1988 (9) TMI 59 - HC - Customs

Summary

Issues Involved:
1. Imposition of penalty for short-landing of cargo.
2. Reliability of measurements taken on board versus in the shore tank.
3. Consideration of relevant evidence by the customs authorities.
4. Legality of the orders passed by the customs authorities.

Detailed Analysis:

1. Imposition of penalty for short-landing of cargo:
The writ petition challenges the order by the Deputy Collector of Customs imposing a penalty of Rs. 48,621/- for the alleged short-landing of 69.847 metric tons of inedible bleachable fancy tallow. The petitioner, Mackinnon Mackenzie and Co. Ltd., acting as a Steamer Agent, imported the tallow and contends that the measurement discrepancies are due to practical difficulties in obtaining accurate readings.

2. Reliability of measurements taken on board versus in the shore tank:
The petitioner argues that the measurement of the tallow on board the vessel, which indicated 3027.997 metric tonnes, should be considered more reliable than the shore tank measurement, which showed varying results: 2967.314 metric tonnes by the petitioner's surveyor, 2961.931 metric tonnes by the consignee's surveyor, and 2943.910 metric tonnes by the customs surveyor. The petitioner attributes these discrepancies to factors such as the admixture of tallow from different sources and the unreliable calibration chart of the shore tank.

3. Consideration of relevant evidence by the customs authorities:
The petitioner contends that the customs authorities, particularly the Deputy Collector and the Collector of Customs (Appeal), failed to consider all relevant evidence, including the conditions of the shore tank and the inherent difficulties in measuring liquid cargo accurately. The petitioner cites a precedent from the Calcutta High Court, which emphasizes the necessity of considering the entire body of evidence, including outturn reports, surveyor reports, and other relevant documents, before imposing a penalty under Section 116 of the Customs Act.

4. Legality of the orders passed by the customs authorities:
The court found that the customs authorities did not adequately consider all the relevant evidence and mechanically imposed the penalty based on the discrepancy between the Bill of Lading and the customs surveyor's report. The court highlighted that Section 116 of the Customs Act is penal in nature and requires clear and convincing evidence before a penalty can be imposed. The court concluded that the orders by the Deputy Collector and the Collector of Customs (Appeal) were arbitrary and lacked proper consideration of the petitioner's explanations and evidence.

Conclusion:
The court allowed the writ petition, quashed the impugned orders, and directed the Deputy Collector of Customs to give a personal hearing to the petitioner. The Deputy Collector is instructed to consider all relevant evidence, including any additional evidence presented during the hearing, and then decide whether the petitioner satisfactorily explained the short-landing. The court emphasized that the penalty should not be imposed mechanically and must be based on a thorough consideration of all circumstances and evidence. There will be no order as to costs.