jurisdiction under Article 226 of the
Constitution.
The
function of weighing the evidence or considering its sufficiency was the
business of the Collector or the appellate authority which was the final
tribunal of fact. "For weighing evidence and drawing interference from
it", said Birch, J. in R. V. Madhub Chunder "there can be canon.
Each
case presents its own peculiarities and in each common sense and shrewdness
must be brought to bear upon the facts elicited". It follows from this
observation that so long as the Collector's appreciation of the circumstantial
evidence before him was not illegal, perverse or devoid of common sense, or
contrary to rules of natural justice, there would be no warrant for disturbing
his finding under Article 226." [p. 555] Similarly, in Indru Ramchand Bharvani
& Ors. v. Union or India & Ors., 1988 (4) SCC 1, this Court has said:-
"It must be reiterated that the conclusions arrived at by the fact-
finding bodies, the Tribunal or the statutory authorities, on the facts, found
that cumulative effect or preponderance of evidence cannot be interfered with
where the fact- finding body or authority has acted reasonably upon the view
which can be taken by any reasonable man, courts will be reluctant to interfere
in such a situation.
Where,
however, the conclusions of the fact-finding authority are based on no evidence
then the question of law arises and that may be looked into by the courts but
in the instant case the facts are entirely different.[pp. 9,10] In the present
case, the Collector as well as the Tribunal, after carefully considering the
evidence produced during course of the proceedings, arrived at the conclusion
that the explanation offered by the owners and master of the vessel MANSCO-3
for voyage of vessel from Karachi to Bombay, namely, to pick up additional
cargo at Bombay and to get the Radar and V.H.F. equipment repaired at Bombay
was unacceptable. Reversing the said view the High Court has accepted the said
explanation. The explanation that the vessel MANSCO-3 came to Bombay to pick
additional cargo was rejected by the Collector as well as the Tribunal in view
of the statements of Ramesh Shah and Abedin Abdul Hussain Ghadiali, the two
Directors of M/s Regent Shipping and Trade Pvt. Ltd., the agents of the owners
of the vessel at Bombay that they had no knowledge that the vessel had arrived
at Bombay for lifting cargo and that no cargo was available at Bombay which
could be picked up by the vessel and that in the telex which was received by
the local agents at Bombay from the owners of the vessel at Dubai there was no
mention about picking of additional cargo by the vessel at Bombay.
No
reliance was placed on the testimony of Mohammed Yousef, the promoter of M/s
Regent Shipping and Trade Pvt. Ltd., for the reason that he had made
conflicting and inconsistent statements as regards the purpose of the visit of
the vessel MANSCO-3 to Bombay. The High Court has proceeded on
the basis that no importance could be attached to the statements of Ramesh Shah
and Abedin Abdul Hussain Ghadiali since they are not "well versed in the
field and have not much experience to their credit". The High Court, while
observing that "the tendency exhibited by Mohamed Yousef to prevaricate in
that behalf is so eloquent that it gives rise to a strong inference to be drawn
against him", has chosen to rely on his statement that in his conversation
with Mustafa (respondent No.2) on telephone he had "promised that he would
arrange the cargo for the ship to compensate the expenses of previous
dealing". The said statement was subsequently contradicted as wrong by
Mohammed Yousuf in his statement. The High Court has discarded the subsequent
disclaimer and has said:
"However,
the fact remains that he had been in contact with the Dubai persons and was
anxious to supply additional cargo and at the relevant time had full knowledge
that the vessel was reaching Bombay to lift additional cargo and therefore it
follows with necessary implications that he had promised that he would supply
the cargo when the ship comes to promise that the ship officials at Dubai
thought it proper to direct the ship to go to Bombay from Karachi to pick up
the additional cargo for being brought to Dubai." There is nothing to
corroborate the statement of Mohammed Yousef on which reliance had been placed
by the High Court. On the other hand, the said statement about Mohammed Yousef
having promised to arrange for the cargo at Bombay does not find support from
the telex received at the office of the agents at Bombay on August 16, 1983
from Dubai and it is belied by the fact that no cargo was available at the
Bombay port for loading on the vessel when it arrived at Bombay.
