1987 (1) TMI 266 - AT - Customs

Summary

Issues Involved:
1. Confiscation of wet dates.
2. Absolute confiscation of the vessel.
3. Bank's claim regarding hypothecation of the vessel.

Detailed Analysis:

1. Confiscation of Wet Dates:

The appellants argued that they were regular importers of wet dates and had no involvement in the smuggling activities of the vessel's crew. They contended that the vessel was not engaged by them, and they were unaware of any contraband goods concealed within the vessel. The Collector of Customs (Preventive), Ahmedabad, ordered the confiscation of the wet dates under Section 119 of the Customs Act, which allows for the confiscation of goods used to conceal smuggled goods. However, the Collector's order did not specify which contraband goods were concealed under the wet dates or provide evidence to support the claim of concealment. The Tribunal found that the Collector's finding was not based on evidence and contradicted the record, noting that the contraband goods were found in secret cavities and not under the dates. Consequently, the Tribunal set aside the confiscation of the wet dates and ordered the refund of the security amounts adjusted towards the fine.

2. Absolute Confiscation of the Vessel:

The owner of the vessel contended that the vessel was used for the carriage of goods for hire and thus should have been given an option to pay a fine in lieu of confiscation under the proviso to Sub-section (2) of Section 115 of the Customs Act. The vessel had carried onions to Dubai and dates on its return journey, indicating it was used for commercial purposes. The Tribunal agreed that the vessel was used for the carriage of goods for hire and that the Collector erred in ordering absolute confiscation without providing an option to pay a fine. The Tribunal set aside the absolute confiscation order and directed that the vessel be released on payment of a fine of Rs. 2,50,000/-, based on the Marine Surveyor's valuation.

3. Bank's Claim Regarding Hypothecation of the Vessel:

The State Bank of Saurashtra challenged the confiscation, arguing that it had advanced a loan to the vessel's owner and that the vessel was hypothecated to the bank. The bank sought a directive to the Collector to discharge the loan amount from the proceeds of the vessel's sale. The Tribunal noted that the bank did not challenge the confiscation order itself but rather sought to enforce its mortgage. Under Section 126 of the Customs Act, confiscated goods vest in the Central Government, and the bank's claim could only be against the Central Government, not the Tribunal. The Tribunal dismissed the bank's appeal as misconceived, stating that the bank could pursue its claim through a civil suit or by approaching the Central Government.

Conclusion:

The Tribunal allowed the appeals concerning the confiscation of wet dates and the absolute confiscation of the vessel, setting aside the orders and directing refunds and the option to pay a fine in lieu of confiscation. The bank's appeal was dismissed as it was not within the Tribunal's jurisdiction to enforce the bank's mortgage claim against the confiscated vessel.