TaxTMI 
TaxTMI 
1984 (9) TMI 292
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.... 238-A of 1979, dated 28-9-1979 passed by the Central Board of Excise and Customs, by which it confirmed the Order-in-Original bearing No. S/14-5-5/78 Pint., dated 29-7-1979 passed by the Additional Collector of Customs (Preventive), Bombay, by which he imposed a personal penalty of Rs. 20,000/- on the appellant Shri A.L. Fernandez, Master of the vessel M.V. Akbar under Section 112 of the Customs Act, 1962. 3. The Appeal 260/80 arises out of the Order-in-Appeal bearing Nos. 309A-310A of 1979 passed by the Central Board of Excise and Customs by which the Board confirmed the Order-in-Original bearing No. S/14-4-547/78, dated 3-4-1979 passed by the Additional Collector of Customs (Preventive), Bombay, by which he imposed a personal penalty of Rs. 10,000/- on the second appellant, Shri U.N. Padwal, Master of the vessel and directed confiscation of the vessel M.V. Marjan belonging to the first appellant but gave an option to the first appellant to redeem the same on payment of a fine of Rs. 1,00,000/-. 4. The Appeal 325/80 arises out of Order-in-Appeal Nos. 317A-318A/79 of 1979, dated 30-11-1979 passed by the Central Board of Excise and Customs, by which it confirmed the Order-in-....
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....ter of the vessel but confirmed the order of confiscation of the vessel M.V. Al-Loulouah and fine in lieu of confiscation of Rs. 20,000/-, passed by the Additional Collector of Customs (Preventive), Bombay vide his Order-in-Original bearing No. S/14-4-528/78 Pint., dated 24-1-1979. 8. The Appeal 335/80 arises out of the Order-in-Appeal bearing Nos. 329A-330A of 1979 passed by the Central Board of Excise and Customs dated 30-11-1979 by which it confirmed the order of the Additional Collector of Customs (Preventive), Bombay in Order-in-Original bearing No. S/14-4-168/79 Pint., dated 23-4-1979, by which the Addl. Collector directed confiscation of the vessel M.V. AL-Loulouah but gave an option to the first appellant, M/s. Al Jassim Shipping Agencies, Kuwait to redeem the same on payment of a fine of Rs. 20,000/-, and also imposed a personal penalty of Rs. 3000/-, on the second appellant Shri K.S. Contractor, Master of the vessel. 9. The Appeal 352/80 arises out of the Order-in-Appeal Nos. 325A-326A, dated 30-11-1979 passed by the Central Board of Excise and Customs, by which it confirmed the Order-in-original bearing No. S/14-4-787/78 Pint., dated 18-5-1979 passed by the Additio....
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....rder, cassette tape recorders, transistors, electronic calculators, sewing machines, microphones, textiles, toys, cameras, perfumes etc. of foreign origin totally valued at Rs. 83,878/-CIF and Rs. 2,51,634/- M.V. The said goods were seized on the reasonable belief that they were unauthorisedly imported into India. After investigation, a show cause notice was issued to the owners as well as the Master of the vessel calling upon them as to why the vessel should not be confiscated under Section 115(2) of the Customs Act and why personal penalty should not be imposed on the Master for non-declaration of the seized goods. After consideration of their reply and after giving personal hearing, the Additional Collector ordered confiscation of the seized goods and imposed a personal penalty for non-declaration under Section 30 of the Customs Act on the Master and also ordered confiscation of the ship but allowed redemption on payment of a fine of Rs. 1,50,000/-. Feeling aggrieved the appellants preferred appeals before the Board unsuccessfully. Thereafter, they filed revision applications which statutorily stood transferred to this Tribunal for being heard as an appeal. 14. Appeal No. 259....
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.... Kasab stores under the tool racks in kasab stores and in the officers smoke room-cum-dining saloon. Inside the gunny bag the officers of Customs noticed one tin which contained some wrist watches and watch straps. The cloth bundle and the polythene bags contained cigarettes, transistor, radios, textiles, cassette tapes, electronic battery cells of foreign origin. In all the officers found goods of the value of Rs. 46,607 cif and Rs. 99,261/-M.V. The officers continued the search on 22-8-1978 in the presence of the Chief Officer and Second Engineer. During the search they found another gunny bag containing wrist watches and watch straps concealed in the airvent pipe on port side of the engine room. They further found one cloth bundle containing 4 wrist watches ; a pocket transistor and 3 cartons of cigarettes concealed above the air trunking in the air-conditioning plant on the boat deck. On further examination of the gunny bag and cloth bundles they found 112 pcs. of wrist watches, 200 cigarettes each in 3 cartons and one pocket transistor of foreign origin in all valued at Rs. 17,567/- cif and Rs. 35,229/- M.V. On 23-8-1978, the Rummaging Officers again searched the said vessel a....