Similarly,
as regards repair of Radar and V.H.F. Equipment the Collector and the Tribunal
have found that the Radar was not functioning when the vessel left Dubai and
that it had been repaired at Karachi and that the V.H.F. equipment was working
till the vessel reached about 100 to 150 nautical miles from Bombay port which
shows that repair of Radar and V.H.F. equipment could not be the reason for the
vessel MANSCO-3 proceeding to Bombay from Karachi. The High Court, while
accepting the explanation that one of the reasons for the vessel to proceed to
Bombay was to have the Radar and V.H.F. equipment repaired at Bombay, has laid
stress on the fact that at the time when the vessel reached Bombay V.H.F.
equipment was not working and that two mechanics were taken to the vessel for
repairing of Radar and V.H.F. equipment. The fact that the Radar and V.H.F.
equipment
had to be repaired at Bombay does not, however, mean that they were not
functioning when the vessel left Karachi and it cannot be said that the vessel
had to proceed to Bombay for repair of Radar and V.H.F. equipment.
A
Perusal of the impugned judgment of the High Court shows that while dealing
with the Writ Petition, the High Court embarked upon re-appreciation of the
evidence and has dealt with the matter as if it was hearing an appeal on facts.
Such a course, as indicated earlier, was not permissible. The Collector and the
Tribunal, after carefully considering the evidence produced during the course
of the proceedings, had concurrently arrived at the finding that the vessel
MANSCO-3 had not come to Bombay from Karachi for a bonafide purpose and that the explanation offered for
the vessel proceeding to Bombay from Karachi could not be accepted. The said finding cannot be regarded
as unreasonable or perverse. We are, therefore, unable to uphold the decision
of the High Court in reversing the said finding of fact recorded by the
Collector and the Tribunal.
Moreover,
bonafides of the owners or the master of the vessel has a bearing only on the
applicability of sub- section (3) of Section 30 which enables the proper
officer to permit the import manifest or import report to be amended or
supplemented if he is satisfied that the said import manifest or import report
is in any way incorrect or incomplete and there is no fraudulent intention. In
the present case, the question of applicability of sub-section (3) of Section
30 does not arise because no import manifest was delivered by the Master of the
vessel at any time. The intention of the owners or master of the vessel has no
bearing on the exercise of the power of confiscation of goods under Section 111
of the Act because, as laid down by this Court, confiscation of goods is an
action in rem directed against the goods in respect of which the contravention
rendering them liable to be confiscated has taken place. [See :Shewpujanrai Indrasanrai
Ltd. v. The Collector of Customs & Ors., 1959 SCR 821 at p. 838; and
Collector of Customs, Madras & Ors. v. D. Bhoormall (supra) ]. In the
matter of confiscation of goods under Section 111(d) of the Act intention has,
therefore, no bearing. What is required to be seen is whether the goods had
been imported or attempted to be imported or brought within the Indian customs
water for the purpose of being imported contrary to any prohibition imposed by
or under the Act or any other law for the time being in force. If it is found
that any goods have been imported or attempted to be imported or brought within
the Indian customs water for the purpose of being imported contrary to any
prohibition imposed by or under the Act or any other law for the time being in
force the said goods would be liable to confiscation under Section 111(d) and
the question whether the person importing or bringing the said goods intended
to commit violation of the provisions of the Act or any other law for the time
being in force would be of no consequence.
Similarly,
clause (f) of Section 111 provided for confiscation of any dutiable or
prohibited goods which are required to be mentioned under the regulations in
any import manifest, or import report and which are not so mentioned therein.
