1. These are four appeals arising out of a common Order-in-Appeal passed by the Appellate Collector. As the basic issues involved in all these cases are said to be the same, these are being heard together.
2. On 16.6.1988 when the cases came up for hearing the appellants' representative, Shri S.K. Biswas contended that these were cases in which the Assistant Collector has penalised them under Section 116 of the Customs Act, for alleged shortlarding of cargo. It was. however, their case that the shortlanding of cargo has not been established in these cases. The Steamer Agent's responsibility begins at the time of loading the cargo and ends with the unloading thereof. In the instant cases, no steamer agent survey was held after the landing of the carga and an ex parte insurance survey was held long after the discharge of the cargo. They were not associated with this survey and they had no idea that the survey had been held. It was their contention that even if the packages were landed in unsound condition that by itself does not show that the contents were short therein, and it is well known that Port Trust staff records BK/RP condition merely on the basis of outward condition of the packages and does not ascertain the contents at the time of landing. Therefore, mere indication of BK/RP condition at the time of tally, taken while unloading the cargo, is by itself not sufficient to show that the contents were short. In other words, such noting is not sufficient to show that the shortage, if any, took place before unloading.
3. It was also their contention that the Port Trust are the approved custodian of the goods in whose custody the goods are landed. It was also their contention that in the instant case the packages contained sensitive cargo in the nature of foreign textiles and therefore, the probability of pilferage after landing cannot be ruled out, particularly when they were stored in the ordinary fashion for long in the Port Trust Transit shed. It was their contention that these goods were part of Nepal Cargo which was in transit through India. The goods had been manifested as Nepal Cargo meant for discharge at Calcutta for onward transmission to Nepal.
4. Such Nepal cargo is duty-free and therefore, under the circumstances, no penalty is imposable under Section 116 which allows penalty upto twice the amount of duty to be imposed only if the Steamer agents are unable to satisfactorily account for the cargo and not otherwise.
5. It was also their contention that similar cases have already been decided by a number of authorities, including the Government of India and the Tribunal (ERB) as well as the Calcutta High Court, and these orders have been cited in their appeal memorandum and copies thereof have been annexed and marked as AnnexuresA, B, C & D. It was their prayer that the ratios of these orders may be applied to the instant cases and their appeal may be accepted.
6. The Learned S.D.R. speaking for the Department, states that the points raised by the Learned representative of the appellants have been the subject matter of consideration by the Hon'ble High Court of Calcutta in a similar case of Everett (India) Ltd. .
7. In these judgments the Hon'ble High Court had held that Section 116 was applicable to the case of Nepal Cargo also, and also observed that even if insurance survey was held long after the discharge, the steamer agents could not escape the liability under Section 116. It is also his contention that in preference to the earlier cases cited by the Learned Representative of the appellants, this case may be relied upon as it is the latest judgment of the Calcutta High Court and squarely covers the issues involved.
8. On 27.7.1988 the matter again came up for hearing. The Learned Representative, Shri Biswas on behalf of the appellants, submitted that as assured by them they have brought with them a photocopy of the order of the Calcutta High Court dated 14.1.1987 by which the Divisional Bench has stayed operation of the Single Member Bench order passed in the case of Everett (I) Pvt. Ltd. by the Appellate Collector of Customs, in the matter No. 1704/81 dated 1.4.1986.
9. They have also brought with them a copy of letter dated 7.7.1988 of the Advocate & Solicitor, Andersons & Morgans, Calcutta informing that the matter it still pending before the Appellate Court.
10. He would also like to draw attention to the order No. 397 to 402/88 dated 9.3.1988 of the Government of India passed in the case of Scindia Steam Navigation in which under similar circumstances Government of India allowed the revision application with consequential benefit.
11. He would also like to draw attention to the CEGAT's Order No.320/Cal-83/1868 dated 10.8.1983 wherein the Tribunal has allowed the appeal of M/s, Everette (f) Pvt. Ltd. in the similar circumstances.
12. The Learned S.D.R. requested for two days' time to check up the Public Notice cited by the Assistant Collector in his order-in-original as the subsequent Public Notice No. 132/73 has been issued in modification of the earlier Public Notice No. 81/71.
