1983 (4) TMI 59 - SC - Customs

Whether the respondent No. 1 is liable for the loss or damage to the goods? Held that - In the instant case as not a single document has been produced before this Court by the Customs Authorities showing that the goods were handed over to the custody and possession of the Board of Trustees and that the Board issued any receipt for that as required under Section 42 read with Section 43 of the said Act. Therefore under no circumstances can the Board of Trustees be held responsible for the loss or destruction of the said imported goods. As stated hereinbefore the imported goods were kept unloaded in the customs area and were confiscated and as such the respondent No. 1 is liable for the loss or damages that has been caused to the appellant by the destruction of the imported goods from their custody and possession. It is not possible for this Court while hearing the appeal under Section 130-E of the Customs Act against the order of the Appellate Tribunal to ascertain and determine the money value of the imported goods which have been lost or destroyed from the possession and custody of the Customs authorities. The appellant may take appropriate proceedings for determination of the damages and for recovery of the same in accordance with law.

Issues Involved:
1. Liability for loss or damage to imported goods.
2. Confiscation and redemption fine under the Customs Act.
3. Compliance with import policies and customs regulations.
4. Responsibility for the custody and preservation of goods.
5. Compensation for untraceable goods.

Detailed Analysis:

1. Liability for Loss or Damage to Imported Goods:
The Supreme Court addressed the liability for the loss or damage of 58 bales of woollen rags imported by the appellants. The Customs authorities confiscated the goods under Section 111(d) and (m) of the Customs Act but allowed the appellants to clear the goods on payment of a redemption fine. The appellants later found that part of the goods was missing. The Court noted that the statutory liability to account for the goods rests with the Customs authorities until the goods are cleared for home consumption. The Court directed the Tribunal to examine the liability of the Customs authorities and the Calcutta Port Trust for the missing goods and to determine the appropriate compensation for the appellants.

2. Confiscation and Redemption Fine under the Customs Act:
The Collector of Customs confiscated the goods under Section 111(d) and (m) of the Customs Act but allowed the appellants the option to clear the goods on payment of a redemption fine of Rs. 50,000, later reduced to Rs. 20,000 by the Central Board of Excise and Customs. The Tribunal upheld this order, subject to the goods being mutilated to the satisfaction of the Collector. The Supreme Court waived the redemption fine but maintained the requirement for the appellants to pay the appropriate duty.

3. Compliance with Import Policies and Customs Regulations:
The appellants imported the goods through the State Trading Corporation as per the import policy of 1979-80. The goods were described as woollen rags with a minimum wool content of 80%. However, upon testing, the Customs authorities found the wool content to be only 6-10%, leading to the issuance of a show-cause notice for contravention of the Imports (Control) Order, 1955. The Collector of Customs confiscated the goods but did not impose any penalty, considering the lack of complicity by the appellants or the State Trading Corporation.

4. Responsibility for the Custody and Preservation of Goods:
The Court highlighted that under Section 45 of the Customs Act, imported goods remain in the custody of the Customs authorities until cleared for home consumption. The Calcutta Port Trust denied liability, stating that the goods were under the control of the Customs authorities. The Court noted that the Customs authorities are responsible for the goods' custody and preservation and directed the Tribunal to adjudicate the liability for the missing goods.

5. Compensation for Untraceable Goods:
The Court acknowledged the appellants' contention that the goods were not properly preserved and parts of some bales were missing. The Court directed the Tribunal to determine the liability for the untraceable goods and to decide the amount of compensation payable to the appellants if the goods are not found. The Tribunal was instructed to give reasonable opportunity to all parties involved and to complete the adjudication within three months.

Conclusion:
The Supreme Court concluded that the Customs authorities are liable for the loss or damage of the imported goods while in their custody. The Court directed the Tribunal to adjudicate the liability and compensation for the missing goods and allowed the appellants to seek appropriate proceedings for the determination and recovery of damages. The appeal was disposed of with no order as to costs.

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