In the matter of confiscation of goods under Section 111(f) what is required to
be seen is whether the goods are dutiable or prohibited goods and are required
to be mentioned in the import manifest or import report under the regulations
made under the Act and whether they are mentioned in the import manifest/import
report. If it is found that the goods are dutiable or prohibited goods and are
required to be mentioned under the regulations made under the Act in the import
manifest/import report but have not been so mentioned, the goods would be
liable to be confiscated and the intention of the default would have no bearing
on the exercise of power to confiscate the goods.
Since mens
rea is not essential for invoking the power of confiscation of the goods under
Section 111 of the Act, the intention of the master of the vessel or the owners
of vessel and the circumstances under which the vessel containing the goods
came to Bombay has no bearing on the exercise of the power of confiscation of
goods under Sections 111(d) and 111(f) and all that has to be seen is whether
the conditions prescribed under the said provisions were fulfilled so as to
justify the confiscation of the goods.
As
regards the non-filing of the Import General Manifest either by the Captain of
the vessel or the agents of the owners of the vessel at Bombay, the High Court
has held that the Manifest is required to be filed "within twenty four
hours after the arrival of the vessel at a customs station" and that time
for filing the said Manifest would have started running only after the Bombay
Port Trust charges had been paid and the said cargo charges were paid on August
23, 1983. According to the High Court, the customs officials boarded the vessel
on the morning of August
24, 1983 at about 9/10
a.m. and seized the goods immediately thereafter mainly on the ground that no
Import General Manifest had been filed by that time. According to the High
Court, the period of twenty four hours had not expired and there was still time
to file the Import General Manifest. We find it difficult to agree with the
said view of the High Court. Under Section 30(1) an import manifest has to be
delivered within twenty four hours after the arrival of the conveyance at a
customs station. The expression 'customs station' is defined in Section 2(13)
to mean "any customs port, customs airport or land customs station."
The expression "customs port" is defined in Section 2(12) to mean
"any port appointed under clause (a) of section 7 to be a customs port and
includes a place appointed under clause (aa) of that section to be an inland
container depot". In the present case, the vessel MANSCO-3 had arrived at
the outer anchorage of the Bombay Port on August 20, 1983.
The outer anchorage is a part of the Bombay Port. This would show that the vessel
MANSCO-3 had arrived at the customs port
of Bombay on August 20, 1983. In view of Section 30(1) of the Act the Import General
Manifest should have been delivered within twenty four hours of the arrival of
the vessel at the outer anchorage on August 20,1983. The High Court was in error in
holding that the vessel would be treated to have arrived at the customs port of
Bombay on August 23, 1983 after the Bombay Port Trust charges had been paid and
the signal had been given for the vessel to be brought into the inner anchorage
or on after August 23, 1983. Proviso (b) to sub-section (1) of Section 30,
which empowers the proper officer to accept the import manifest or import
report at any time after the expiry of the period of twenty four hours if he is
satisfied that there was sufficient cause for not delivering the import
manifest or import report or any part thereof within twenty four hours after
the arrival of the conveyance, has no application in the present case because
the Collector as well as the Tribunal have found that no request for filling
the Import General Manifest after the expiry of the period of twenty four hours
was made at any time either by the Captain of the vessel or by the local agents
at Bombay.
The
Tribunal has held that the Goods that were seized from the vessel were
prohibited goods and the said finding has not been upset by the High Court. In
the circumstances, it must be held that there was contravention of the
requirement regarding mentioning of the goods in the Import General Manifest by
the captain of the vessel and the local agents of the owner of the vessel at Bombay and the goods seized were liable to
be confiscated under Section 111(f) of the Act.
The
High Court has held that the goods were obviously in transit to Dubai which was the port of clearance and
the visit to Bombay port was not illegitimate or
illegal. In holding that there was no contravention of the provisions of
clauses (d) and (f) of Section 111 the High Court has proceeded on the basis
that since the vessel had come to Bombay for legitimate purpose and there was
no lack of bonafides on the part of the master and the owners of the vessel in
the ship having come to Bombay, it cannot be said that there was violation of
the provisions of Section 111(d) and (f) of the Act. As indicated earlier, the
finding of the High Court that there was no lack of bonafides on the part of
the master of the vessel and the owners of the ship in the ship having come to
Bombay, has been arrived at by the High Court after reversing the finding of
fact recorded by the Collector and the Tribunal and it cannot be sustained.