13. Further on 29.7.1988 when the cases were taken up for hearing the Learned S.D.R. stated that the perusal of the Public Notice No. 132/73 modifying the earlier Public Notice No. 8 1/71 would show that although the importers/clearing agents have been advised to initiate action soon after the landing of the goods, at the same time it cannot be said that the responsibility of the steamer agents is extinguished or ceases because of these Public Notices. It is his contention that the steamer agents continued to remain responsible for the goods till they were landed and delivery order was issued.
14. The object of Section 116 is to prevent revenue loss as well as to prevent smuggling and the steamer agents cannot be absolved of their responsibility merely because the importers/clearing agents may not have approached them. If such a situation was allowed it is conceivable that in certain cases there could be scope for collusion and if that happened the very purpose of Section 116 would be defeated.
15. The lack of address of the importers or the lack of any other information or action on the part of the appellants/importers does not absolve the steamer agents from their responsibility.
16. Under the circumstances, the Learned S.D.R. submitted that the appeal may be rejected.
17. The Learned representative stated that the steamer agents' liability starts from the point of loading and issue of bill of lading and ceases when the goods are discharged in (he custody of the Port Trust who acts as a Bailee. Furthermore, the steamer agents are required to get the survey conducted if approached by the importers within three days or seven clear working days and if no one approaches them during this normal period, their responsibility is deemed to have been discharged in full. In the instant cases, the Insurance Surveys had taken place long after unloading of the goods and therefore, they could not be held liable for shortages, if any found.
18. They have filed an attested copy of the High Court Order cited by them on the last occasion But they could not produce any copy of the Bill of Lading and Delivery Order as the cases are very old. They may produce them if they are given time for at least 15 (fifteen) days. The cases were accordingly adjourned.
19. On 19.8.1988 when the cases came up for hearing the Learned Representative for the appellants stated that he has since filed copies of bills of lading and copies of correspondence exchanged with the clearing agent vide their letter dated 17.8.19fc8. It was. however, observed that the copies filed are the copies of the non-negotiable copy and do not show the terms and conditions. The Learned Representative agreed to file a photocopy of triplicate copy of the original bill of lading showing standard terms and conditions.
20. He also agreed to produce photocopy of the relevant extracts of the provisions of Indian Carriage of Goods by Sea Act in support of his contention that the responsibility of the steamer agent is over as soon as the goods are unloaded from the Port Trust custody.
21. The learned S.D.R. stated that in the normal course it is expected that the steamer agent's representative would also be present and therefore, in the normal course, they will be aware of the condition in which the goods are unloaded. The tally is actually done in the presence of steamer agent's representative by the Port Trust and the Port Trust also gives them a copy of the tally sheet.
22. So, in any case, they come to know about the condition in which the goods are unloaded both by virtue of their presence and by virtue of tally sheet copy received by them.
23. The Learned Representative for the steamer agents stated that many a time, the Port Trust gives only a part tally sheet and not full tally sheet which may be sent in a piecemeal manner from time to time and normally it takes 4 to 5 days to reach their office.
24. The Learned S.D.R. agreed to check up further on the details of the procedure and make submissions if necessary. The Learned S.D.R. also stated that from the copies of the correspondence produced by the steamer agent it is apparent that the clearing agents, in these cases, had contacted them after the discharge of the goods and therefore, it should have been possible for the steamer agents to contact either the clearing agents of the importers or the importers through them for arranging survey.
25. The Learned Representative for the steamer agent stated that the clearing agent had approached them for amendment of the IGM 20/22 days after the discharge of the goods and for Agent Survey even later than that. Since their request for survey was time-barred, it was not accepted.
26. A question was put to the Learned Representative regarding the authority, if any, to reject such an application as time-barred. He stated that as per the Port practice they normally accept the request if it is within three days. If a request is received after this date, it is time-barred.