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....an appeal. 18. Appeal 332/80 : On 14-10-1978 on an information, the officers of the Rummaging Division boarded the vessel M.V. Vijaya Vasant and conducted a search which resulted in the recovery of watches, cassette tapes, cigarettes, transistors, etc., of foreign origin of the value of Rs. 2,572/-cif and Rs. 5,853/- M.V. concealed in a drum box. The rummaging officers again boarded the ship on 18-10-1978 and searched the Poop Dect and the ventilator of the crew gaily. The officers noticed a number of small cartons concealed therein. They also noticed a number of small cartons and loose cassette tapes concealed beneath the wooden crate containing the coal. They further found one paper packet containing wrist watches concealed in the hallow spare of the capstan at the extreme aft of the ship and in the hallow pipe nearby. Search of the said bags and packets resulted in the recovery of goods of foreign origin totally valued at Rs. 8,746/- cif and Rs. 23,346/- M.V. On 19-10-1978 the rummaging officers again search the said vessel. They found 8 small cartons and cassette tapes in loose condition 2 car stereos, 3 pocket transistors and four gunny bags concealed in an unoccupied spare....
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.... revision application before the Government of India which statutorily stood transferred to the Tribunal for being heard as an appeal. 21. Appeal 335/80 : On 21-2-1979, the officers of Customs House, Bombay boarded the vessel M.V. Al-Loulouah and searched the vessel. During the search they found two polythene wrapped bundles concealed underneath mooring rope coil at the stern of the vessel. The bundle contained 90 pcs. of wrist watches of foreign origin valued at Rs. 11,250/- cif and Rs. 22,500/- M.V. After investigation show cause notices were issued to the owners of the vessel. Master and agents of the vessel as well as to the Chief Officer of the vessel. After considering their replies and after personal hearing, the Addl. Collector of Customs ordered confiscation of the vessel but gave an option to redeem the same on payment of a fine of Rs. 20,000/-. He also imposed a personal penalty of Rs. 3,000/- on the Master but refrained from imposing any penalty on the others. Feeling aggrieved the owners as well as the Master preferred appeals before the Board unsuccessfully. Thereafter they filed a revision application which statutorily stood transferred to the Tribunal for being h....
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.... hearing, the Addl. Collector (Preventive), Bombay ordered confiscation of the vessel but gave an option to the first appellant to redeem the same on payment of a fine of Rs. 20,000/-. He also imposed a personal penalty of Rs. 5,000/- on the second appellant. Feeling aggrieved the appellants preferred two appeals before the Board unsuccessfully. Thereafter, they filed one Revision Application before the Central Govt. which statutorily stood transferred to this Tribunal for being heard as an appeal. 25. Shri N.P. Jagasia, learned Advocate who appeared for the appellants in all the above appeals contended that the Additional Collector ordered confiscation of the vessels holding that they were used as a means of transport in the smuggling of goods and that the owners and the Masters of the ship have not adduced positive evidence that the vessels were not so used without the knowledge or connivance of the owners or the Masters and that they had failed to discharge the burden of proof cast on them under Section 115(2) of the Customs Act. The Additional Collector has further held that the owner has to adduce evidence which should prove beyond doubt that the owner or his agent or the m....
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.... as a means of transport in the smuggling of contraband goods or used in the carriage of the smuggled goods. There was not even a finding by the Additional Collector or by the Board that the master or the owner of any of the vessels had knowledge of the existence of the contraband goods in the vessel. Shri Jagasia further submitted that the master had stated that he had taken all reasonable precautions to prevent smuggling by the crew members and others and he had even conducted search and had made entries in the log book. Thus, established that reasonable precautions were taken by the master. There was no contra evidence that the master did not warn the crew members and others against the act of smuggling or that he did not conduct the search of the vessel. The Customs Authorities had recorded the statements of the crew members. None implicated the master either in the act of smuggling or in the carriage of the smuggled goods. In the said circumstances the master is deemed to have discharged the burden that was cast on him under Section 115(2) of the Customs Act. Shri Jagasia also submitted that the precautions required to be taken by the owner and his agent are those which are to....
