2018 (3) TMI 283 - HC - Customs

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

The court allowed the writ petition, quashing the impugned order and the consequential penalty order. The court found the delay in the adjudication ... Inordinate delay in adjudication - Reasonable time for exercise of statutory power - Penalty under Section 116 of the Customs Act - Person in charge of vessel / agent liability for import manifest - Mens rea requirement for imposition of penalty - Draft survey report versus Landing Certificate as evidence of short landingInordinate delay in adjudication - Reasonable time for exercise of statutory power - Whether the prolonged delay in issuing the show cause notice and completing adjudication vitiated the proceedings. - HELD THAT: - The Court examined the chronology from completion of discharge (19.02.1993) to issuance of show cause notice (09.03.1995), the extended gap before passing the Order-in-Original (04.08.1999), and the further delay in disposal of the Appeal (31.01.2003), observing that the overall time taken to finalise adjudication exceeded what the authorities and earlier decisions have treated as a reasonable period. Noting consistent precedents that, where statutory power adversely affects citizens' rights it must be exercised within a reasonable time and that a five year window has been treated as reasonable in comparable cases, the Court found the time taken by the authorities to complete adjudication to be inordinate and arbitrary. The Court declined the Revenue's attempt to distinguish earlier decisions by pointing only to the date of issuance of the show cause notice, holding that the total time to conclude adjudication is the relevant yardstick. [Paras 28, 29, 30, 31]The delay in adjudication was inordinate and unreasonable, vitiating the proceedings.Penalty under Section 116 of the Customs Act - Person in charge of vessel / agent liability for import manifest - Mens rea requirement for imposition of penalty - Draft survey report versus Landing Certificate as evidence of short landing - Whether, on the material, the petitioner (steamer agent) was liable to the penalty imposed for short landing when the Revisional Authority had found no intentional or active responsibility on the part of the petitioner. - HELD THAT: - The Revisional Authority recorded that there was no evidence to show that the petitioner was intentionally or actively responsible for the short landing; it also considered the nature of the cargo, the Bills of Lading, and the time taken for discharge. The High Court accepted the Revisional Authority's finding of absence of mens rea and observed that, having so concluded, the Revisional Authority ought to have deleted the penalty entirely. The Court further noted the evidentiary record included competing draft survey reports and a Landing Certificate, and it treated the Revisional Authority's acceptance of lack of culpability as determinative in the circumstances of this case. [Paras 31, 32]Given the Revisional Authority's finding that the petitioner was not intentionally or actively responsible for the short landing, the penalty imposed on the petitioner is vacated.Final Conclusion: Writ petition allowed; impugned revisional order and consequential compliance order reducing (but not deleting) the penalty are quashed and the penalty imposed on the petitioner is vacated. No costs. 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.