Customs penalty for cargo shortage fails without positive proof loss occurred on board the vessel.

Penalty under Section 116 of the Customs Act, 1962 was not sustainable where shortages were detected long after discharge of cargo and there was no immediate survey after landing. The goods remained in dock custody for over 16 months, making it unsafe to infer that the shortage occurred on board the vessel. In the absence of positive evidence that the loss happened before landing, and with no immediate agents' survey having been sought, the statutory penalty could not be imposed merely because the required certificate under the bill of lading rules was unavailable. The penalty orders were set aside and any amount paid was directed to be refunded.

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Issues: Whether penalty under Section 116 of the Customs Act, 1962 was sustainable against the steamer agents for shortages detected long after discharge of cargo, where no immediate survey was taken and the goods remained in dock custody for over 161/2 months.

Analysis: The cargo had been discharged and remained with the port authorities for a prolonged period before any appraisement survey was held. No agents' survey was sought immediately after landing, though the goods had landed under a qualified receipt. In such circumstances, the lapse of time and the possibility of pilferage while the goods were lying in the docks made it unsafe to infer that the shortages occurred on board the vessel. The absence of the certificate contemplated by Article 3 of the Rules relating to Bill of Lading did not justify imposition of penalty under Section 116, as that provision could be invoked only on positive evidence that the shortage occurred before landing.

Conclusion: The penalty was not sustainable and the appeal succeeded.

Final Conclusion: The orders imposing and affirming the penalty were set aside and the Customs authorities were directed to refund the amount, if paid.

Ratio Decidendi: Penalty for shortage under Section 116 of the Customs Act, 1962 cannot be imposed in the absence of positive evidence that the shortage occurred on board the vessel, especially where no immediate survey was conducted after discharge and the goods remained in dock custody for a substantial period.

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