Full Judgment
2. Ld. Counsels S/Shri Mukherjee and Wadwalkar of M/s. Bhat & Saldanha appearing for the applicants submitted that the penalty on applicant Capt. Jens Warner is based on no evidence but on mere inferential findings of the Commissioner that the non-maintenance of verification log relating visitors to the vessel and non-checking of persons boarding the vessel at port was perhaps with a view to conniving at smuggling. The ld. Counsel also relied upon Bombay High Court judgment in the case of Indo Oceanic Shipping Co. v. Addl. Collector of Customs - 1993 (64) E.L.T. 196 wherein the High Court had held that no penalty under Section 112 of Customs Act can be imposed on the master of the vessel for not employing independent watchmen to keep a watch on the activities of crew members on board as a precaution against the vessel being used for smuggling of contraband. The ld. Counsel urged that the ratio of the judgment is applicable to and support this case. It was pleaded that pre-deposit of penalty should be dispensed with.
3. In respect of applicants Carl F. Peters GMBH, it was urged that the Commissioner having found that this applicant, as owner of the vessel, could not be said to have culpable knowledge of the carriage of smuggled gold in the vessel, levy of fine of Rs. 1 crore was unjustified. It was urged that Tribunal should exercise its inherent powers to stay recovery of redemption fine.
4. Shri Gurdeep Singh, ld. Departmental Representative contended that the application of Carl F. Peters for stay of recovery of redemption fine is misconceived as provisions of Section 129E of Customs Act require pre-deposit of duty and penalty as a condition for hearing the appeal and redemption fine is not covered thereunder. The ld. DR pointed out that a total of 400 bars of foreign marked gold has been recovered from the vessel in question and it is in evidence that a carrier in this case, Shri Kaiser Hussain, who was caught with the gold concealed on his person as he came out of the vessel, had been a frequent visitor on board contacting the crew members. Reference was made to the reasoning in the Commissioner's order to urge that the concealment and carriage of gold in the vessel can be attributed to want of diligence to take to precautions on the part of the master of the vessel and hence penalty on him under Section 112 of Customs Act is justified. The ld. DR contended that the present case is factually distinguishable from the Bombay High Court judgment cited by applicants as in that case no contraband had been recovered from the vessel but the case was that crew members had illegally disposed of personnel effects (a charge which they admitted) for which the vessel was confiscated and penalty was imposed on the master of the vessel.
5. We have carefully considered the submissions. In this case the vessel 'Wilma' berthed in Bombay Port on 22-9-1995. The Customs officers apprehended one Kaiser Hussain who had come down from the vessel and who started running away on seeing the officers. The officers recovered 200 bars of foreign marked gold from two cotton belts worn by him weighing about 23 kgs. valued at Rs. 11,26,000/- market value which were seized for action under the Customs Act. In his statement following the seizure Shri Hussain said he had gone abroad the vessel along with labourers, had been introduced to a crew member by one Manubhai and that the crew member had brought the cloth belts containing the gold which he had worn on his person and was thereafter intercepted. Although the ship was thereafter rummaged by the officers, they did not recover any more contraband. The vessel sailed out to the anchorage on 28-9-1995, and the crew while cleaning the deck found two more cloth bags at the place below the framework of the passage between Hatch 1 and 2 of ship and informed officers of the Directorate of Revenue Intelligence who took possession of it and recovered therefrom another 200 bars of foreign marked gold which was seized. The vessel valued at about Rs. 15 crores was also seized under the Customs Act as it had been used for carrying smuggled gold. It was provisionally released on a bond with Bank Guarantee of Rs. 28,15,000/-.
6. David Macaso, a member of the crew and crane operator of the vessel gave a statement saying that it was he who took out the two cloth bags containing the gold from its place of concealment in the ship and these bags were collected by Kaiser Hussain whom he identified. Applicant Jens Warner gave a statement in which he said that David Macaso was among the crew members who had gone ashore while the vessel was at Dubai Port. He said that no verification log was maintained and crew members going ashore and returning were not subjected to arty checks.
7. The proceedings against the applicant and others indicated by issue of show cause notices on 19-3-1996 and 22-3-1996 culminated in the impugned order by which the vessel was confiscated under Section 115(2) of Customs Act as having been used in the transport of smuggled gold, which was also confiscated in the same order. The owners of the vessel were given the option to redeem it on a fine of Rs. 1 crore in lieu of confiscation. Penalty of Rs. 25 lakhs was imposed on applicant Jens Warner.
8. From the above it would prima facie appear that the confiscation of the vessel under Section 115(2) is well-founded as that section lays down inter alia that any conveyance used as a means of transport in the smuggling of any goods shall be liable to confiscation unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner of the conveyance or the person in charge thereof. Here there is evidence indicating prima facie that the one of the crew members had admitted bringing on board foreign marked gold and retrieving it and giving it at Bombay to Kaiswer Hussain and it is also an evidence that from another place of concealment from the framework of the ship more of such gold had been recovered. Thus, this is a case where contraband gold of a substantial quantity had been recovered from places which are accessible or capable of inspection by the master of the vessel and hence, prima facie, it is difficult to accept the plea that the master of the vessel had not thought it-fit to maintain even a cursory check on people and crew on board especially considering that the vessel was touching sensitive ports from the Indian Customs point of view. It is not uncommon for Masters of vessels to take some precautions as is evident from Division Bench, Bombay High Court judgment in the case of Mugul Line v. A.K. Dutt - 1990(45) E.L.T. 382.
