2007 (11) TMI 111 - AT - Customs

Goods have been unloaded from the vessel and custody was handed over to the Mumbai Port Trust - at the time of delivery, a survey was conducted and it was found that there was shortage of the goods before they were given out of charge Whether Trust is responsible or not for the shortages occurred in their custody Since no any complaint has been lodged and no any SCN has been issued by revenue against trust so port trust cannot be held responsible for pilferage

Summary

Issues:
1. Liability of the Port Trust for shortage of imported goods.
2. Applicability of Major Port Trust Act provisions.
3. Responsibility under Section 45(3) of the Customs Act, 1962.

Analysis:
1. The case involved appeals against an Order-in-Appeal regarding shortages of imported goods in the custody of the Port of Mumbai. The appellants contested the show cause notice, arguing that the notice was time-barred and that the Major Port Trust Act provisions exempted them from liability after seven working days of taking charge of goods. The adjudicating authority held the Port Trust responsible for the shortages and imposed penalties. The Commissioner (Appeals) upheld the decision, stating that the Port Trust could not evade responsibility under Section 45(3) of the Customs Act, 1962.

2. The appellant's advocate argued that the Major Port Trust Act clearly limited the Port Trust's liability to seven working days after taking charge of goods. Referring to a previous Division Bench order absolving the Port Trust from duty payment and penalties, the advocate contended that the Customs Act did not apply in this case. The SDR, however, emphasized the Port Trust's responsibility as the custodian of the customs area, citing a Public Notice designating the Mumbai Docks under the custody of the Port Trust and directing compliance with customs regulations.

3. The Member (J) considered the submissions and records, focusing on whether the Port Trust was liable for duty on goods found short without evidence of pilferage. Referring to previous Tribunal decisions in favor of the appellants due to lack of proof of pilferage, the Member highlighted the importance of establishing pilferage before shifting duty liability to the custodian. Noting discrepancies in weight and mis-declaration by shippers, the Member upheld the decision to set aside the demand against the Port Trust, citing failure to conclusively prove pilferage. Given the similarity of issues with previous Tribunal decisions, the Member set aside the impugned order, refraining from ruling on the custodian issue due to pending litigation.

The appeals were allowed, and the Member refrained from making a finding on the custodian issue due to the pending challenge in the High Court.