2016 (6) TMI 813 - HC - Customs

Customs Act penalties overturned on appeal, Commissioner's order reinstated

M/s. J.M. Baxi & Co. Versus The Government of India

The court allowed the writ appeal, setting aside the orders of the learned Judge and the Government, and restoring the order of the Commissioner ... Levy of penalty on steamer agent u//s 116(a) r.w.s. 149(2) - short landing of the cargo - Held that:- Unfortunately, in the case on hand, the Department had missed the bus. The original order of adjudication itself shows that the appellant claimed to have discharged more quantity than what was entrusted to them. But, after arrival, a landing certificate was issued only in 1994 to the effect that there was short delivery. At the time when the landing certificate was issued on 30.9.1994, the vessel had already gone and a period of more than two years had passed and the importer had also cleared the cargo by then. Therefore, the concession granted by the Department to the importer in the form of remission of duty, behind the back of the Steamer Agent, cannot now be taken advantage of by the Department. Therefore, even on merits, we find that the act of Department cannot be accepted. - No Penalty - Decided in favor of appellant. Issues:Challenge to penalty imposed under Customs Act, 1962.Analysis:The case involved a Steamer Agent challenging penalties imposed under Section 116(a) read with Section 148(2) of the Customs Act, 1962, due to alleged short landing of cargo. The vessel in question arrived at the Port of Pondicherry with a manifested quantity of Potassium Chloride, but discrepancies in the quantity discharged led to a show cause notice being issued. The appellant appealed the penalty imposed, leading to a series of legal proceedings.The appellant raised three key legal grounds, including the power of the Government to condone delays, the procedural aspects of condoning delays and allowing appeals, and the reasonableness of the delay in passing the order of adjudication. The court addressed each issue in detail.Regarding the power to condone delays, the appellant's argument was refuted based on a Supreme Court decision that established the applicability of Section 14 of the Limitation Act to proceedings under the Customs Act. The court found that the period during which the Revenue was prosecuting an appeal before the wrong forum should be excluded when computing the period of limitation.Concerning the procedural irregularity in condoning delays and allowing the appeal, the court agreed with the appellant's contention that the Government's composite order was not in accordance with the usual method of disposal of an appeal. The court highlighted the importance of addressing delays before taking up the appeal for disposal.On the issue of the delay in passing the order of adjudication, the court sided with the appellant, emphasizing that the significant delay of eight years from cargo discharge to adjudication order was unreasonable. The court stressed the importance of timely resolution in cases where the weight of discharged cargo is questioned, as it affects the ability of the Steamer Agent to defend themselves effectively.The Department argued that the appellant, as an Agent, was liable for the accurate declaration of the quantity of cargo discharged. However, the court found that the Department's actions, including issuing a landing certificate after the vessel had left and the importer had cleared the cargo, did not support their case. The court concluded that the Department's actions could not be accepted, even on merits.Ultimately, the court allowed the writ appeal, setting aside the orders of the learned Judge and the Government, and restoring the order of the Commissioner (Appeals). The appellant succeeded in challenging the penalties imposed under the Customs Act, 1962, based on the various legal grounds raised during the proceedings.