2016 (9) TMI 975 - AT - Customs

Imposition of penalty - Port Clearance Certificate - Charter Agents - Bagged Rice - extension of port clearance upto 07.02.2012 - surrender of original Port Clearance Certificate on 08.02.2012 - Section 42 of the Customs Act, 1962 - whether the penalty imposed for the reason that the vessel has left the port without Port Clearance Certificate as envisaged in Section 42 of the Act is justified? - Held that - Section 42 states that no vessel can leave without written order given by the proper officer. It does not say that the original Port Clearance Certificate has to be in the hands of the master of the vessel while leaving the port though it may be necessary for the vessel to have the original port clearance certificate in case it is intercepted or for that matter for any other inspections. Section 42 of the Act only says that the vessel shall not sail unless a written order is given by a proper officer. Perhaps the appellant, Steamer Agent was in possession of the Port Clearance Certificate and the Master of the ship had in possession only a photocopy of Port Clearance Certificate. Section 148 of the Act states that the principal/master of the vessel shall be liable for the acts or omissions committed by the agent and vice versa. At the time of sail of the vessel if the appellant who are Steamer Agents of the vessel were holding the Port Clearance Certificate, it cannot be said that there is violation of Section 42 if the vessel leaves the port during the validity of Port Clearance Certificate. The department has issued Port Clearance Certificate which was valid till mid night of 07.02.2012. So also department does not have a case that the vessel sailed after mid night of 07.02.2012. Therefore, at the time of sail of the vessel from the port, there was a valid Port Clearance Certificate issued by the department. Penalty imposed under section 42 of the Customs Act, 1962 is unsustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Violation of Section 42 of the Customs Act, 1962 - Leaving port without proper clearance certificate.

Detailed Analysis:

Issue 1: Violation of Section 42 of the Customs Act, 1962

The case involved appeals filed by Steamer Agents and its Manager against penalties imposed for allegedly leaving the port without proper clearance, violating Section 42 of the Customs Act, 1962. The appellants secured port clearance initially valid till midnight of 04.02.2012, later extended till 07.02.2012 due to a dispute. The appellants informed the Customs Department that the vessel had sailed out on 07.02.2012. The Department issued a Show Cause Notice alleging illegal sail without proper clearance.

Analysis:
The appellants argued that there was no violation of Section 42 as the vessel sailed before the clearance expiry. The Department contended that the vessel sailed without holding the clearance certificate. The Tribunal examined Section 42, emphasizing that a vessel should not depart without a written order. It noted that the vessel sailed during the valid clearance period and no evidence showed sailing post expiry. The Tribunal highlighted Section 148, holding the Steamer Agents liable for the vessel's actions. As the vessel sailed within the clearance validity, the violation claim lacked legal basis. The penalties were deemed unsustainable, and the appeals were allowed.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the penalties imposed for leaving the port without proper clearance certificate, as there was no violation of Section 42 of the Customs Act, 1962 based on the circumstances presented in the case.