INDIA STEAMSHIP COMPANY LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal raises a question relating to interpretation of clause (e) of sub-section (1) of S. 115 of the Customs Act, 1962 (hereinafter referred to as 'the Customs Act') which provides for confiscation of "any conveyance carrying imported goods which has entered India and is afterwards found with the whole or substantial portion of such goods missing unless the master of the vessel or aircrafts is able to account for the loss of, or deficiency, in the goods".

(2.) M/s. India Steamship Company Limited, the appellant herein, (hereinafter referred to as 'the appellant-company') was the owner of the sea-going vessel known as 'M. V. Indian Resolve'. On its voyage from United Kingdom Continental Ports to Calcutta Port it touched the Ports at Bombay, Colombo, Madras and Visakhapatnam. The ship was carrying cargo imported for delivery at different Indian Ports including the Port of Calcutta. When the vessel arrived at the Port of Calcutta Peter Sherazee, the Purser of the vessel, handed over the Bonded Stores List of the vessel to the Customs Officer. The said list mentioned the items of bonded stores and their respective quantities. The said Bonded Stores List stated that there was on board 1,22,400 pieces of cigarettes which were contained in unopened large cartons containing 5,000 cigarettes and also in smaller cartons and open cartons. On checking by the Customs Officer the unopened large cartons appeared to be intact and the Customs Officer locked up and sealed the Bond-Room of the vessel. On two occasions thereafter, on October 12 and October 16, 1974, Peter Sherazee took out some cigarettes from the Bond-Room in the presence of the Customs Officer and on both these occasions the customs' seal on the Bond-Room was found to be intact. On October 28, 1974 one S. K. Mukherji took over charge as Purser of the vessel and on that day the Customs Officer accompanied S. K. Mukherji and Peter Sherazee for verification of the stock in the Bond-Room. Some cigarettes were taken out for consumption of the crew on the vessel. The large cigarette cartons still appeared to be intact. Thereafter the Bond-Room was duly locked and sealed. On November 4, 1974 S. K. Mukherji went with the Customs Officer to the Bond-Room for taking out a further quantity of cigarettes. The seal of the Bond-Room was found to be intact. One of the large cartons, when opened in the presence of the Customs Officer, was found to be empty. Thereupon all the large unopened cartons were checked and it was found that nine of them were empty. On the basis of the stock statement as submitted there was a shortage of 45,000 cigarettes. On April 9, 1975 the Assistant Collector of Customs for Preventive (Adjudication), Calcutta, issued a notice to the appellant-company wherein it was stated that 45,000 cigarettes were found short in the Bond-Room of the vessel on November 4, 1974 and that no satisfactory explanation was forthcoming from the appellant-company for the alleged shortage. In the said notice it was further stated that it is reasonably believed that the said cigarettes had been removed clandestinely from the vessel while she was in Port. By the said notice the appellant-company was called upon to show cause why the vessel should not be confiscated under S. 115(1)(e) and why penal action should not be taken under S. 112 of the Customs Act. The appellant-company submitted a reply to the said notice wherein the shortage of 45,000 cigarettes was not disputed but it was contended that the shortage was inconsequential compared to the value of the entire imported cargo carried by the vessel and, therefore, S. 115(1)(e) was not attracted. It was pointed out that the imported goods scheduled to be unloaded at the Port of Calcutta consisted of 847 tonnes iron and steel, 200 tonnes of carbon blocks and plates, 6 tonnes of milk powder, 976 tonnes of mechinery, spare parts, equipments and other general cargo and as compared to the cargo to be unloaded the missing goods, namely 45,000 cigarettes, were inconsequential and insignificant. The Additional Collector of Customs, by order dated August 23, 1975, held that the terms "substantial portion" in S. 115(1)(e) referred to the value of the missing goods in themselves and that 45,000 cigarettes was substantial portion of the imported goods carried by the vessel and the amount of duty leviable on the missing quantity is more than Rs. 31,000/- and he, therefore, held that the loss or the deficiency amounting to 45,000 pieces of cigarettes has rendered the vessel liable to confiscation under S. 115(1)(e) of the Customs Act. The Additional Collector imposed a fine of Rs. 50,000/- in lieu of confiscation and he also imposed a penalty of Rs. 10,000/- on Peter Sherazee under S. 112 of the Customs Act. Feeling aggrieved by the said order of the Additional Collector the appellant-company filed a writ petition in the Calcutta High Court which was allowed by the learned single Judge by judgment dated January 11, 1977 and the order dated August 23, 1975 passed by the Additional Collector of Customs in so far as it related to confiscation of vessel under S. 115(1)(e) of the Customs Act was set aside. The learned single Judge held that 45,000 cigarettes which were found missing were insignificant portion of the imported goods which were being carried in the vessel and even if their loss was not duly accounted for, S. 115(1)(e) was not attracted for the confiscation of the vessel. The learned single Judge upheld the penalty of Rs. 10,000/- imposed on Peter Sherazee under S. 112 of the Customs Act. The respondents filed an appeal before the Division Bench of the High Court assailing the said judgment of the learned single Judge. The said appeal was allowed by the Division Bench of the High Court by the impugned judgment dated August 17, 1978. The learned Judges on the Division Bench rejected the contention urged on behalf of the appellant-company that the words "substantial portion" means substantial portion of all the "imported goods" on the view that it leads to a difficulty as to whether these two words are to be understood with reference to the value of the imported goods or with the quantity of the imported goods. The learned Judges have said:-

(3.) Shri Dipankar Gupta, the learned senior counsel appearing for the appellant-company, has urged that the expression "substantial portion" in Section 115(1)(e) of the Customs Act must be construed to mean substantial portion of the goods which have been imported in the vessel. The submission is that the learned single Judge was right in proceeding on that basis and that the Division Bench of the High Court was in error in reversing the said view of the learned single Judge. It has been contended that it could not be the intention of Parliament to provide for confiscation of the vessel in a case where a portion of a particular consignment, which may be substantial portion of that consignment, is found missing if the said portion which is found missing is insignificant as compared to the goods that have been imported in the vessel.