27. Finally on 16.9.1988 the cases were heard. Further Shri M.N.Biswas, the Learned S.D.R. for the Department stated that be has since checked up the procedure from the Custom House, Calcutta and he has found that at the time of unloading of the cargo the following remain present: (i) Steamer Agents' Representatives, (ii) Port Trust Representatives, (iii) Customs Representatives; Normally, from the Custom House side, the Preventive Officers supervise the unloading and from the Steamer Agents' side the Chief Officer of the Ship and his staff are there and from the Port Trust side Shed Superintendent and his staff are present and a Tally is taken and in the Tally Sheets the condition in which the packages are unloaded is recorded as for example BD (broken)/RP (repaired)/TR (Trivial) Damaged etc. and on the basis of these Tally Sheets the landing certificates are issued by the Port Trust showing the condition in which the packages are landed (i.e. showing the receipt as qualified or unqualified). Subsequently, the Port Trust also issues the Outturn Report giving a full picture of the cargo which is landed and the cargo which has been short-landed.
28. Under the circumstances, the Steamer Agents cannot absolve themselves of their responsibility merely because the importers/clearing agents had approached them after three days or for that matter seven working days.
29. In this connection, he will also draw attention to Section-6 of Article-Ill of the Indian Carriage of Goods by Sea Act, 1925 (as modified upto 1st September, 1977) which has been referred to by the Learned Representative of the appellants, Under this Section 6, the relevant portion reads as follows: Unless notice of loss of damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or, if the loss or damage be not apparent, within three days such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.
30. Since it is apparent from the above description of the procedure that the Steamer Agents' officers remain present at the time of unloading and taking of tally and the condition of the packages is noted by the Port Trust officials in their presence. Therefore, the facts come to their notice at the time of removal of the goods from their custody into the custody of the Port Trust. Hence, the question of any time-limit whether three days or seven days does not arise even in terms of Section 6 cited by the Learned Representative. Furthermore, Section-116 of the Customs Act, J962 with reference to whtch the case has been made out also does not provide for any time-limit.
...if the failure to unload or the deficiency is not accounted for to the satisfaction of the Assistant Collector of Customs, the person in charge of the conveyance shall be liable.
32. It is, therefore, apparent that the responsibility is on the steamer agents to explain to the satisfaction of the Assistant Collector how the shortage had occurred or loss or damage had taken place. It is noteworthy that Section 116 refers to not only the shortage of packages but also to loss or deficiency and does not cast any burden on the importers or Customs or the Port Trust, but places it squarely on the Steamer Agents. Therefore, the question of absolving the steamer agents of their responsibility on account of delay in approach by importers does not arise.
33. However, in all fairness he would also like to mention that the Assistant Collector had referred to an Old Public Notice No. 81/72 whereas on the date of unloading of cargo Public Notice in force was 132/73. In the earlier Notice i.e. the Public Notice No. 81/72, undoubtedly the resposibility was squarely and entirely placed on steamer agents only. But subsequently, in the amended Public Notice, it was prescribed that the importers/clearing agents were required to approach the steamer agents immediately after landing of the goods.
This Public Notice, however, does not refer to any time-limit as yet whether three days or seven days.
34. The Learned S.D.R. further staled that he had checked from Custom House and found that there is no typographical error in the above Public Notice and it refers to the importers/clearing agents and not to steamer agents.
35. In response to a Court question as to what is the authority under which the Collector of Customs has issued these Public Notices. But both of them appear to have been issued in the context of refund claims filed by the importers in respect of cases in which qualified receipts have been issued.
36. The Learned Representative for the appellants speaking in reply stated that although the procedure prescribed by the Learned S.D.R. is correct and the ships officers are also present at the time of unloading of cargo, the fact is that many a time, the packages are missed in tally and the landing certificates are issued by the Port Trust after three days and the outturn reports are issued after as much as two to three months, whereas from any point of view such landing receipt or reports ought to be issued within a reasonable time of landing of the cargo. But as a matter of fact, they do not come to know at all about shortages in those cases where if Insurance Surveys are conducted or got conducted by the importers/clearing agents in the cases without intimation to them i.e. where they have not been approached at all or where they have been approached only after the prescribed period of three days/seven days and therefore, the right for steamer agents' survey has been rejected as time-barred. He would also like to clarify that prior to the issue of the latest public notice, the normal period of time in which the importers were expected to approach the steamer agents for joint survey, was three days as per the long-established port practice which was in consonance with Section-6 of the Indian Carriage of Goods by Sea Act, 1925 as also the International Parctice as evident from the condition-22 of the Bill of Lading.