We
have also indicated that mens rea is not essential for invoking the power of
confiscation under Section 111 of the Act and, therefore, the intention of the
owners of the vessel or the master of the vessel has no bearing on the exercise
of the power to confiscate the goods under clauses (d) and (f) of Section 111
of the Act.
The
High Court has also held that direction regarding of the goods could not be
sustained for the reason that no notice as required under Section 124 of the
Act was given by the Collector to the owners of the goods ordered to be
confiscated before passing the order of confiscation of goods and the notice
that was given to the local agents of the owners of the vessel cannot be a
substitute for a notice which is required to be given to the owners of the
cargo since the local agents have no concern whatsoever with the owners of the
cargo. Section 124 of the Act reads as follows:- "124. Issue of showcause
notice before confiscation of goods, etc.- No order confiscation any goods or
imposing any penalty on any person shall be made under this Chapter unless the
owner of the goods or such person- (a) is given a notice in writing informing
him of the grounds on which it is proposed to confiscate the goods or to impose
a penalty;
(b) is
given an opportunity of making a representation in writing within such
reasonable time as may be specified in the notice against the ground or
confiscation or imposition of penalty mentioned therein; and (c) is given a
reasonable opportunity of being heard in the matter:
Provided
that the notice referred to in clause (a) and the representation referred to in
clause (b) may at the request of the person concerned be oral." Shri Usgaonkar
has urged that confiscation of goods under Section 111 of the Act is in the
nature of a penalty in rem which attached to the goods and is district from
personal penalty that can be imposed under Section 112 of the Act which is a
penalty in personam. The submission is that while a notice under Section 124 is
required to be issued to the person on whom penalty under Section 112 is to be
imposed, the notice to the owner of the goods is not required to be given in
every case and there may be cases in which the notice has to be given to the
person from whose possession the goods were seized instead of the owner of the
goods. Shri Usgaonkar has, in this context, pointed out that under Section 123
of the Act in a case where any goods to which the said section applies are
seized under the Act in the reasonable belief that they are smuggled goods, the
burden of proving that they are not smuggled goods shall be, in a case where
such seizure is made from the possession of any person, on the person, on the
person from whose possession the goods were seized.
In the
context of the Sea Customs Act, 1878 this Court has pointed out the distinction
between penalty in rem and penalty in personam. In the case of Shewpujanrai Indrasanrai
Ltd. (supra) this Court was dealing with Section 167(8) of the Sea Customs Act,
1878 wherein it was prescribed that it would be an offence "if any goods
the importation or exportation of which is for the time being prohibited or
restricted by or under Chapter IV of this Act, be imported into or exported
from India contrary to such prohibition or restriction" and that
"such goods would be liable to confiscation and any person concerned in
any such offence shall be liable to a penalty not exceeding three times the
value of the goods or not exceeding one thousand rupees".
This
Court, after pointing out that 'a distinction must at once be drawn between an
action in rem and a proceeding in personam', has observed that under Section
167(8) of the Sea Customs Act:- "The penalty provided is that the goods
shall be liable to confiscation. There is a further provision in the penalty
column that any person concerned in any such offence shall be liable to a
penalty not exceeding three time the value of the goods etc. The point to note
is that so far as the confiscation of the goods is concerned, it is a
proceeding in rem and the penalty is enforced against the goods whether the
offender is known or not known; the order of confiscation under s. 182, Sea
Customs Act, operates directly upon the status of the property, and under s.
