2003 (12) TMI 545 - AT - Customs

Summary

Issues Involved:
1. Confiscation of the vessel under Section 115(2) of the Customs Act, 1962.
2. Imposition of redemption fine on the confiscated vessel.
3. Knowledge or connivance of the master/owner/agent of the vessel in the smuggling activities.
4. Adequacy of precautions taken by the master/owner/agent to prevent smuggling.

Detailed Analysis:

Confiscation of the Vessel under Section 115(2) of the Customs Act, 1962:
The primary issue was whether the vessel "m.v. Tiger Bridge" should be confiscated under Section 115(2) of the Customs Act, 1962. The vessel was used for smuggling 900 gold biscuits weighing 104.85 Kgs. The Commissioner of Customs (Sea), Chennai, had ordered the confiscation of the vessel with an option to redeem it on payment of a fine of Rs. 85,00,000/-.

The Tribunal noted that the vessel was used for smuggling, and the contraband was concealed in the cabin of a crew member. However, there was no evidence that the master of the vessel had knowledge or connivance in the smuggling activities. The Tribunal emphasized that after the amendment to Section 115(2) in 1988, the only condition for confiscation was the knowledge or connivance of the master/owner/agent, and not the failure to take precautions.

Imposition of Redemption Fine:
The Commissioner had imposed a redemption fine of Rs. 85,00,000/-, which was 10% of the vessel's value. The Tribunal upheld this fine, considering it neither excessive nor harsh. They emphasized that the smuggling activities were part of a well-organized international racket, and the vessel had been used for smuggling on earlier occasions as well.

Knowledge or Connivance of the Master/Owner/Agent:
The Tribunal found no evidence implicating the master of the vessel in the smuggling activities. Statements from involved persons did not indicate any knowledge or connivance on the part of the master. The Tribunal referred to several judgments, including "Mogul Line Ltd. v. Addl. Collector" and "Carl F. Peters v. CCE (Prev.), Mumbai," which supported the view that without specific evidence of involvement, the vessel should not be confiscated.

Adequacy of Precautions Taken:
The Tribunal discussed whether the master of the vessel had taken adequate precautions to prevent smuggling. The master claimed to have warned the crew against smuggling, but there was no evidence of effective measures taken. The Tribunal noted that mere warnings were insufficient, and the master should have conducted physical searches of the cabins. However, the Tribunal also acknowledged that after the 1988 amendment to Section 115(2), failure to take precautions was no longer a ground for confiscation.

Separate Judgments:
- Majority View (Member (T) and Member (J)): The majority concluded that the confiscation of the vessel was not sustainable under the amended Section 115(2) as there was no evidence of knowledge or connivance by the master/owner/agent. They allowed the appeal and set aside the confiscation order.
- Dissenting View (Member (T)): One member disagreed, emphasizing that the master failed to take effective precautions, thus justifying the confiscation. This member upheld the confiscation and imposition of the redemption fine.

Final Decision:
In terms of the majority order, the impugned order was set aside, and the appeal was allowed with consequential relief, if any.