2013 (11) TMI 1230 - AT - Customs

Import of Shredded Steel Scrap - Consignment found to contain broken goods - Penalty u/s 116 and 112 - Held that - Revenue has not brought out anything on record to show that the shipping line was aware of the mis-declaration regarding the contents of the containers. It is not in dispute that the containers were brought with seals intact. It is also evident that the importer and the shipper agreed that the mis-declaration of cargo happened before the goods were placed on board and not in the custody of shipping line. Against such facts and circumstances this is not a case of short landing but is more appropriately to be considered a case of short shipment. Based on such facts and considering the decisions of the High Courts cited by the Counsel especially that in Shaw Wallace & Co. Ld (1986 (7) TMI 106 - HIGH COURT OF JUDICATURE AT BOMBAY) the impugned order passed against the appellant is not maintainable - Decided in favour of assessee.

Summary

Issues involved:
1. Applicability of penalty under section 116 of the Customs Act on a steamer agent for alleged misdeclaration of goods in containers.
2. Liability of the steamer agent for discrepancies in the contents and weight of containers.
3. Interpretation of clauses in Bills of Lading and their impact on the liability of the carrier.
4. Assessment of the responsibility of the shipping line in cases of misdeclaration of goods.

Analysis:
1. The case involved a steamer agent acting for a shipping company, where certain containers declared as 'Shredded Steel Scrap' were found to contain broken roof tiles instead. The appellant was penalized under section 116 of the Customs Act for not making a true declaration in the import manifest and not accounting for the discrepancies in the goods. The penalty imposed was based on the alleged misdeclaration by the appellant.

2. The appellant argued that modern shipping practices hold steamer agents responsible only for ensuring the seal on containers is intact, not for verifying the contents. They claimed ignorance of the misdeclaration and lack of practice in verifying container weights. The importers acknowledged being cheated by the supplier, suggesting the misdeclaration occurred before the goods were in the custody of the shipping line.

3. The appellant relied on clauses in the Bills of Lading stating that particulars furnished by the shipper are not checked by the carrier, absolving them of liability for discrepancies. They cited legal precedents where carriers were not held responsible for shortages in cargo if containers were delivered with seals intact, emphasizing the importance of the seal's integrity as a carrier's responsibility.

4. The Revenue argued that the significant weight differences in the containers indicated collusion or negligence by the shipping line. They contended that the misdeclaration could not have gone unnoticed, especially when all 150 containers showed substantial discrepancies. The Revenue sought to impose penalties on the appellant due to the alleged involvement of the principal in the fraud.

5. The Tribunal found that there was no evidence to suggest the shipping line was aware of the misdeclaration, as the containers arrived with intact seals. The misdeclaration was deemed to have occurred before the goods were placed on board, absolving the shipping line of responsibility. Relying on legal precedents, including the Shaw Wallace & Co. Ltd. case, the Tribunal concluded that the penalty imposed on the appellant was not justified, leading to the appeal being allowed and the order set aside.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Tribunal's decision based on the arguments presented by both parties.