182 transfers an absolute title to Government." [pp. 836,837] By way of
illustration the Court has referred to a case 'where the offender (the
smuggler, for example) is not known, but the goods in respect of which the
contravention has taken place are known and have been seized." Similarly,
in the case of D. Bhoormall (supra) this Court, while considering the
provisions of Section 167(8) of the Sea Customs Act, 1878, has pointed out that
proceedings for confiscation of contraband goods are proceedings in rem and the
penalty of confiscation is enforced against the goods irrespective of whether
offender is known or unknown and it is not necessary for the customs
authorities to prove that any particular person is concerned with their illicit
importation or exportation and it is enough if the department furnishes prima
facie proof of the goods being smuggled stocks. It was observed that the second
kind of penalty which is enforced against the person concerned in the smuggling
of the goods is one in personam and in the case of the said penalty the
Department have to prove further that the person proceeded against was
concerned in the smuggling. It was held that "goods found to be smuggled
goods can, therefore, be confiscated without proceeding against any person and
without ascertaining who is their real owner or who was actually concerned in
their illicit import." [pp. 550, 551 and 554] This distinction between the
nature of the two penalties , viz., penalty in rem and penalty in personam, has
been maintained in the Act. The provision regarding confiscation of goods
contained in Sections 111 and 113 of the Act is a penalty in rem which is
enforced against the goods, while the personal penalties imposed under Section
112 and other provisions of the Act are in the nature of penalty in personam
which are enforced against the person concerned.
Section
124 of the Act, which incorporates the rule of audi altrem partem, one of the
two basic tenets of the principles of natural justice, does not have the effect
of making any alteration in the nature of these penalties.
There
may be situations where the goods are found to be smuggled goods and are seized
but the identity of the owner of the goods is not known. Can it be said that
since notice cannot be issued to the owner of the goods under Section 124 of
the Act, the goods which are found to be smuggled goods cannot be confiscated
under Section 111 of the Act? In our view, this question must be answered in
the negative because confiscation of goods under Section 111 of the Act is a
penalty in rem which attached to the goods which are the subject matter of the
proceedings for confiscation and if it is found that the goods are liable to be
confiscated under Section 111 of the Act, they can be confiscated without
ascertaining their real owner. Moreover, in so far as the rule of audi altrem partem
is concerned, the position is well settled that an order passed in disregard of
the said principle would not be invalidated if it can be shown that as a result
of denial of the opportunity contemplated by the said rule the person seeking
to challenge the order has not suffered any prejudice. Since Section 124 of the
Act incorporates the said principle of natural justice, failure to give the
notice to the owner of goods would not, by itself, ivalidate an order of
confiscation. What has to be seen is whether the owner of the goods has
suffered prejudice on account of the failure on the part of the officer passing
the order for confiscation of goods to give a notice to the owner of the goods
before passing the order for confiscation of goods. the owner of goods ordered
to be confiscated cannot be said to have suffered any prejudice in a case where
notice has been given to the person responsible for the alleged contravention
on which the order for confiscation of goods is founded and who alone is in a
position to offer an explanation for such contravention. The requirement
regarding issuing of notice to the owner of the goods under Section 124 cannot,
therefore, be constructed as a mandatory requirement so as to have the effect
of invalidating an order. An order of confiscation would not be rendered
invalid if there is substantial compliance with the requirements of Section 124
in the sense that before passing an order of confiscation a notice has been
given either to the owner of the goods or a person who is responsible for the
contravention on which the order for confiscation of goods is founded and who
alone is in a position to offer an explanation for such contravention.