37. I have carefully gone through the submission of both the sides including the cases cited by them. This is a case of Nepal Cargo said to have been short-landed at Calcutta Port. The Assistant Collector has held the appellants who are Steamer Agents, liable to penalty for shortianding of cargo under Section 116 of the Customs Act, 1962, 38. Briefly, the appellants have stated inter alia that Section 116 was in applicable to Nepal Cargo which merely consists of goods in transit through India. In any eventuality, no Steamer Agents Survey was conducted in this case and therefore, their liability, if any, for carriage of cargo and landing thereof, stood duly discharged after three days in terms of the conditions of the Bill of Lading read with Section-6 of the Indian Carriage of goods by Sea Act.
39. It was also their contention that the importers/clearing agents were in any case required to approach them, in case of shortlanding, within seven working days, for steamer agents' survey in terms of Customs Public Notice No. 132/73. But the importers had not done so.
Hence, no steamer agents' survey was conducted and in these circumstances, the goods could only be deemed to have been landed and their responsibility deemed to have been discharged after expiry of seven days. Therefore, it was incorrect on the part of the Learned Assistant Collector to impose a penalty on them in respect of alleged shortage, said to have been detected during insurance survey with which they were not associated and with which they were not concerned. They have cited a number of orders of the Government of India and the Tribunal in support of their contention that in such circumstances, they were not liable to penalty as the shortlanding was not proved beyond doubt.
40. Briefly, the Learned Departmental Representatives have on the other hand contended that Section 116 was applicable as the shortage had been detected during the insurance survey before clearance of the goods out of Customs charge and the Port Trust had issued only qualified receipt.
As such, the goods could only be considered as having been short landed.
41. They have cited the case of a Single Bench Judgment of the Calcutta High Court in the case of M/s. Everett India Pvt. Ltd. in support of their contention that Section-116 was applicable and have further pleaded that no time-bar applies as Section 116 does not provide for time-limit. They have further pleaded that merely because the steamer agents survey was not held it could not be said that the steamer agents had no liability.
42. In this connection, I consider that first and foremost it is necessary to examine whether Section 116 has any application to the facts of this case. In this connection, I find that in the Single Bench Judgment of Calcutta High Court in the case of M/s. Everett India Pvt.
Ltd., it has been held by the Hon'ble Single Judge that Section 116 applies to the goods in transit to Nepal also.
43. Although the appellants have shown that this order of the Learned Single Member Judge has been stayed by the Divisional Bench and therefore, it is not binding on the Tribunal at this stage, yet nothing prevents this Bench from taking into consideration inter alia the criteria or aspects which weighed with the Hon'ble Single Judge and to come to its own conclusions with reference to the facts and the law.
44. In this respect, I consider that even in the case of Nepal Cargo, first the goods are imported into India and then only, they are allowed to proceed in transit through Indian Territory to Nepal in terms of Indo-Nepal Treaty. Since initially import takes place into India and the Bill of Lading and other shipping documents also show that the goods were loaded at the foreign port ex-Calcutta i.e. for landing at Calcutta Port, therefore, in so far as the losses during carriage or on board the vessel are concerned, the carrier's liability has to be judged in terms of various provisions of the Customs Act of India and the Jurisdictional Assistant Collector of Indian Customs was competent to determine their liability in terms of Section 116 of the Customs Act, 1967. He could, therefore, call their explanation and impose a penalty if he was not satisfied with the same.
45. Next comes the question as to whether these cases actually involve shortlanding or not.
46. In this connection, I consider that insurance survey shows the condition of the packages and the quantity and condition of the goods found in the packages at the time of survey and at the place of survey.
