TaxTMI 
TaxTMI 
1990 (5) TMI 162
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....a company registered under the Companies Act, 1956. It was stated by the appellants that they entered into with the Southern Marine Services Company Limited, South-Eastern Insurance Building, 315, Silom Road, 7th Floor Bank, Thailand, an agreement called Time Charter, to begin with on the 17th day of November, 1978, for a duration of 350-380 days, which period the Government of India was pleased to further extend beyond 365 days. Therefore, yet another Time Charter was concluded between the parties on 18th November, 1979. The appellants averred that it is in accordance with this agreement that the trawler, NOR-SRICHAMANAN-14/SMS/GOLD- 17, and several other trawlers were chartered by the appellants. The appellants further stated that this agreement was also duly approved by the Government of India. 4. It is the case of the Department as could be seen from the Order-in- Original passed by the learned Collector of Customs & Central Excise, Bhubaneswar that on 12-9-1980 INS SHARABH brought to Paradeep Port harbour the Thai fishing trawler NOR. SRICHAMANAN-14-SMS-GOLD-17 with 44 crews. The Commander of INS Sharabh handed over to the Assistant Collector of Customs, Paradeep, on 12-9-1....
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....leared outward from Port Blair for Visakhapatnam in Ballast. 6. The above fishing trawler was detained by Paradeep Customs pending further investigation and enquiry and the crew members were handed over to the Police authorities on 12-9-1980. 7. The trawler was searched by the Customs officers of Paradeep on 2-10-1980 and was seized with the catch of fish and shrimps and other articles on board as per search list dated 2-10-1980 under Section 110 of the Customs Act, 1962 under the reasonable belief that the trawler with catch and other articles on board are liable to confiscation under Section 113 and 115 of the Customs Act, 1962. In course of the search of the above trawler an exercise book recording daily catch by the trawler of fish and shrimps for the period from 17-7-1980 to 10-9-1980 was also seized along with the ten documents referred to in Para 3 of show cause notice. 8. Immediately after the seizure, the Assistant Collector, Customs, Paradeep managed to keep the fish catch, in required deep freeze condition on board of the trawler by running the deep freeze machinery with the help of the captured crew. The Department had proposed to auction the catch on 6-10-1980....
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....r the directions of Hon'ble High Court of Orissa, show cause notice was issued to the disponent owners, Master of the vessel and the Indian Charterers, on 11-11-1980. for contravention of the provisions of the Customs Act, 1962. Before filing a reply to the show cause notice the parties asked for xerox copies of the-various documents referred to in the show cause notice, and the copies were supplied to them. . 11. In reply to the show cause notice the disponent owners, in addition to what has been stated in the personal hearing granted on 26-11-1980, submitted a written explanation also on 24-11-1980. In the written explanation, the disponent owners M/s. Southern Marine Services Company Limited, Bangkok denied the allegations made by the Department as well as the Commander of the Naval vessel INS Sharabh in his aforesaid report dated 12-9-1980 and pleaded that the trawler obeyed orders of the INS vessel and followed the INS vessel to the shores of Paradeep on 11-9-1980. 12. The Master of the trawler also endorsed the submission made by the disponent owners in his written reply received on 24-11-1980 to the show cause notice and also filed an affidavit sworn before the Executi....
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....mps etc. found on the board of the trawler NOR SRICHAMANAN-14/SMS/GOLD-17 seized in this case are liable for confiscation under Section 113(a) of the Customs Act, 1962, and confiscated the same accordingly. The owner of the goods was given an option to pay a fine of Rs. 2 lakhs in lieu of confiscation. He also held that the trawler is also liable for confiscation under Section 115(1)(c) and 115(2) of Customs Act, 1962 and confiscated the same. But he gave an option to the owners of the trawler to pay in lieu of confiscation a fine of Rs. 2 lakhs. Thus, he held that the goods and the trawler may be allowed to leave India on payment of the fine as imposed above and after completion of all Customs and Exchange Control formalities in regard to export of the goods and departure of trawlers. 16. The appellants M/s. Golden Hind Shipping (India) Private Limited filed an appeal against the above-said order before the Central Board of Excise & Customs, New Delhi, challenging the confiscation order passed by the Collector. Before the Board, the appellants had pointed out that the decision of the Collector in advancing the case from 16-1-1981 to 7-1-1981 was not correct and that it has prej....
