2023 (1) TMI 513 - HC - Customs

Levy of penalty - liability of the Carrier - short-landing of goods loaded in a conveyance for importation into India - HELD THAT - As per Section 116 of the Customs Act, the person in charge of the conveyance is responsible for short-landing. This has to be read with Section 148, which deals with the liability of an agent appointed by the person in charge of a conveyance. It lays down that where the Act requires anything to be done by the person in charge of a conveyance, it may be done on his behalf by his agent. An agent appointed by the person in charge of a conveyance and any person who represents himself to any officer of customs as an agent of any such person in charge, and is accepted as such by that officer, shall be liable for the fulfillment in respect of the matter in question of all obligations imposed on such person in charge including penalties and confiscations which may be incurred. The Petitioner in response to the show cause notice has taken this defence and had even given the details of the slot agents M/s. Liberty Marines Syndicate Pvt. Ltd., Globe Link W.W. India Pvt. Ltd. and M/s. Schenker India Ltd. These slot agents were directed to remain present for the hearing before the Assistant Commissioner, and the Assistant Commissioner (Customs) had given them the opportunity and heard the slot agents as well. Thereafter, the Commissioner (Customs) passed an order wherein there was no bifurcation of liability though the order was sent to the Petitioner and these three slot agents. It is the Petitioner who took up the challenge to the order, as according to the Petitioner, since the Petitioner is a reputed firm, it did not want the stigma of the order of penalty. The factual aspect as to the role of enquiry thereafter was not undertaken, and by the order in Appeal and the Revisional orders, the Order-in-Original was confirmed. Prima facie there appears to be a practice of holding an enquiry to ascertain whether it is the steamer agent who has filed the IGM should be held liable for the penalty in the case of short-landing or the liability should be fixed on the slot agent. There are no reason on record why this course of action is adopted in this case when the Petitioner has been consistently demanding the same. Thus, the appropriate course of action would be to set aside the impugned order and restore the Revision. The impugned order dated 9 May 2012 passed by the Joint Secretary, Revisional Authority, is quashed and set aside, and the revision filed by the Petitioner is restored to the file.

Issues Involved:
1. Legality of the penalty imposed under Section 116 of the Customs Act, 1962.
2. Liability of the Petitioner as an agent under Section 148 of the Customs Act, 1962.
3. Applicability of guidelines laid down in M/s. Shaw Wallace & Co. Ltd. v/s The Assistant Collector of Customs.
4. Role and liability of slot agents in cases of short-landing.
5. Consistency in the application of penalties by Customs Authorities.

Issue-wise Detailed Analysis:

1. Legality of the penalty imposed under Section 116 of the Customs Act, 1962:
The Petitioner challenged the penalty imposed by the Joint Secretary, Revisional Authority, under Section 116 of the Customs Act, 1962, for the short-landing of goods. The Revisional Authority confirmed the penalty but reduced the amount. The Court noted that Section 116 prescribes a penalty for not accounting for goods loaded for importation into India if the quantity unloaded is short of the quantity to be unloaded and if the deficiency is not accounted for to the satisfaction of the Assistant Commissioner or Deputy Commissioner of Customs.

2. Liability of the Petitioner as an agent under Section 148 of the Customs Act, 1962:
The Petitioner, acting as an agent for foreign ship owners, argued that the penalty should not be imposed on them as they were not responsible for the stuffing of the containers. The Court examined Section 148, which states that an agent appointed by the person in charge of a conveyance is liable for the fulfillment of obligations, including penalties. The Commissioner (Appeals) and Revisional Authority held the Petitioner liable as the agent who submitted the Import General Manifest (IGM).

3. Applicability of guidelines laid down in M/s. Shaw Wallace & Co. Ltd. v/s The Assistant Collector of Customs:
The Petitioner relied on the guidelines from the Shaw Wallace case, which provided that if a container's seals are intact, the vessel owner should not be held responsible for short-landing. The Court acknowledged these guidelines but noted that the Customs Authorities did not properly appreciate them in the present case. The Petitioner argued that they should not be held liable as the containers were received with seals intact and the IGM was based on Bills of Lading issued by slot agents.

4. Role and liability of slot agents in cases of short-landing:
The Petitioner consistently argued that slot agents, who were responsible for the stuffing of containers, should be held liable. The Customs Authorities had heard the slot agents but did not bifurcate the liability. The Court noted that in other cases, the Customs Authorities had held slot agents responsible for short-landing and not just the main line agents who filed the IGM. The Court found no reason why a similar approach was not adopted in this case and directed the Revisional Authority to reconsider the role of slot agents.

5. Consistency in the application of penalties by Customs Authorities:
The Petitioner provided instances where penalties were imposed on slot agents in similar cases. The Court observed that the Customs Authorities had a practice of holding an enquiry to ascertain whether the steamer agent who filed the IGM or the slot agent should be held liable. The Court directed the Revisional Authority to examine the additional affidavit filed by the Petitioner and ensure consistency in the application of penalties.

Conclusion:
The Court set aside the impugned order dated 9 May 2012 passed by the Joint Secretary, Revisional Authority, and restored the revision filed by the Petitioner. The Revisional Authority was directed to reconsider the case in light of the guidelines from Shaw Wallace and the additional affidavit provided by the Petitioner. The decision should be taken within four months, and the amount of Rs. 60 Lakhs deposited by the Petitioner in the Court would be subject to the outcome of the revision. Rule was made absolute with no costs.

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