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....ster, they are not required to take any precautions, Shri Jagasia relied upon certain decisions of the Bombay High Court to which we shall make reference later. Shri Jagasia also relied upon certain decisions of the Bombay High Court to fortify his contention that the owner and the master are not required to adduce positive proof regarding the absence of knowledge and connivance. Finally, Shri Jagasia submitted that the Additional Collector as well as the Board had committed a grave error in holding that the masters of the vessels were required to declare the smuggled goods in the manifest and failing to declare the smuggled goods carried in their vessels amounts to violation of the provisions of Section 30, and, therefore, the masters are liable for penalty under Section 112. Shri Jagasia contended that the declaration contemplated under Section 30 of the Customs Act is in respect of the goods legitimately carried in the vessel and there is no legal obligation to make any declaration in respect of the goods which were illegitimately carried, and of which the master has no knowledge. In support of his contention Shri Jagasia relied upon an unreported decision of the Division Bench ....
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...., take up for consideration the second point first. The Additional Collector had imposed a personal penalty on the masters of the various vessels solely on the ground that they had failed to make declaration of the contraband goods seized from their vessels. The Additional Collector as well as the Board held that the masters have contravened the provisions of Section 30 of the Customs Act. 31. Sub-section (1) of Section 30 requires that the person in-charge of a conveyance carrying imported goods shall within twenty-four hours after arrival thereof at a customs station, deliver to the proper officer, an import manifest, and to make and subscribe to a declaration as to the truth of its contents at the foot of the manifest. The finding of the Additional Collector and confirmed by the Board was to the effect that the masters have failed to include the goods which were seized from the vessels in the manifest and therefore, the declaration made are not true declaration, and thus, violated the provisions of Section 30 and hence, became liable for personal penalty under Section 112 of the Customs Act. We have already referred to the rival contentions, namely, the contentions urged by S....
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....n, not the classification of goods like smuggled, shop-soiled, damaged, decayed and so forth but must mean goods in their different varieties from a pin to an elephant legitimately carried by the vessel". Shri Krishan Kumar was not able to point out any other decision of the Bombay High Court or the Supreme Court which has taken a view different from the view taken by the Division Bench in Mogul Line Ltd. The judgment of the Bombay High Court is binding on us. Following the above cited decision of the Bombay High Court we hold that the imposition of penalty on the masters for violation of Section 30 of the Customs Act is not legal, and therefore, we set aside the penalties imposed on the masters of the vessels. 32. Now coming to the first of the points, Shri Jagasia contended that the Additional Collector as well as the learned Member of the Board have misunderstood the scope and extent of the burden cast on the owners and the masters of the vessels under Section 115(2) of the Customs Act. He had urged that the authorities below were not right in taking a view that the master and the owner are required to adduce positive proof as to the absence of knowledge and connivance. He co....
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....f Section 115 of the Customs Act, the conveyance could be confiscated if it was used with the knowledge or connivance of the owner or its agent for the purpose of transport of smuggled goods. It is not in dispute that the Government of India has not framed no rules in regard to the precautions to be taken by the owner or his agent under this sub-section. The Additional Collector relied upon the fact that the petitioners sent a radio message to the master of the ship to search the vessel on September 7, 1977 and though the search was carried out, it was not a thorough search. According to the Collector if the search was thorough, then the master could have detected the contraband goods. In my judgment the approach of the Additional Collector is not accurate. The contraband material was concealed in a drum cavity of the lift boat and the log book entry clearly shows that the search was carried out throughout the ship but nothing was detected. There is no reason to presume that the search was not thorough and the master failed in his duty. In absence of any rules providing for the precautions to be taken, it is not proper to hold that the master has not taken proper precautions'. In a....
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....d to take requisite precautions in accordance with the rules. The Additional Collector observed in his order that the master failed to take all such precautions before the vessel entered the Indian territorial waters. In my judgment, in absence of any rules providing for certain set of precautions, it is impossible to direct confiscation of the vessel under sub-section (2) of Section 115 of the Customs Act, 1962 and the order of confiscation, therefore, requires to be set aside'. 34. The Division Bench of the Bombay High Court in Misc. Petition in Appeal No. 57/79, The Mogul Line Ltd. and others v. A.K. Dutt and another affirmed the view taken by Justice Pendse. In paragraph 6 of the judgment, the Division Bench observed "thus, the next question that arises is whether 'all such precautions against such uses' had been taken as required by sub-section (2). Now according to sub-section (2) itself, the precautions to be taken must be 'as are for the time being specified in the rules'. Admittedly, no rules have been framed in that behalf. Hence, in the absence of any such rules, the precautions to be taken must necessarily depend on the facts and circumstances of each case. In the pr....