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....t. On their part, the appellants had not only informed but also forewarned and had given adequate notice to the Department of the possible attempts by the Thai party of unauthorisedly and illegally taking away the trawler and the fish, shrimps etc. on the board, which was in the custody of the Customs Department. It was contended that the Customs Department was solely and entirely responsible for the safe custody of the seized trawler and the catch of fish and shrimps and other items seized on 2-10-1980 under seizure memo. It was contended that any amounts realised by way of fine or otherwise as a result of the impugned order of the Collector of Customs, Bhubaneswar dated 8-1-1981 were also to be held by the Department on behalf of the appellants. It was also contended before us that when finally the learned Board had held that the orders of confiscation of fish and trawler was not sustainable and when the Board had set aside that order of the Collector of Customs, Bhubaneswar, the Department was duty bound to return the trawler with the catch of fish, shrimps etc. It was also strongly canvassed that the Customs Department had no authority either deliberately or negligently to part....
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....regarding extension of licence period of the trawler in question for continued fishing and other allied activities in the Indian waters beyond 14-8-1980 and up to 18-12-1980, they submitted that even the alleged basis of search had disappeared and the entire action on the part of the learned Collector of Customs and his officer was illegal. It was also pointed out in the reply to the show cause notice that keeping the trawler and its catch of fish etc. detained despite its valid licence up to 18-12-1980 would be not only illegal but mala fide which would give rise to the question of claims for damages and compensation from the department. He further contended that there was no basis for having any reason to believe that the trawler was going to leave India with the catch without observing necessary Customs formalities and without paying Customs cess on the export of the catch of shrimps and fish out of India. It was therefore, contended that mere allegation is not sufficient nor adequate to initiate or proceed and continue such proceedings. It was also contended that the appellants had pointed out in para 14 of the reply that there had been no violation of any provisions of the Ind....
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....ong on the part of the Collector of Customs to impose and decide fines in regard to the property belonging to the appellants, and not their charterer on the representation of any parties or any one else other than the appellants. Therefore, the Collector had no authority to deal with such foreign party as owners of the catch of fish and shrimps and the trawler. It was also contended that the alleged Master of the trawler to whom the notice was given by the Customs Department was totally stranger to the proceedings. The learned Counsel further brought to our notice that the learned Collector was pointed out by the appellants, through their letter, that the appellants had reason to believe that being given a chance, the foreign party through its stranger Master or otherwise, may take away the trawler and its catch and other seized materials on board without completion of the Customs formalities by the applicant in regard to the export of catch and departure of the trawler, as also without making payment towards export price and the expenditure incurred by the applicant. It was also brought to the notice of the Collector that the safe custody of the trawler should be ensured as the fo....
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....he learned Board:- (a) The appellant company held a valid licence to catch fish; (b) The trawler in question on its inward journey was duly cleared by the Customs authority; (c) The appellants' trawler was apprehended well within the territorial limits of India and within the Indian Customs waters. It is not even alleged that the trawler was caught in the act of attempting to cross into international waters; (d) There was not even a remote intention of going out of India because the trawler was carrying a number of Indian trainees; (e) That the fish and shrimps which were found on board of the trawler did not attract any duty and this being not dutiable goods the appellant company could have no motive to export them surreptitiously; (f) The appellants also pointed out before the Board that the authorities below arbitrarily assumed that the catch of fish and shrimps were meant for export. 22. It was, therefore, contended that when the Hon'ble Board itself found the grounds of appeal to be acceptable and the order of confiscation was set aside, it was totally wrong to deny the natural and consequential benefits to the appellants by ignoring the provisions of Sect....
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....appellants, was also allowed to escape by allowing the Thai parties to take the same away. It was his contention that the appellants have obtained a decree against the Thai parties for a sum of about Rs. 35 lakhs from the Hon'ble High Court of Delhi. If actually this vessel were to be in custody of the appellants, which, in law, the appellants were entitled to, the trawler would have become the appellants' trawler and the appellants would have the remedy of obtaining the decreetal amount. It was, therefore, contended that the Customs Department is not agent of the competitors of the appellants, who were having other two boats which were allowed to escape. The law should have been applied equally against all the three boats. It was also contended that allowing the Thai party to take away the trawler in question jeopardises this case, as the appellants were the rightful person to get the trawler and fish in question into their possession as they were taken from their possession. It was also contended that the Master of the present vessel is one Shri Praton Chon Chob and he had replied the show cause notice. It was also pointed out before us that in this respect he has denied the alle....
