P.K. MISRAWRIT PETITION NO.374 OF 1998 Marine Container Services (South) Private Limited v. Deputy Commissioner of Customs & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 13-06-2005CORAMTHE HONOURABLE MR. JUSTICE P.K. MISRAWRIT PETITION NO.374 OF 1998 Marine Container Services (South) Private Limited,18, Swami Sivananda Salai, Chennai 600 005... Petitioner Vs.

Deputy Commissioner of Customs, (Manifest Clearance Department) Custom House, Chennai 600 001.

Union of India, rep. by Joint Secretary to Govt., Ministry of Finance, Department of Revenue, New Delhi 110 001... RespondentsPetition filed under Article 226 of the Constitution of India for the issuance of writ of Certiorari calling for records in order No.232/97 dated 18.2.1997 of the 2nd respondent confirming penalty of Rs.2,50,000/- on the petitioner and quash the same. For Petitioner : Mr.T.K. RamkumarFor Respondents: Mr.S. Udayakumar, ACGSC- - -J U D G M E N TThe petitioner has challenged the order dated 18.2.1997passed by the second respondent imposing penalty under the following circumstances :- The petitioner carries on business as a steamer agent for several foreign and Indian ship owners and particularly for M/s.Bengal Tiger Lines, which operates common feeder shipping services between Madras/Singapore and Madras/Colombo. The feeder services are utilised by various shipping lines for transhipping loaded containers from Singapore/Colombo to Madras and from Madras to https://hcservices.ecourts.gov.in/hcservices/ Singapore/Colombo.

The original authority considered two issues, namely, whether there had been any short landing of the goods and whether the liability for short landing was of the petitioner or of M/s.Prabhu Shipping Services Pvt. Ltd., which has filed the cargo declaration. The authority took note of the contention of the petitioner that the Manifest clearly shows that the container hasFCL and the tally sheet indicated that the container had landed with seals intact, and therefore, there is no liability of the petitioner. The original authority, by relying upon Section 116of the Customs Act and another decision of the Commissioner(Appeals), came to the conclusion that as per Section 116 of the Customs Act penalty is leviable on the person in charge of the conveyance and not on any other person and the steamer agent is considered as the person in charge of the conveyance, and therefore, the steamer agent is liable. Accordingly, the original authority imposed penalty of Rs.3,33,080/-. Thereafter, the petitioner filed appeal. The appellate authority modified the penalty amount as Rs.2,50,000/-, but observed that such penalty isto be paid by the present petitioner in view of the provisions contained in Section 116 of the Customs Act. The petitioner filedRevision before Respondent No.2, which has been dismissed under the impugned order.4. The main contention raised by the petitioner is to the effect that since the transhipment was of Full Container Loadand the seals were intact, the steamer agent, namely, the petitioner, cannot be held responsible.

Section 116 of the Customs Act is to the following effect :-

116. Penalty for not accounting for goods If any goods loaded in a conveyance for importation into India, or any goods transhipped under the provisions of this Act or coastal goods carried in aconveyance, are not unloaded at their place of destination in India, or if the quantity unloaded is https://hcservices.ecourts.gov.in/hcservices/ short of the quantity to be unloaded at that destination, and if the failure to unload or the deficiency is not account for to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissionerof Customs, the person-in-charge of the conveyance shall be liable,-(a) in the case of goods loaded in aconveyance for importation into India or goodstranshipped under the provisions of this Act, to apenalty not exceeding twice the amount of duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been imported; (b) in the case of coastal goods, to a penalty not exceeding twice the amount of export duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been exported.

A perusal of the aforesaid provision makes it clear that if the quantity unloaded is short of the quantity to be unloaded at the destination and the deficiency is not accounted for to the satisfaction of the Assistant Collector of Customs, theperson-in-charge of the conveyance shall be liable for the penalty.