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....ence of these goods. The possibility of somebody hiding some of the goods and throwing away to the sea which are found floating after the Master had effected the search cannot be ruled out. The cabin itself was unoccupied and apparently accessible to all, the crew members. Looking to the duties that a Captain has to discharge and considering the fact that he had taken such precautions which a reasonable and a prudent man in the circumstances would have taken and in the absence of any other circumstances to impute the knowledge to the Captain it could be safely said that the Master, i.e. Captain had no knowledge of the existence of the contrabands. The department did not even contend that the Master of the ship connived in the importation of the smuggled goods. We, therefore, hold that the learned Additional Collector and the Board were not justified in directing confiscation of the vessel. We set aside the confiscation. 37. Appeal 260/80 : The search conducted on the vessel M.V. Marjan by the Customs officers resulted in the recovery of some plastic wrapping material in the engine room, one gunny bag, one cloth bundle and two polythene bags in an empty oil tank on the star board....
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....hips inner structure of the common store room. This gunny bag contained 87 pcs. of wrist watches of foreign origin valued at Rs. 13,572/- cif and Rs. 27,144/- M.V. Looking to the nature of the goods and manner of concealment and value thereof it is highly improbable that the Master would have connived in the act of smuggling or would have known the existence of the smuggled goods. In the circumstances and for the reasons already given earlier, we hold that the Additional Collector was not justified in ordering the confiscation of the vessel. We, therefore, set aside the confiscation. 39. The search carried out by the Rummaging Officers of the vessel M.V. Vijaya Vasant which is the subject-matter of the appeal 332/80 resulted in the recovery of watches, cassette tapes, cigarettes, transistors, etc of foreign origin of the value of Rs. 2,572/- cif and Rs. 5,853/- M.V. concealed in a drum box. The second search conducted by the officers on 18-10-78 after a period of 4 days from the date of first search resulted in the recovery of a number of small cartons and loose cassette tape concealed beneath the wooden crate containing the coal. They also found one paper packet containing wris....
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....he order of confiscation of the vessel. 41. The vessel M.V. Al-Loulouah which is the subject-matter of the Appeal 335/80 was searched by the officers on 21-2-1979, they found two polythene wrapped bundles concealed underneath mooring rope coil at the stern of the vessel which contained 90 pcs. of wrist watches of foreign origin valued at Rs. 11,250/- cif and Rs. 22,500/- M.V. Here again, considering the quantity of the wrist watches and value thereof it is highly improbable that the Master would have been a party to the smuggling of the goods in question. Looking to the place of concealment, we are satisfied that the Master who is not an expert could not have detected the goods during the search. We, therefore, hold that the Master has discharged the burden cast on him. Accordingly, we set aside the order of confiscation of the vessel. 42. The search carried out by the officers of the Rummaging Division of the vessel M.V. Noor Jahan which is the subject-matter of Appeal 352/83 on 18-12-1978 resulted in the recovery of 11 gunny bags and 2 beddings bearing no marks and numbers mixed with passengers' baggage in batch Nos. 1, 4 and 5 of the vessel. They contained lighters and tex....
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....arned Additional Collector in all these cases was that the vessels were used as means of transport in the smuggling and not that they were used for the carriage of smuggled goods. The Board had only confirmed the finding of the Additional Collector. There was hardly any evidence to establish that the vessels were used as means of transport in the smuggling of the goods. Just because certain smuggled goods were found in the vessels, one cannot jump to a conclusion that the vessels were used as means of transport in the smuggling of the goods found inside the vessel. The vessels are either cargo vessel or passenger vessel. In the circumstances, the said finding of the learned Collector, in our opinion, is not based on any evidence. On this ground also the confiscation of the vessels are liable to be set aside. As we had set aside the orders of confiscation of the vessels, the question of setting aside the fine imposed in lieu of confiscation does not arise. 45. In the result, all these appeals are allowed. The orders of confiscation are set aside and the personal penalties imposed on the masters are also set aside. The fine and penalty, if paid, shall be refunded. 46. Before pa....