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....27. Shri Mittal further contended that the reply given by the Department vide their letter dated 25th February, 1981 in response to the aforementioned letter of the appellants, is totally in violation of the principles of natural justice. He drew our attention that in that letter it was pointed out that the Southern Marine Services Company Limited filed a Writ Petition as O-J-C No. 196/81 in the High Court of Orissa for issue of a direction to the Union of India, through the Collector of Customs, to release the trawler and the Hon'ble High Court, by its order dated 5-2-1981, directed that the same be released, on the petitioner therein furnishing an unconditional bank guarantee by the State Bank of India in a sum of Rs. 4 lakhs. It was, therefore, pointed out by the Department that the directions meant that the trawler be released in favour of the Southern Marine Services Company Limited and the Department also pointed out that the disputes raised by the appellants in their letter about the ownership of the trawler and its catch on board on the basis of the Charter Agreement is beyond the purview of any proceedings under the Customs Act, 1962. It was also pointed out in that letter....
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....ly the Charter Agreement for fishing vessels was valid up to 14-2-1980 and it was extended up to 14-8-1980. Therefore, he contended that on 11-9-1980 when the goods were seized by the Customs Department there was no valid permit for continuing the Charter operations. In this connection, he also brought to the notice of the Bench that the Government by a letter dated 29-11-1980 vide No. 318/CH-12/80-FY(T-1) extended the period for this vessel up to 18-12-1980. Therefore, as per that letter the extension of the validity of the charter period to the extent of its non-operational period was extended up to 18-12-1980. Shri Jain, therefore, contended that this order was dated 29-11-1980 and on the date of seizure there was reasonable belief for them to seize the vessel in question. He also brought to our notice the Charter Agreement in this case. The Charter Agreement between Southern Marine Services Company Limited, Thailand and M/s. Golden Hind Shipping (India) Private Limited, New Delhi (the appellants, herein) is seen in the paper book from pages 71-98. Shri Jain drew our attention to several clauses in the Charter Agreement. He contended that as per Clause 6 of the above-said Agreem....
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....ny fishing vessel and will notify the owner forthwith of any such occurrence and take all steps and make all payments necessary to secure the prompt release of the fishing vessel. It was also mentioned therein that if the charterer is prevented from making use of the fishing vessel on account of detention of legal proceedings, he shall not be liable to pay the owner any hire charges for such period of non-use. Such hire charges will become payable only if the vessel is again released from such detention or confiscation. It was, therefore, contended that the owner is M/s. Southern Marine Services Company Limited, Thailand and as far as the appellants are concerned, they being not the owner of the vessel, they are not under an obligation to pay the hire for the fishing vessel for non-operational reasons; but they cannot claim possession of the vessel. It was, therefore, contended that on the date of the seizure, the trawler belonged to the owner who is Southern Marine Services Company Limited, and the re-validation of licence was done only on 29-11-1980, which validated licence up to 18-12-1980. It was further contended that the impugned order was passed after the extended period of ....
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....greement to the effect that the appellants need not pay any hire charges during those periods. He also contended that the Tribunal is a creature of statute and it is bound by the limitation of the statute. In this connection, he relied on a decision of the Supreme Court reported in 1988 (37) E.L.T. 478 (S.C.) = 1988 (19) E.C.R. 273 (S.C.) in the case of Collector of Central Excise, Chandigarh v. M/s. Doaba Co-operative Sugar Mills Ltd., Jalandhar. He also brought to our notice the provisions of Section 131B(2) of the Customs Act, 1962 and stated that every proceedings which is pending immediately before the appointed day before the Central Government under Section 131, as it stood immediately before that day and any matter arising out of or connected with such proceeding and which is so pending shall stand transferred on that day to the Appellate Tribunal and the Appellate Tribunal may proceed with such proceeding or matter from the stage at which it was on that day as if such proceeding or matter were an appeal before it. Therefore, he contended that only the matters which were pending before the Central Government can be dealt by this Tribunal. 32. For all the afore-mentioned ....