In the present case, the revisional authority by considering the fact that transhipment was of FCL / LCL basis, relying upon a Bombay High Court decision reported in 1986 (25)E.L.T.948 (Bombay) (SHAW WALLACE & CO. LTD. v. ASSISTANT COLLECTOROF CUSTOMS & OTHERS), has come to the conclusion that in the present case, the transhipment was not merely FCL, but it wasFCL/LCL and since at the time of unloading of LCL container, seals were intact and such seals were intact even at the time ofdestuffing of the container, the carrier was responsible.

The Bombay High Court decision has laid down the following prepositions in respect of Cargo brought in container :-

(a) Cargo brought in container.F.C.L. Container (Full Container Load)(1) A full container load when unloaded from the vessel and the seals are found intact, then the vessel owner shall not be held responsible for any short landing or be made liable to pay penalty. (2) In case where the seal is found broken, the survey report will be prepared of the contents of such container in the presence of Customs Officer and this survey should be carried out within 72 hours after the https://hcservices.ecourts.gov.in/hcservices/ container is unloaded and seal is found broken. TheCustoms Officer and the Port Trust authorities should ensure that the container is re-sealed after completion of the survey reports of the contents. Any shortage noticed in such survey report will have to be accounted for by the carrier and the liability for such shortage will be solely of the carrier. (b) L.C.L. Container (Less Container Load)(1) At the time of unloading of the L.C.Lcontainer, if the seals are intact and again at the time of de-stuffing the container, the seals are found intact, then the carrier should be responsible to account for the difference between the manifested quantity and the de-stuffing tally. (2) In case, the seals of the L.C.L. containers at the time of unloading are found to be intact, but are broken or tampered with at the time of de-stuffing then the responsibility for difference between the manifested quantity and de-stuffing quantity would be that of the Port Trust authorities and not of the carrier.

In the present case, it appears that the authorities have considered that it was not a clear case where the cargo had been brought in Full Container Load and on the other hand at the time it was unloaded at Madras, it had assumed the character of Less Container Load and since seals were found intact at the time of unloading and at the time of destuffing, the carrier was found responsible. This conclusion is based on certain factual conclusions. In the absence of any apparent error in such factual conclusions, it is difficult to come to a different conclusion while deciding the matter under Article 226 of the Constitution.

It is also important to notice that even though an opportunity of show cause had been given, the present petitioner had not taken any specific stand explaining the matter and it had only forwarded the show cause notice to M/s. Prabhu ShippingServices Pvt. Ltd., merely because, according to the petitioner, explanation was to be given by M/s. Prabhu Shipping Services Pvt. Ltd. Even after the matter was remanded, it was never contended in specific terms that transhipment was on FCL basis throughout and it was never specifically contended that at Singapore the FullContainer Load container was again transhipped through the present petitioner. The original authority as well as the appellate authority and the revisional authority have considered the relevant aspects and have come to a definite conclusion. Thefactual conclusion arrived at by them cannot be said to be perverse warranting any interference. On the basis of such factual conclusion, it is apparent that Section 116 of the Customs https://hcservices.ecourts.gov.in/hcservices/ Act was applicable and imposition of penalty on the petitioner cannot be said to be illegal.

In view of the above discussion, the writ petition is liable to be dismissed. However, the issue as to whether the short fall was on account of the petitioner’s default or on account of the default of M/s. Prabhu Shipping Services Pvt. Ltd.,is a matter between the petitioner and M/s. Prabhu ShippingServices Pvt. Ltd., and it would be open to the petitioner to recover the amount from M/s. Prabhu Shipping Services Pvt. Ltd.,by proceeding in accordance with law.

With the above observation, the writ petition is dismissed. No costs. Sd/Asst. Registrar/true copy/Sub Asst. RegistrardpkTo1. Deputy Commissioner of Customs, (Manifest Clearance Department) Custom House, Chennai 600 001.2. The Joint Secretary to Govt., Union of India, Ministry of Finance, Department of Revenue, New Delhi 110 001.1 cc to Mr.S.Udayakumar, S.C.G.S.C., SR.No. 236791 cc to Mr.T.K. Ramkumar, Advocate, SR. 23738WP.NO.374 OF 1998PV (CO)kk 14.6.05