Therefore, if shortage is noticed during such survey, the Survey Report can be considered only as one of the pieces of evidence showing shortage. It may not, by itself, help us in establishing the liability of the steamer agents. The landing condition certificate on the other hand merely shows the condition in which the package was found after landing thereof and this by itself may not be a sufficient proof of shortlanding of contents of the package (and the quantity thereof) particularly where the landing certificate merely shows the apparent condition of the container. Further, the Insurance Survey report and the Landing Certificate taken together are also merely indicative of a probability. The preponderance of probability could, however, be determined easily if a joint survey is conducted at the time of landing or soon thereafter. As time passes, other factors may intervene.
47. In the circumstances, even though there was no provision regarding imeimit under Section 116 as rightly pointed out by the Ld. S.D.R., some rasonable criteria will have to be adopted. In the absence of any provision in the Customs Act proper we may seek guidance from the sister enactments and internationally accepted documents and/or practices as for example the Carriage by Sea Goods Act, Bills of Lading and established port practices. In this context, the Public Notice issued by the Customs themselves, assumes significance and 1 consider that seven working days constitute a reasonable period of time in most of the cases, in the normal course. It will be, in fact unfair to hold the steamer agents responsible for an indefinite period of time and the Customs are required to honour their own Public Notice. The appellants have also rightly cited a number of orders of the Government of India and the Tribunal in support of their contention. Almost all these orders show that if no steamer agents' survey is conducted within a reasonable period of time and merely an insurance survey is conducted and that too long after discharge of cargo, it could not be said with certainty that the goods were shortlanded and in such circumstances, the steamer agents were in any case entitled to the benefit of doubt.
48. Actually the importance of a joint survey lies in the fact that the interest of all the parties is represented and a shortage found during such survey is generally accepted by all the parties and therefore, the liability can be clearly and easily if not undisputably determined with reference to the report of such a survey. As such, in the instant case, the absence of steamer agents' survey is an important a factor to be kept in view. It may also be mentioned en passant that rejection of request for such a survey by the steamer agents mechanically as time-barred does not seem to be either fair or proper as there can be many reasons due to which the importers may not be able to approach the steamer agents immediately after landing of goods or soon thereafter.
Hence, in the absence of any specific provision regarding time-bar in the Customs Act, the only criteria which can be adopted is that of a reasonable period which may vary from one class of cases to another depending upon the circumstances of each individual case. Such an approach would also eliminate the possibility of avoiding or evading responsibility on a technical plea of time-bar and would enable the Ld.
Assistant Collector to judge that the steamer agents had duly discharged their responsibility in terms of Customs Act, 1962. As a matter of fact, the request for steamer agents' survey by the importers and its acceptance or rejection by the steamer agents was strictly speaking a matter between the importer and the clearing agents and the steamer agents' decision is not binding on Customs. In other words, it is open to the Assistant Collector to consider whether the request for steamer agents' survey was rightly rejected and if he finds that it was not fairly or properly dealt with, it was still open to him to take insurance survey, the Port Trust reports/landing certificate and other relevant material or circumstances into account. It is important to note that Section 116 of Customs Act, 1962 provides for satisfaction of the Assistant Collector and does not tie him down to any procedure as such. In other words, the ambit and scope of this section is very wide and in view of this amplitude, the Assistant Collector was expected to pass orders taking all the relevant factors into account.
49. In the instant cases, the Port Trust had issued qualified receipts but the Steamer Agents' Survey was not held. The Insurance Survey was held ex-parte long after the discharge of cargo. In the circumstances, it is not clear as to exactly en what basis tie Id. Assistant Collector has (concluded that the shortage detected during some occurred prior to the unloading of cargo. In my opinion, the aforesaid documents referred to by the Asstt. Collector are by themselves not suffcient to conclusively prove the shortlanding of the goods in the circumstances of these cases. In any eventuality, the appellants were entitled to the benefit of doubt and therefore, the Ld. Assistant Collector had erred in imposing the penalty.
50. I also observe that the Ld. Appellate Collector has rightly held that Section 116 is applicable in the instant cases in view of the legal position already discussed above. However, he has erred in not examining at any length the point as to whether the shortages could be attributed to the shortlanding of the goods and in confirming the order of penalty.
51. Looking to the totality of the facts and circumstances of the case 1 consider the appellants' liability has not been established beyond doubt. I therefore, extend the benefit of doubt to the appellants and accept the appeals.