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....sion reported in 1969 (3) Supreme Court Cases 415 in the case of M/s. Wire-Netting Stores v. Delhi Development Authority, wherein at page 419 their Lordships have held as follows: "The action of the Authority appears to have been most high-handed on the facts of the case as brought out before us. If the Authority wished to evict the petitioners from the occupation of these premises it behoved them to follow strictly the procedure laid down for their action. It is a matter of great regret that authorities constituted to take such drastic steps without recourse to civil court should be so oblivious to their own duties as laid down in the Act. We accordingly allow the petition and order the restoration of the premises to the petitioners and return of all the machinery and other goods and parts of their factory which have been seized from them. 9. It is alleged by the petitioners that no inventory was made. If this is so, the Authority will be accountable to the petitioners for all the movable property taken from their possession. The Authority will also bear the costs of this petition." Relying on the above-said decision it was contended that the trawler along with the fish s....
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....Marine Services Company Limited. In such circumstances, they are liable to pay the damages. In this connection, reliance was placed on the decision reported in 1989 (21) ECR 125 in the case of M/s. Oswal Spinning Weaving Mills Ltd. v. Collector of Customs, Calcutta, wherein at page 1156, paras 55 and 56, the Tribunal held as follows :- "55. As regards question No. 1, it was contended by the Customs authorities that the Calcutta Port Trust failed to take as much care of the goods as a man of ordinary prudence would have under the similar circumstances, taken of his own goods of the same bulk, quality and value as of the goods lost. This allegation was refuted by the Calcutta Port Trust. Before we decide this question, it would be advantageous to advert to the legal position as regards the responsibility of a bailee under Sections 151, 152 and 161 of the Contract Act. It is well settled that when goods entrusted to a bailee are lost or damaged, there is the initial presumption of negligence or failure to take reasonable care of the goods on the part of the bailee; though such presumption may be rebutted by the bailee. To escape the liability for the loss or damage, onus of proof i....
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....rgument cannot be upheld for the simple reason that M/s. Southern Marine Services Company Limited is not the owner of the fish and the shrimps found in the trawler. The fish and shrimps belonged to the appellants who were in custody and control of the trawler and who were allowed to fish in the Indian waters. If that is so, the fish should have been released in favour of the appellants. In this connection, the Board in its order had already held that there was no justification for proceeding against the trawler under Section 115(1)(a) and 115(2) of the Customs Act, 1962. Therefore, the Board set aside the orders of confiscation of the fish and trawler. That order was made by the Board on 5th September, 1981. Once when the order of confiscation is set aside the appellants are entitled for the fish which was in the trawler. So also during confiscation proceedings it was the appellants who should have been allowed to redeem the fish in question. In this connection, it is significant to note that the appellants by their letter dated 13th February, 1981 addressed to the Collector of Customs had stated that the seized trawler was in their possession under the Charter Agreement. The appel....
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....y their Advocate Shri T. Hafiz. The order-sheet reads as follows :- "23-2-1981 - The application for releasing the trawler along with the catch by the petitioner is not pressed by Mr. T. Hafiz, learned Counsel for the petitioner." 38. It is thus clear that this application for taking the trawler and the fish was not pressed before the Hon'ble High Court. If that were to be the position and when the Union Government was a party in that proceeding, the ultimate result is that the application was withdrawn. Accordingly, the fish and the catch should have been released in favour of the appellants. The reason is that the orders of the Hon'ble High Court dated 5-2-1981 was modified in view of the above fact that this application was not pressed by the petitioner - M/s. Southern Marine Services Company Limited. The learned Collector had replied to the letter of the appellants on 25th February, 1981. When he replied to the abovesaid letter on 25-2-1981 it was merely mentioned in the letter that the directions of the High Court dated 5-2-1981 meant to release the trawler and the catch to the Southern Marine Services Company Limited. But nowhere it was stated that the trawler and the c....
