2013 (12) TMI 1465 - CGOVT - Customs

Penalty u/s 116 - Shortage of goods - Held that - Provision of Section 116 makes it clear that penalty is imposed for not unloading the goods which were loaded in vessel for importation into India. There is no requirement of proving mens rea on the part of person-in-charge of conveyance. In this case, the short landing or non-landing of goods is admissible by the applicant. As such penalty is imposable under Section 116 - 0.5% losses due to natural causes like moisture are required to be taken into account while working out actual short landed quantity. As such, after deducting 27 MT (0.5%) from 99 MT, the actual short landed quantity is 72 MTs. The proportionate duty involved on 72 MT of said cargo is ₹ 3,47,879 - Applicant is liable to penal action under Section 116 of Customs Act, 1962 as held by lower authorities taking into account the short landed quantity of 72 MT of cargo involving duty of ₹ 3,47,879/-. Keeping in view the overall circumstances of the case, the penalty imposed is quite harsh and should be reduced. As such Government reduces the penalty to ₹ 3,47,879/-. - Decided partly in favour of assessee.

Summary

Issues:
1. Short landing of cargo leading to penalty imposition under Section 116 of the Customs Act, 1962.
2. Interpretation of permissible limits and penalties under relevant legal provisions.
3. Liability of the steamer agent for short landing of goods.

Analysis:

Issue 1: Short landing of cargo and penalty imposition under Section 116
The case involved M/s. K.R. & Sons Pvt. Ltd., a steamer agent, filing IGM under the Customs Act for a vessel carrying Ammonium Nitrate. A discrepancy of 99 MT was found in the discharged cargo, leading to a penalty of &8377; 9,56,000 imposed by the adjudicating authority. The Commissioner (Appeals) upheld this penalty, prompting the revision application by the applicant.

Issue 2: Interpretation of permissible limits and penalties
The applicant contested the penalty on various grounds, including the permissible limit of 1% and general practices of allowing tolerance in bulk cargo shipments. The government analyzed the legal provisions under Section 116 of the Customs Act, emphasizing the responsibility of the person-in-charge for short landing of goods. The government also referred to relevant Supreme Court judgments for strict interpretation of legal provisions without liberal interpretation.

Issue 3: Liability of the steamer agent for short landing
The government noted that the steamer agent, appointed under Section 148 of the Customs Act, is liable for fulfilling obligations related to short landing as per the Act. The penalty under Section 116 was imposed without requiring proof of mens rea, as the short landing was admitted by the applicant. The government reduced the penalty considering the natural causes of losses, such as moisture, and adjusted the short landed quantity to 72 MT, involving a reduced duty of &8377; 3,47,879.

In conclusion, the revision application was disposed of with the penalty reduced to &8377; 3,47,879, emphasizing the liability of the steamer agent for short landing of goods and the strict interpretation of legal provisions under the Customs Act.