9. In the Indo Oceanic Shipping case (supra) there was no recovery of gold from places of concealment in the ship and the High Court found that the Master of the vessel had posted some crewmen on watch duty, but they themselves had indulged in sale of foreign goods. The High Court observed that the Customs cannot insist that independent persons should have been employed to keep a watch on crew's activities.
Therefore, we find substance in ld. DR's argument. In the result, no prima facie case for totally dispensing with pre-deposit of penalty by applicant Capt. Jens Warner has been made out. Therefore, it is directed under Section 129E of Customs Act, the appeal by this applicant be heard on condition of his depositing Rs. 5 lakhs (Rupees Five Lakhs) on or before 31st March, 1997 and on compliance with this direction, the pre-deposit of balance amount of penalty is dispensed with and its recovery stayed pending disposal of the appeal.
10. As regards the applicant M/s. C.F. Peters GMBH, their prayer in the application is for stay of the operation of the impugned order and for the appeal to be heard without prior deposit of redemption fine. We observe that prior deposit of redemption fine is not a requirement at all for hearing the appeal on merits as per Section 129E of Customs Act which requires prior deposit of only duty and penalty. No duty has been demanded in this case from this applicant nor has any penalty been imposed on them by the Commissioner whose findings in this regard are in their favour.
11. The application has been filed, we find, on an apprehension that the department may demand payment of the redemption fine from them as they have demanded the penalty from applicant Jens Warner. But as noted already such stay is not envisaged under Section 129E of Customs Act and, further, in the prima facie view taken of the case as above on confiscability of the vessel, this is not a fit case for exercising inherent powers to stay the recovery of fine, nor has the applicant produced any material by way of any letter to them in this regard by the department to substantiate their apprehension.
12. We further hold that this is not a fit case for staying the operation of the impugned order in the light of the prima facie view we have taken as above of the case. The application filed by M/s. C-F- Peters GMBH is hence dismissed.
13. Normally I do not write any separate order. Due to the peculiar circumstances I write a separate order. When the case was taken up for hearing, I informed the appellants whether they have any objection for me to hear the matter, as I have seen this case earlier as a Joint Secretary and Legal Advisor to the Gevernment of India and as a member of Cofeposa Screening Committee. Shri Mukherjee the ld. Counsel who was arguing the matter did not have any objection therefore I heard the case.
14. The question involved is whether the Tribunal can exercise jurisdiction to deal with application for stay on payment of redemption fine.
15. Section 129E of the Customs Act, deals with the power of the Tribunal to dispense with pre-payment of duty penalty and interest demanded. There is no specific reference to payment of redemption fine so it can be viewed normally that the Tribunal does not have power to stay the demand for payment of redemption fine. In the impugned order the Commissioner of Customs (P) has ordered confiscation of Hiro-honda Motor Cycle under Section 115(ii) of the Customs Act, however, he allowed the owner to remedy on payment of refund of Rs. 10,000/-. He also ordered confiscation of vessel M.V. Wimla, under the said Section 115(2) of the Customs Act, and he gave the owner an option to remedy on payment of Rs. 1.00 crore (Rupees One Crore only).
16. Section 129B of the Customs Act, provides that the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it think fit, confirming, modifying or annulling the decision or order appealed against.
Therefore the Tribunal has the powers to nullify or change the order of the lower authority which is considered by the Tribunal. The Customs, Excise & Gold (Control) Appellate Tribunal has been modelled under provisions of the Customs arid the Central Excise Acts similar to the Income Tax Appellate Tribunal under Income Tax Act. In dealing with the powers of the Tribunal, the Supreme Court in the case of I.T.O. v. M.K.Mohammed Kunhi - 1969 (71) ITR 815 has held that the Tribunal has such powers as are truly incidental and ancillary for doing all such acts or employing all such means as are reasonably necessary to make the grant effective. The Supreme Court in the case of Union of India v. Paras Laminates (P) Ltd. - 1990 (49) E.L.T. 322 has approved the following observation contained in Maxwell on Interpretation of Statutes: "Where act conferees a jurisdiction, if impliedly also grants the powers of doing all such acts, or employing such means, as are essentially necessary to its execution".
In my view the power to grant stay of recovery of redemption of fine is incidental to the power of the Appellate Tribunal to pass such orders on the impugned order as the Tribunal think fit, either to confirm or to modify or annual the decision or order appealed against.
17. Having held in the above manner I am of the view that I whole heartedly agree with the views record in the illustrative and eluminative order recorded by my learned brother.