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.... arisen. In our view, Mr. Tarkunde, is right in this submission. Ordinarily, a suit is tried in all its stages on the cause of action as it existed on the date of its institution. But it is open to a Court including a court of appeal to take notice of events which have happened after the institution of the suit and after relief to the parties in the changed circumstances where it is shown that the relief claimed originally has (1) by reason of subsequent change of circumstances become inappropriate; or (2) where it is necessary to take notice of the changed circumstances in order to shorten the litigation or (3) to do complete justice between the parties. (See Rai Charan v. Biswanath AIR 1915 Cal. 103)." It is clear from the above decision that it is open to the Tribunal even as an appellate authority to take notice of events which have happened after the adjudication order and to afford a relief to the parties in the changed circumstances in order to do complete justice in between the parties. At this juncture, it is not possible to order for handing over the fish to the appellants. The reason is that the fish is not available. This apart, the changed circumstances have to be t....
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....jurisdiction to do complete justice between the parties so far as the same does not contravene any specific provision of the Customs Act. In this connection, the learned Advocate Shri Mittal had relied on a decision reported in AIR 1962 (SC) 527 in the case of Manohar Lal v. Seth Hiralal, wherein at pages 533-534, their Lordships have held as follows :- "These observations have no bearing on the question of the Court's exercising its inherent powers under S. 151 of the Code. The section itself says that nothing in the Code shall be deemed to limit or otherwise affect the inherent power of the Court to make orders necessary for the ends of justice. In the face of such a clear statement, it is not possible to hold that the provisions of the Code control the inherent power by limiting it or otherwise affecting it. The inherent power has not been conferred upon the Court; it is a power inherent in the Court by virtue of its duty to do justice between the parties before it." It is, therefore, clear that the inherent power is not one which is conferred on the Tribunal by any provisions of the Act but it is a power inherent in the Tribunal by virtue of its duty to do justice between....
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....rovided that an amendment which has the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the other party shall not be made under this sub-section, unless the Appellate Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard. (3) The Appellate Tribunal shall send a copy of every order passed under this section to the Collector of Customs and the other party to the appeal. (4) Save as otherwise provided in Section 130 or Section 130E, orders passed by the Appellate Tribunal on appeal shall be final." A simple reading of the above section leads us to the stand that this Tribunal, after giving an opportunity to the party, can pass such orders thereon as it thinks fit, either by confirming, modifying or annulling the decision or order as the Tribunal may think fit in the circumstances of the case. 41. In view of the above-mentioned decision in the case of Md. Kunhi decided by their Lordships of the Supreme Court in connection with Section 254 of the Income-tax Act, ratio decedendi of that decision cited supra, applies to this Tribunal while dealing with appeals unde....
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....er Art. 136 of the Constitution, we do not see any reason why we should proceed to hear this appeal and adjudicate upon the plea of the appellant based on S. 110 of the Madras Port Trust Act (II of 1905)." 44. What emerges out, from the principles laid down by their Lordships is that the State should not ordinarily take technical pleas for the purpose of defeating the legitimate claims of the citizens. In this case, the claim of the appellants is a just claim as the appellants were the owner of the fish. 45. On this point, the learned Counsel for the appellants once again relied on the decision of the Tribunal reported in 1989 (21) E.C.R. 125 in the case of Oswal Spinning & Weaving Mills Ltd. v. Collector of Customs. Shri P.C. Jain, learned JDR wanted to distinguish this decision on the ground that in this case the Hon'ble Supreme Court had ordered the Tribunal to determine the compensation that is to be paid to the appellant in view of the fact that the Customs authorities were not able to give back the appellant the seized goods as they were pilfered away. Shri Jain contended that by virtue of the orders of the Supreme Court the Tribunal granted the damages in that case. Th....
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....ner, who had a right to demand the same. It was further held that even if the Government cannot be said to be in a position of a bailee, it was in any case bound to return the seized property by reason of its statutory obligation or to pay its value if it had disabled itself from returning it either by its own act or by any act of its agents and servants." Again, at Para 27, pages 143-144, the Tribunal held as follows :- "27. Recently a Division Bench of the Calcutta High Court without noticing the aforesaid judgment of the Supreme Court in the case of Dhian Singh v. U.O.I., (supra) has also taken the same view in the case of Union of India v. Shambhunath Karmakar, 1986 (26) E.L.T. 719 = 1987 (13) E.C.R. 160 holding that where the order, of confiscation of the seized goods is set aside the Government is under an obligation to return the seized goods to the owner or pay the market price of such goods as on the date of setting aside of the order of confiscation. In that case also Collector of Central Excise vide his order dated 10-1-1964 ordered the confiscation of gold and gold ornaments seized on 26th April, 1963. It appears that on April 1, 1966 an application for return of ....
