2013 (1) TMI 725 - CGOVT - Customs

Penalty u/s 116 - Failure in proper accounting and discharge of the cargo manifest - Held that - The seals of 41 containers as mentioned in their Bills of Lading and that the seals found in these 41 containers at the time of unloading from the vessel at Tuticorin were entirely different. Government notes further in the instant case the applicants had given undertaking to perform or to procure performances of the entire transport from place at which the goods are taken in charge to the place designated for delivery in the bill of lading. They have also undertaken responsibility for the acts and omission of any person of whose services makes use for the performance of the contract evident by the bill of lading. Hence Government finds much force in the contention of the department that the applicant s responsibility do not merely stop with providing the containers in which the cargo was stuffed. They have issued an MBL and accepted the responsibility of delivering the cargo properly at the port of delivery as a person-in-charge of conveyance. Person-in-charge of conveyance is responsible for any short landing or non-landing of goods. As per definition in Section 2(31) of Customs Act, 1962, person-in-charge of the conveyance is the master of the vessel. There is no dispute in the matter that all the 41 containers were found empty and total quantity as per Bill of Lading was found short. The steamer agent is an agent of carrier, appointed under Section 148 of Customs Act, 1962 - Section 148 makes it clear that such agent shall be liable for fulfilment in respect of matter in question of all obligations imposed on such person-in-charge by or under this Act or any law for the time being in force and to penalties and confiscation which may be incurred in respect of that matter. As such steamer agent is liable to penal action under Section 116 ibid in this case matter. - Decided against assessee.

Issues Involved:
1. Imposition of penalty under Section 116 of the Customs Act, 1962.
2. Responsibility and liability of the carrier for short landing/non-landing of goods.
3. Validity and sufficiency of evidence submitted by the applicant.
4. Role of mens rea in the imposition of penalty.
5. Interpretation of statutory provisions and legal precedents.

Issue-wise Detailed Analysis:

1. Imposition of penalty under Section 116 of the Customs Act, 1962:
The primary issue is whether the penalty imposed under Section 116 of the Customs Act, 1962, is justified. The adjudicating authority observed that the applicants failed in proper accounting and discharge of the cargo manifest, as 41 containers were landed in empty condition against invoices, Bill of Lading, and IGM. Consequently, a penalty of Rs. 18,58,922/- was imposed under Section 116 of the Customs Act, 1962. The Commissioner (Appeals) upheld this order, and the revision application filed by the applicant contested this penalty.

2. Responsibility and liability of the carrier for short landing/non-landing of goods:
The applicants contended that they were not responsible for the short landing/non-landing of goods, as the containers were found empty at the time of export from Malaysia. They argued that the sealing and stuffing of the containers were undertaken by the shippers, and they acted bona fide based on the House Bill of Lading (HBL) issued by the shippers. However, the government observed that the applicants, as the carriers, had issued the Master Bill of Lading (MBL) and accepted the responsibility for delivering the cargo properly at the port of delivery. The applicants' responsibility did not merely stop with providing the containers; they were also responsible for the acts and omissions of any person whose services they used for the performance of the contract evidenced by the bill of lading.

3. Validity and sufficiency of evidence submitted by the applicant:
The applicants submitted various documents, including letters from Portklang Authorities and the export manifest, to support their claim that the containers were empty at the time of export. However, the adjudicating authorities dismissed the letter from Portklang Authorities, stating that it was not a verification report. The government noted that the applicants had given an undertaking to perform or procure the performance of the entire transport and were responsible for the acts and omissions of any person whose services they used. The discrepancy in the seal numbers of the containers further indicated the applicants' failure to verify the cargo properly.

4. Role of mens rea in the imposition of penalty:
The applicants argued that there was no mens rea (guilty mind) on their part, and therefore, the penalty under Section 116 could not be imposed. However, the government noted that in terms of Section 116, penalty is imposed for not unloading the goods at the port of import in India, and there is no requirement of proving mens rea on the part of the person-in-charge of the vessel. The short landing/non-landing of goods was admitted by the applicant, and therefore, the penalty was rightly imposed.

5. Interpretation of statutory provisions and legal precedents:
The government referred to the statutory provisions under Chapter VI and Chapter V of the Customs Act, 1962, which stipulate the requirements for delivery of import manifest and the levy of customs duties. The provisions of Section 116 were interpreted strictly, as per the principles laid down by the Hon'ble Supreme Court in cases such as M/s. ITC Ltd. v. CCE, Delhi, and M/s. Paper Products Ltd. v. CCE, Vadodara. The government found that the penal action was rightly taken against the steamer agent under Section 116, and there was no infirmity in the order of the Commissioner (Appeals).

Conclusion:
The government upheld the order of the Commissioner (Appeals) and found no merit in the revision application filed by the applicant. The penalty imposed under Section 116 of the Customs Act, 1962, was justified, as the applicants failed to properly account for and discharge the cargo manifest. The applicants' responsibility extended beyond providing the containers, and they were liable for the short landing/non-landing of goods, irrespective of the absence of mens rea. The revision application was disposed of accordingly.

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