In the
present case, Show Cause Notice dated December 31, 1983 were issued by the
Assistant Collector of Customs, R & I, Bombay, to M/s Mustafa & Najibai
Trading Co., Dubai, respondent No. 1, the owners of the vessel, MANSCO-3, Nuruddin
Mustafa, respondent No. 2, the Managing Director of respondent No. 1, Abdul Rahim
Khatri, the Captain of the vessel, MANSCO-3, the Promoter and the two Directors
of M/s Regent Shipping and Trade Pvt. Ltd., the local agents of the owners of
the vessel at Bombay, M/s Aero Meritimes Ltd., the agents of the owners of the
vessel at Karachi and certain other persons. Replies to the said Show Cause
Notices were filed on behalf of the owners of the vessel as well as by the
Master of the vessel and the local agent of the owners at Bombay. The owners of the cargo did not
appear before the Collector. None of the owners of the cargo challenged the
order for confiscation of goods passed by the Collector before the Tribunal and
the order of the Collector regarding confiscation of goods became final as
against the owners of the goods. In the Writ Petition filed before the High
Court respondent No. 3, claiming to be the owner of a part of the cargo which
was seized and confiscated., for the first time sought to challenge the orders
passed by the Collector as well as the Tribunal regarding the confiscation of
the goods. In Para 8 of the Writ Petition it has been averred that before the
Collector it was pointed out that the cargo belonged to various parties and
mainly to respondent No. 3 and the names of the owners and other persons were
furnished to the Collector and other customs officers and that they should be
given an opportunity of hearing if any judicial order is passed in respect of
the cargo belonging to respondent No. 3 and other persons. The replies that
were filed on behalf of respondent No. 1 before the Collector in response to
the Show Cause Notice do, not, however, support the said averment. Nor is there
anything in the order passed by the Collector to show that any such contention
was advanced before him. the judgment of the Tribunal also does not indicate
that any such plea was raised. the said contention appears to have been raised
for the first time before the High Court. Moreover, under the Show Cause
Notices the seized goods were proposed to be confiscated under Sections 111(d)
and 111(f) of the Act. The owners of the vessel, MANSCO-3, the Master of the
said vessel and the local agents of the owners of the vessel at Bombay were the best persons who could
offer an explanation and show that there was no contravention which could
justify the confiscation of goods under Sections 111(d) and 111(f) of the Act.
Since the owners of the goods were not present on the scene and had no personal
knowledge, they could not offer an explanation other than that offered by the
owners of the vessel, the Master of the vessel and the local agent of the
owners of the vessel at Bombay. In the circumstances, it cannot be
said that the failure to issue a notice under Section 124 to the owners of the
goods has resulted in any prejudice to the owners of the goods that have been
ordered to be confiscated of goods passed under Sections 111(d) and 111(f) of
the Act. We are, therefore, unable to uphold the impugned judgment of the Higher Court setting aside the order for
confiscation of the goods passed under Sections 111(d) and 111(f) of the Act.
The
order of confiscation of the vessel MANSCO-3 was passed under Section 115(2) of
the Act. At the relevant time, Section 115 provided as under :- "115.
Confiscation of conveyances.- (1) The following conveyances shall be liable to
confiscation.- (a) any vessel which is or has been within the Indian customs
water, any aircraft which is or has been in India, or any vehicle which is or
has been in a customs area, while constructed, adapted, altered or fitted in
any manner for the purpose of concealing goods;
(b)
any conveyance from which the whole or any part of the goods is thrown
overboard, starved or destroyed so as to prevent seizure by an officer of
customs;
(c) any
conveyance which having been required to stop or land under section 106 fails
to do so, except for the good and sufficient cause;
(d)
any conveyance from which any warehoused goods cleared for exportation, or any
other goods cleared for exportation under a claim for drawback, are unloaded,
without the permission of the proper officer;
(e) any
conveyance carrying imported goods which has entered India and is afterwards found with the
whole or substantial portion of such goods missing, unless the master of the vessel
or aircraft is able to account for the loss of , or deficiency in, the goods.
(2)
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 and that each of them had taken
all such precautions against such use as are for the time being specified in
the rules:
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.