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....ternational price of the goods. In the above-cited decision in the case of Oswal Spinning and Weaving Mills Limited v. Collector of Customs the Tribunal fixed a compensation on the basis of an affidavit which was filed by the appellants before the Hon'ble Supreme Court with respect to the value of the goods. But in this case there is no such affidavit or any other material produced by the appellants to show the actual market value of the goods. However, Shri Mittal brought to our notice an application filed by Southern Marine Services Company Limited before the Deputy Collector through their Advocate on 6-10-1980, which is found in pages 133-135 of the paper-book. In Para 8 of their application M/s. Southern Marine Services Company Limited stated as follows :- "That the trawler owned by the petitioner has been seized by the authorities and it has been announced that the fish shall be auctioned in the open market on 6-10-1980." Again, they stated that the fish stored shall be worth Rs. 20 lakhs and if it is auctioned it may fetch a lesser price. Therefore, they stated that the authorities may refrain from auctioning the catch till the adjudication is over. Even in that petitio....
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....nsation of Rs. 5 lakhs to the appellants towards the price of fish, shrimps and other catches. 49. Point No. II : As far as Point No. II is concerned, it is very relevant to look into the Charter Agreement. The learned Advocate Shri Mittal contended that this Agreement is not binding on the appellants, as far as these proceedings are concerned. It was his contention that the trawler having been seized from the possession of the appellants, the appellants are entitled to get possession of the same and if the Department without taking due precautions has allowed Southern Marine Services Company Limited to take away the same, the appellants are not responsible for the same and they should get the value of the trawler. He also contended that the appellants had got a decree against the above-said Company (M/s. Southern Marine Services Company Limited) in the Hon'ble High Court of Delhi to the extent of Rs. 35 lakhs and if this vessel was returned to them which they are legally entitled, they could have pressed for their claim. Therefore, he contended that the value of the vessel should be given to the appellants. But we are unable to agree with this argument advanced on behalf of the....
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.... very important, which reads as follows :- "14. LOSS OF FISHING VESSEL: Should the fishing vessel be lost or missing, hire shall cease from the date the vessel is reported to be lost." Therefore, if the fishing vessel is lost or is missing, the appellants are not liable to pay the hire charges from the date the vessel is reported to be lost. It is thus clear that from the date of seizure of the vessel the appellants are not liable to pay the charges towards hire. This only confirms that the Southern Marine Services Company Limited is the owner of the vessel and even if it is missing the appellants are not responsible for the same. On the contrary, the appellants are under any liability to pay the hire charges. Clause 17 of the Agreement further states that the fishing vessel unless the consent of the owner is obtained shall not be ordered to any place or on voyage which is within a dangerous zone as a result of any actual or threatened act or war, hostilities. It again confirms that Southern Marine Services Company Limited is the owner of the vessel. Clause 18 of the Agreement states that the total expenses paid or required to be paid by the charterer in the aggregate under C....
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....ither by deposit or by bank guarantee furnished by them. That amount cannot be returned to the appellants and it cannot be said that they have deposited in favour of the appellants. It cannot also be said that they are deemed to have deposited the same on behalf of the appellants. The Tribunal cannot make an order for return of that amount to the appellants on the ground that the appellants had obtained some decrees against Southern Marine Services Company Limited. The remedy of the appellants is to execute those decrees in accordance with the law and in these proceedings the appellants cannot take advantage of the same and claim the amounts as stated above. Therefore, this claim of the appellants is also not tenable. Point No. III is also decided accordingly. 51. Point No. IV : As far as Point No. IV is concerned, we have to find out whether the appellants are entitled for damages which was caused due to non-fishing of the trawler in question and the cost of litigation. It was contended that the seizure of the trawler was not in accordance with the law and, therefore, the confiscation was set aside and the trawler and the fish were ordered to be released. It was, therefore, con....