1988 (4) TMI 149 - SC - Customs

Whether the respondent No. 1 is liable for the loss or damage to the goods? Held that - No manner of doubt that the goods were confiscated by the Collector of Customs under Section 111(d) and 111(m) of the Customs Act, 1962 and directions were given for collection of redemption fine and for complying with certain directions contained in the order of the Collector before the release of goods. . 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.

Summary

Issues Involved:
1. Liability for loss or damage to imported goods.
2. Confiscation and redemption of goods under the Customs Act.
3. Responsibility for accounting for the goods.
4. Compensation for untraceable goods.

Detailed Analysis:

1. Liability for Loss or Damage to Imported Goods:
The judgment concluded that the respondent No. 1 (Customs authorities) is liable for the loss or damage to the goods. The appellants imported 58 bales of woollen rags through the State Trading Corporation from Canada. Upon arrival, 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 of Rs. 50,000/-, later reduced to Rs. 20,000/- by the Central Board of Excise and Customs. The Tribunal upheld this decision, and the Supreme Court waived the redemption fine but required payment of duty.

2. Confiscation and Redemption of Goods under the Customs Act:
The goods were initially confiscated under Section 111(d) and (m) of the Customs Act, which allows for confiscation if goods are imported in contravention of any prohibition imposed by law. The appellants were given the option under Section 125 to pay a fine in lieu of confiscation. The Tribunal's order required the goods to be mutilated to render them unfit for use except as rags and allowed their release upon payment of a fine and appropriate duty.

3. Responsibility for Accounting for the Goods:
Section 45 of the Customs Act mandates that all imported goods remain in the custody of a person approved by the Collector of Customs until cleared for home consumption, warehoused, or transshipped. The judgment emphasized that the statutory liability to account for the goods lies with the Customs authorities until the goods are cleared. The appellants contended that 19 bales were missing and the remaining 39 bales were not properly preserved. The Customs authorities and the Calcutta Port Trust disputed these claims.

4. Compensation for Untraceable Goods:
The Supreme Court directed the Tribunal to adjudicate the issue of compensation for the untraceable goods. The Tribunal was instructed to provide a reasonable opportunity to all parties involved and determine the amount of compensation payable if the goods were not traceable and the liability to account for the goods was fixed on the respondents. The Tribunal was to complete this process within three months.

Conclusion:
The Supreme Court held that the Customs authorities are liable for the loss or damage to the goods, as they were in possession and control of the goods after confiscation. The Court noted that the Calcutta Port Trust could not be held responsible as there was no evidence that the goods were handed over to them. The appellants were advised to seek appropriate proceedings for the determination and recovery of damages. The appeal was disposed of with no order as to costs.