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Issues:
1. Interpretation of Section 115(2) of the Customs Act, 1962 regarding liability of a vessel for smuggling goods without the knowledge of the owner or master. 2. Validity of defense based on non-framing of rules under Section 115(2) against action on the vessel. Analysis: The judgment pertains to a case where a vessel, Vishwa Mamta, owned by a shipping company, arrived at Madras Harbour carrying general cargo. Customs officers found contraband goods on the vessel and ordered confiscation of the goods and the vessel under Sections 111 and 115(2) of the Customs Act, with an option for redemption. The Master of the vessel was also penalized. The shipping company and the Master appealed to the Customs Tribunal, which upheld the penalty but reduced the amount. The shipping company then sought a reference to the High Court regarding the interpretation of the law. The applicant argued that in the absence of specific rules under Section 115(2), the precautions taken should be considered sufficient to prevent smuggling, especially when the Master had no personal knowledge of the contraband. They cited previous judgments to support their contention. On the other hand, the respondent argued that lack of personal knowledge does not absolve the owner from liability, and the Tribunal's decision was in line with the law. The Court analyzed Section 115(2) of the Customs Act and referred to previous judgments for guidance. It highlighted that the absence of rules does not render the provisions unworkable. Compliance with existing rules, if any, and taking necessary precautions are crucial to claim exoneration. The Court disagreed with the view that absence of rules automatically absolves liability, emphasizing the importance of factual circumstances and evidence in determining knowledge and involvement. The Court differentiated between various judgments cited by both parties, emphasizing the need for specific evidence to establish lack of knowledge in smuggling activities. It clarified that the absence of personal knowledge does not automatically discharge the owner or Master from liability, especially when evidence indicates their involvement or awareness. The Court also stressed the need for deterrent fines to combat illegal activities. In conclusion, the Court held that the non-framing of rules under Section 115(2) cannot be used as a defense when evidence shows that the contraband goods could not have been present on the vessel without the knowledge of the Master. The absence of rules does not excuse liability in such cases where the involvement of the owner or Master is evident.
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