LAWS(APH)-1982-9-10

SAVITRU AND COMPANY Vs. GOVERNMENT OF INDIA

Decided On September 11, 1982
SAVITRU AND COMPANY Appellant
V/S
GOVERNMENT OF INDIA Respondents

JUDGEMENT

(1.) Messrs. Savitru & Company, Kakinada, is the clearing and Forwarding Agent for the Ministry of Food and Agriculture, Government of India, at the Port of Kakinada. The Government of India chartered the ship S. S. AKIKO for importing Urea fertilizers into the country. As Clearing and Forwarding agents of the Government of India, Messrs. Savitru and Company has to arrange for the conveyance of the goods delivered to the Lighters alongside to the Wharf. Messrs. D.S. Narayana and Company, Kakinada, who are the agents for the Ship AKIKO at Kakinada. The vessel Akiko called at Kakinada port on 3-1-1967. The ship discharged her cargo from 17-1-67 to 2-2-67. Thereafter, the ship sailed away from Kakinada. The ship was permitted to leave the port on the basis of an undertaking given by Messrs. Savitru and Company making it liable for the performance of all the obligation to be performed by the Master of the Ship Akiko. According to the Manifest, the Master had to deliver certain amount of Urea, but the actual delivery fell short by 802 bags. Messrs. Savitru & Company admitted a shortage of 197 bags out of these 802 bags. ?? Messrs. Savitru & Companys case is that the balance of 605 bags of Urea was never loaded into the ship. The Collector of Customs at Kakinada, accepted this explanation and imposed a penalty of Rs. 5,000.00 on Messrs. Savitru and Company on the basis of the undertakings they had executed under Sections 41 and 42 of the Customs Act, 1962. Under Section 42, a person-in-charge of a conveyance which has brought any imported goods shall not cause or permit the conveyance to depart from that customs station until a written order to that effect has been given by the proper officer. No such order shall be given until the person-in-charge of the conveyance has satisfied the proper Officer that no penalty may be levied upon him under Section 40 has been secured by such guarantee or deposit of such amount as the proper officer may direct, Messrs. Savitru & Company who are acting as clearing Agents for the Government of India and as the Agent of the Ship Akiko in this state had executed an agreement under Section 42 of the Customs Act guaranteeing the payment of any penalty that may be levied upon the ship. The sections clearly providing a mechanism for facilities the high-sea transportation. Now, after the ship has left, the customs authorities exercising their powers under Section 116 of the Customs Act, imposed the aforementioned penalty of Rs. 5,000.00. Section 116 of the Customs Act authorities the imposition of such a penalty if any goods loaded in a conveyance for importation into India, are not unloaded at their place of destination in India, or if the quantity, unloaded is short of the quantity to be unloaded at that destination, and if the failure to unload or the deficiency is not accounted for to the satisfaction of the Assistant Collector of Customs. In such a case, the person-in-charge of a conveyance shall be liable to pay a penalty not exceeding twice the amount of duty that would have been chargeable on the goods not unloaded or the deficient goods. The customs authorities at Kakinada have held that the deficient goods makes the Master of the ship liable to pay the penalty under Section 116, imposed a penalty of Rs. 5,000.00 and held Messrs. Savitru & Company liable to pay the amount in terms of its undertaking executed under Section 42 of the Customs Act. Against the order imposing penalty, Messrs. Savitru & Company had preferred an appeal to the Central Board of Revenue, which is the appellate authority. The Central Board of Revenue had enhanced the amount of penalty from Rs. 5,000.00 to Rs. 37,697.00 by holding that the penalty is levied not only on the admitted loss of 197 bags of Urea but also on the un-admitted loss of 605 bags of Urea. There was a notice given to Messrs. Savitru & Company calling for the explanation why such an enhanced levy should not be imposed, before the Central Board of Revenue had passed the order. Against that order of the Central Board of Revenue dated 13-9-1973, Messrs. Savitru and Company filed a revision to the Central Government under Section 131 of the Customs Act, but that was dismissed by an order dated 26-8-1977. This writ petition is filed challenging the order of the appellate authority as confirmed by the revisional authority.

(2.) The argument of the petitioner is that for the deficient quantity or bags which were not loaded, they were not liable to pay any penalty. They argued that under Section 30, clause (3) of the Customs Act, the import manifest showing the total quantity of Urea bags to be imported should be taken to have amended by the Customs Collector by accepting the petitioners explanation. But, there is no evidence to show that there is an order passed by any Customs authority at Kakinada amending the import Manifest. It is not in doubt that according to the import Manifest there was a shortage of 802 bags of Urea and according to the import Manifest for the deficient goods the Captain of the ship is liable to pay the penalty. I cannot, therefore, accept this submission of the petitioner that the import Manifest is reduced by the acceptance of the petitioners explanation and that the liability of the ship stood reduced to that extent. This point is accordingly rejected.

(3.) The next point is; even assuming that the ship was liable to be penalised under Section 116 of the Customs Act for the deficient goods, it was argued that once the Customs Collector at Kakinada had imposed penalty only on 197 bags of Urea and the customers authorities have not preferred any appeal to the appellate authority against that order of the Customs Collector, it is not open for the appellate authority to enhance the penalty. This argument is advanced by several forums. Firstly, it is said that there is no power given to the appellate authority to enhance the penalty in an appeal preferred by the petitioner complaining against the imposition of Rs. 5,000.00 as penalty. Secondly, it is argued that the power to impose enhanced penalty is only available in the case of confiscation of goods and as there is no confiscation in this case that power is not available. The second argument in this case is passed upon the language of the proviso to Section 128, clause (2) of the Customs Act, which speaks of enhancing any penalty or fine in lieu of confiscation. The argument of the petitioner is that the words "in lieu of confiscation" would govern not only the word "fine", but also "penalty". I cannot agree. The words "in lieu of confiscation" mean "in substitution of confiscation." Instead of confiscating the goods, a fine can be imposed. There cannot be any meaning in saying that an amount can be imposed in substitution of imposing penalty. The words "in lieu of confiscation" will have reference only to fine and not to penalty. I cannot, therefore, accept the second submission of the petitioner on this ground. But, the real difficult question in this case appears to be is whether the appellate authority has the power to enhance the penalty imposed by the Customs Collector in an appeal preferred by the petitioner. Section 128, clause (1) reads thus : "Any person aggrieved by any decision or order passed under this Act, may appeal to the Board."