ADDITIONAL COLLECTOR OF CUSTOMS Vs. MOGUL LINES LIMITED

JUDGEMENT

(1.) This is an appeal against the judgment of Pendse, J. dated 14th October, 1981, making the rule absolute in the aforesaid Miscellaneous Petition No. 28 of 1978 and setting aside the order of confiscation of the vessel as "Mohammadi" (referred to hereinafter as "the said vessel").

(2.) The respondent Company, a Government of India Undertaking, is the owner of the said vessel, which plies between the Persian Gulf Ports and India. Appellant No. 1 is the Additional Collector of Customs, R. & I. Department, and appellant No. 2 is the Union of India. The said vessel arrived from Persian Gulf Ports, with passengers and anchored in steam on 15th June, 1977. The officers of the Customs House boarded the said vessel and rummaged it in the presence of panchas, the Captain, the Chief Engineer and the third Engineer of the ship. During the search, the Customs Officers found one printed cotton cloth bag containing five paper adhesive taped packets concealed behind the side of the main engine near the entrance leading to the engineers' mess room. Two similarly wrapped packets were recovered from the air-blowers in the petty officers toilet on the star board side. On examination, it was found that these packets contained 290 wrist watches of foreign make and having a C.I.F. value of Rs. 39,100/- and market value of Rs. 78,200/-. These goods were seized by the Customs Officers as smuggled goods liable to confiscation under the Customs Act, 1962 . On inquiry it was found that no person on board the ship claimed the ownership of the said goods. After the confiscation of the said goods, Customs authorities recorded statements of the Master of the vessel one Sultan, the Chief Engineer of the vessel one Burges, and the Chief Officer A.R.I. Peera and some other officers and crew members under Section 107 of the Customs Act. From the uncontroverted averments in paragraph 4 of the petition, it can be seen that the Master of the vessel in his statement stated that the said vessel was anchored in stream on 15th June, 1977. Prior to the arrival of the vessel at Bombay Port, he had mustered all the crew members, on 15-6-1977, and warned them not to indulge in smuggling activities. Further he and the other officers and crew members had searched all possible places but nothing of any incriminating nature was found and he made a log entry to that effect. It may be mentioned here that Exhibit A' to the reply to the show cause notice issued against the respondent is a copy of the telex message sent by the respondent to the Master of the said vessel for carrying out a thorough search of the vessel before its arrival at Bombay so that no contraband could be hidden or smuggled in the vessel. The Chief Engineer of the said vessel, Burges, stated that prior to the arrival of the vessel in Bombay, he despatched the second Engineer, the third Engineer and the Senior Electrical Engineer to carry out searches for contraband goods in the engine room and he allotted places for search to different persons but nothing incriminating was found. The Chief Officer on Board, A.R.I. Peera has made a similar statement. None of these officers have been cross-examined by the Customs Officer who recorded the said statements. Thereafter, on 2nd July, 1977, appellant No. 1 issued a show cause notice to the respondent as the owner of the vessel and to the Master of the vessel and "any other owners of the goods under seizure". After setting out the aforesaid facts, the show cause notice called upon the aforesaid parties to show cause why penalty should not be imposed upon them for unauthorised import of the goods under Section 112 of the Customs Act and also to explain why the said vessel should not be confiscated under Section 115 of the Customs Act. The respondent and the Master of the vessel by their Advocates' letter dated 30th August, 1977 showed cause against the said show cause notice. By the said advocates' said reply the respondent and the Master of the vessel explained that the said vessel belonged to a Government Company or undertaking and that all necessary and reasonable precautions had been taken by the owner against the misuse of the said vessel for the purpose of smuggling. It was also pointed out that precautions had been taken and searches were carried out by the Master with the help of his officers and crew members on board the vessel during the voyage. It was stated in the said letter that the respondent and the Master of the vessel did not know nor had any reason to believe about the existence of any of the said goods which were liable to be confiscated on board the said vessel. It is not necessary to set out the said reply in detail for the disposal of this appeal.

(3.) By his order dated 24th August, 1977 and issued on 26th November, 1977 appellant No. 1 ordered that the aforesaid watches which had been seized were confiscated under Section 111(a) and (f) of the Customs Act, 1962 . There is no dispute regarding the correctness of this order of confiscation. Appellant No. 1 further ordered that the said vessel be confiscated under Section 115(2) of the Customs Act, 1962 . However, respondent No. 1 as the owner was given an option to redeem the said vessel on payment of a fine of Rs. 50,000/-. Appellant No. 1 did not impose any personal penalty on the Master of the ship or the owner of the vessel, on the ground that no sufficient evidence had been brought against either of them for the imposition of personal penalty under Section 112 of the Customs Act. What was challenged before the learned trial Judge was the order of appellant No. 1, in so far as it related to the confiscation of the said vessel. The learned trial Judge held that in view of the finding of appellant No. 1 that the Master and the owner of the ship had no personal knowledge about the smuggling activities, it was difficult to hold that they had knowledge that the said vessel was used for carrying contraband within the meaning of Section 115(2) of the Customs Act. It was held that the observations of appellant No. 1 that the Master and the owner of the vessel must establish positively from the material on record that they had no knowledge of the smuggling activities were incorrect. On the basis of this conclusion, the learned trial Judge set aside the order for confiscation of the said vessel.