1992 (1) TMI 240 - AT - Customs

Summary

Issues Involved:
1. Legality of the penalty imposed on the shipping agent under Sec. 112 (a) and (b) of the Customs Act, 1962.
2. Applicability of Sec. 147 and Sec. 148 of the Customs Act to the shipping agent's liability.
3. Requirement of evidence to connect the shipping agent with the commission of the offense.

Issue-wise Detailed Analysis:

1. Legality of the penalty imposed on the shipping agent under Sec. 112 (a) and (b) of the Customs Act, 1962:
The appeal challenges the order of the Addl. Collector of Customs, Madras, which imposed a penalty of Rs. 5 lakhs on the appellant, a shipping agent, under Sec. 112 (a) and (b) of the Customs Act, 1962. The Customs Authorities intercepted the vessel 'm.v. Intercity' and recovered contraband goods, leading to the confiscation of the goods and penalties on various individuals, including the appellant. The appellant contended that there was no allegation or evidence against the shipping agent in the show cause notice or case records to justify the penalty. The adjudicating authority's reasoning that the penalty on the owner could be vicariously imposed on the agent was challenged as unsustainable in law and facts.

2. Applicability of Sec. 147 and Sec. 148 of the Customs Act to the shipping agent's liability:
The appellant argued that Sec. 147, dealing with the liability of the agent, would not apply since the shipping agent had no knowledge or involvement in the illegal activities. The Department contended that Sec. 147 (3) and Sec. 148 made the agent liable for the owner's acts. However, the Tribunal found no evidence in the records to connect the appellant with the commission of any offense. The Tribunal noted that Sec. 148, dealing with the liability of the agent appointed by a person in charge of a conveyance, was not applicable. The proceedings being penal in nature required evidence to connect the appellant with the offense, which was absent.

3. Requirement of evidence to connect the shipping agent with the commission of the offense:
The Tribunal emphasized that before imposing a penalty, there must be evidence, either direct or circumstantial, connecting the appellant with the offense. The show cause notice and the order did not allege any knowledge, wilful act, negligence, or default on the part of the appellant. The Tribunal found that the adjudicating authority's reasoning that the agent was liable for the owner's acts was not supported by law. The Tribunal referred to Sec. 147 (3) and its proviso, which protect the agent from liability unless there is a wilful act, negligence, or default. The Tribunal concluded that the impugned order was unsustainable in law and set it aside concerning the appellant.

Separate Judgment by V.P. Gulati, Member (T):
V.P. Gulati, Member (T), provided an additional perspective, noting that the show cause notice did not implicate the steamer agents directly or indirectly in the smuggling activity. The lower authority's order held the agents liable for the owner's acts without specifying the legal provision under which the penalty was imposed. The Tribunal highlighted that Sec. 147 (3) could only be invoked if the agent was expressly or impliedly authorized by the owner concerning the goods. The Tribunal found no evidence that the steamer agents were involved in the smuggling activities or authorized by the owners. The Tribunal concluded that the penalty could not be shifted to the agents without evidence of their involvement and allowed the appeal.