2018 (3) TMI 283 - HC - Customs

Court quashes penalty order due to unreasonable delay, finding petitioner not at fault

M/s. Transworld Shipping Services Pvt. Ltd. Versus The Government of India, The Commissioner of Customs and Central Excise (Appeals), The Joint Commissioner of Customs

The court allowed the writ petition, quashing the impugned order and the consequential penalty order. The court found the delay in the adjudication ... Penalty - Delay in adjudication process - quantity mentioned in the Bills of Lading is not prima facie evidence for the quantity loaded on board the vessel - Held that: - the respondents, while exercising the powers under Section 116 of the Customs Act, have to exercise the same within the reasonable period, though the Act does not provide for a limitation, within which, the said power should be exercised. The Courts have consistently held that the period of five years to complete the adjudication proceedings should be reasonable period, as the bond executed by the agent is required to be kept alive for a period of five years. The Government of India, in exercise of its revisional powers, followed the decision of various Court and held to the same effect. In the preceding para, the relevant dates have been noted and the time taken between two stages have also been mentioned. Though an Authority, exercising power under the statute can do so, and if such an action has the effect of disturbing rights of a citizen, it should be done within a reasonable time, even if period of limitation is not stipulated under the relevant statute. What is required time would depend upon the facts and circumstances of each case. Thus, bearing the legal principle in mind, it is absolutely necessary to examine the factual matrix of the case. In the cases on hand, though cargo was completely discharged on 19.02.1993, it took two years for the Department to issue show cause notice, (i.e. on 19.03.1995). The petitioner appears to have been prompt in responding to the show cause notice by submitting reply, dated 15.04.1995, and nothing happened thereafter for four years and the order-in-original was passed on 04.08.1999. Immediately thereafter, the petitioner preferred Appeal to the second respondent/Appellate Authority, which was rejected only after four years, i.e., 31.01.2003. The petitioner's Revision Petition, which was filed within the limitation, took one year, to be disposed of by the first respondent, by order, dated 31.03.2004. Only saving grace being that the penalty was reduced. The inordinate delay in concluding the adjudication proceedings is unreasonable - the Revisional Authority, Government of India, having found that, no blame can be fastened on the petitioner for intentionally being the cause for the short landing, this is a fit case, where, the entire penalty imposed on the petitioner requires to be vacated - petition allowed - decided in favor of petitioner. Issues Involved:1. Delay in adjudication process.2. Prima facie evidence of the quantity loaded on board the vessel as per Bills of Lading.3. Responsibility and liability of the Steamer Agent for the short landing of cargo.Detailed Analysis:Delay in Adjudication Process:The petitioner argued that the significant delay in the adjudication process vitiated the proceedings. The vessel discharged its cargo by 19.02.1993, but the show cause notice was issued only on 09.03.1995, two years later. The Order-in-Original was passed on 04.08.1999, four years after the show cause notice. The Appellate Authority took another four years to pass its order on 31.01.2003, and the Revisional Authority took one year to dispose of the revision on 31.03.2004. Citing decisions such as Parekh Shipping Corporation and Raghuvar (India) Ltd., the court emphasized that adjudication should occur within a reasonable period, typically five years, as the bond executed by agents is for five years. The court found the delay of ten years from discharge to the appellate decision unreasonable and arbitrary, thus vitiating the proceedings.Prima Facie Evidence of Quantity Loaded:The petitioner contended that the quantity mentioned in the Bills of Lading is not prima facie evidence of the quantity loaded on board, as per Section 5 of the Carriage of Goods by Sea Act. The vessel operated under Charter Party Terms, making the consignee responsible for loading and discharge, not the carrier or Steamer Agent. The court noted that the Landing Certificate indicated a short landing of 483.739 MTs, but the discharge was done using non-standardized bags, leading to potential losses during handling. The court referred to the Union of India Vs. Tatvani Shipping Co. decision, which emphasized that the draft survey report, not the Landing Certificate, should be the relevant document for determining the discharged quantity.Responsibility and Liability of the Steamer Agent:The petitioner argued that they should not be held liable for the short landing as the carrier did not check the weight of goods loaded in bulk, and the discharge was managed by the consignee. The court noted that the Revisional Authority found no evidence of intentional or active responsibility for the short landing on the petitioner's part. The court held that the penalty should be vacated entirely, given the lack of mens rea and the inordinate delay in the adjudication process.Conclusion:The court allowed the writ petition, quashing the impugned order and the consequential penalty order. The court found the delay in the adjudication process unreasonable and held that the petitioner was not intentionally or actively responsible for the short landing of the cargo.