Explanation.- In this section, "market
price" means market price at the date when the goods are seized." The
consideration which weighed with the High Court to set aside the order
regarding the confiscation of the goods also weighed with it for setting aside
the order for confiscation of the vessel under Section 115(2) of the Act
inasmuch as the High Court has found that there was no fraudulent intention on
the part of the owners of the vessel in directing the vessel to proceed to
Bombay from Karachi to lift additional cargo and the purpose for which the
vessel, MANSCO-3, was directed to proceed to Bombay was to lift the said additional
cargo and also to have the Radar and V.H.F. equipment repaired. We have already
considered the said aspect of the case while dealing with the matter of
confiscation of the goods and have held that the said finding of the High Court
cannot be upheld. The High Court has set aside the confiscation of the vessel
also on the ground that no notice was issued to the owners of the vessel under
Section 124 of the Act. In this regard, it may be stated that the Show Cause
Notice dated December 31, 1983, indicates that the said notice was issued to
Mustafa Najibi, respondent No. 2, on behalf of respondent No. 1, the owners of
the vessel, as well as to Abdul Rahim Khatri, the master of the vessel and the
promoter and the two directors of M/s Regent Shipping and Trade Pvt. Ltd., the
agents of the owners of the vessel at Bombay. Respondent No. 1, the owners of
the vessel, had full knowledge of the said Show Cause Notice because a reply to
the said notice was filed on their behalf as well as on behalf of respondent No.
2 and they had contested the proceedings before the Collector. In these
circumstances, we are of the view that the order regarding confiscation of the
vessel could not be set aside on the ground that no notice under Section 124 of
the Act was issued to the owners of the vessel.
As
regards the penalty that has been imposed under Section 112 of the Act, Shri Rana,
the learned counsel for respondent No. 2, has urged that the Collector and the
Tribunal were in error in imposing penalty on respondent No.2 is the owner of
the vessel. It has been submitted that respondent No.2 is only a Managing
Director or respondent No. 1 company which is the owner of the vessel. It has
also been urged that at the relevant time respondent No. 2 was not in Dubai and that he had no role in the
vessel being directed to proceed to Bombay from Karachi and, therefore, penalty under
Section 112 of the Act cannot be imposed on him. The order passed by the
Collector proceeds on the basis that respondent No. 2 is the owner of the
vessel. It appears that no contention was raised before the Collector that
respondent No. 2 was not the owner of the vessel and that he had no particular
role in the vessel being directed to proceed to Bombay from Karachi. Before the Tribunal.
However,
a contention was raised that respondent NO. 2 was only the Managing Director of
respondent No. 1 company and not the owner of the vessel and reliance was
placed on the affidavit of respondent No. 2 dated March 25, 1985 which was
filed before the Tribunal wherein it was stated that the deviation of voyage
from Karachi to Bombay was without his pre knowledge as at that time he was
away from Dubai and was in Europe in connection with his business. On behalf of
the appellants reliance was placed on the reply to the Show Cause Notice
wherein respondent No. 2 was described as the joint owner of the vessel. The
Tribunal rejected the contention urged on behalf of respondent No. 2 and has
observed that no independent evidence has been adduced to establish that
respondent No. 1 company is owned by any other person other than respondent No.
2 and that it in the reply to the Show Cause Notice respondent No. 2 had been
mentioned as the owner of the vessel. The Tribunal has also referred to the
statement of Mohammed Yousef that he had received the telex dated August 16,
1983 from respondent No.2 and has observed that the said statement clearly
established that respondent NO. 2 knew about the voyage of the vessel from Karachi to Bombay. On that view the Tribunal upheld the penalty imposed on
respondent No. 2 under Section 112 of the Act. We do not find any infirmity in
the said view of the Tribunal. We are, therefore, unable to uphold the
contention of Shri Rana that the Tribunal was in error in affirming the penalty
of Rs. 3,00,000/- imposed on respondent No. 2 by the Collector.
In the
result, the appeal is allowed, the impugned judgment of the High Court is set
aside and, while restoring the orders of the Collector and the Tribunal, the
Writ Petition filed by the respondents is dismissed. No order as to costs.
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