Collector of Customs and Central Vs. Chowgule Brothers - Court Judgment

Excerpt:
1. the departmental authorities have filed the present application vide section 130(1) of the customs act, 1962, seeking reference to the high court on the questions, formulated by them as the questions of law, arising out of our order no. 25/90 wrb, dated 10-01-1990, in appeal no.c/328/89 bom arising out of order-in-original no. 9/89-addl. collr., dated 30-3-1989 of the additional collector of customs and central excise, panaji, goa.2. there is a delay of 27 days in filing the reference application. due cause for delay is shown and we are satisfied that the delay is not on account of any negligence. delay is accordingly condoned.3. two trawlers registered at panama and chartered by m/s. brs marine ltd., new delhi, who held the permit to fish, issued by the ministry of agriculture, vide permit dated 18-12-1985, had reached the port of marmagoa, on 4-3-1988, and their declared base port was goa. for their entry inwards etc. papers were filed by m/s. chowgule brothers (the respondents in the application). the vessels were then given port clearance for sailing in bellast for high seas on 8-3-1988. after their mandatory call at bombay, the trawlers again called at marmagoa on 6-6-1988 and were granted entry inwards on the basis of authorisation given in favour of the respondents by the masters of the vessels and the vessels were also given port clearance for sailing to the high seas on 10-6-1988. the vessels however did not call back at the base port, and were reported to have gone away with the fishing catch, without payment of cess or without observing the customs formalities subsequently however the charterers filed shipping bill as also the log book and also paid the cess payable. in the shipping bill that the charterers filed, they mentioned the respondents as the steamer agents.for non compliance of the statutory provisions of the customs act, proceedings were initiated against the charterers and masters of the vessels, as also against the respondents, as their steamer agents, for imposition of penalty vide sections 114 and 117 of the customs act, 1962. the plea of the respondents that they had no control over the vessels, and could not have brought the vessel back for mandatory call, was accepted by the adjudicating authority and no personal penalty was imposed on them. the said authority, however, imposed personal penalties of rs. 3.00 lacs on each of the two masters, and ordered recovery thereof from the respondents vide section 148 of the customs act.4. the respondents thereupon approached this tribunal, by way of appeal, and this bench, vide its order as aforementioned, observed that even the adjudicating authority had not held the respondents here, to have themselves contravened the provisions and did not impose any personal penalty on them and held that, there was no undertaking obtained by the customs authorities from these respondents, holding them answerable for any penalty that could be imposed on the masters and that the undertaking filed vide section 42(2)(e) of the act, was only in relation to the provisions of section 116 of the act, and as such, the respondents were not the agents for any purpose other than filing entry inward/outward papers and obtaining port clearances and once the port clearance was issued, without taking any undertaking, from the steamer agents, liability of non action in that regards by the masters of the vessels, could not be passed over to the steamer agents, who had not specifically undertaken this function, and as such, provisions of section 148 of the customs act could not stand attracted, and no recovery could be made from the respondents.5. the department has submitted that following issues of law arise out of the aforesaid order of the tribunal: 2. whether agent's liability ceases once the port clearance is issued to the trawlers to proceed to high seas when it is a fact that the owners/masters are obliged to fulfil certain conditions before they sail to a foreign port with the fish catch. 3. whether agents are liable for payment of the penalty/fine imposed on the masters of trawlers for their acts of omission and commission in terms of sections 147 and 148 of the customs act, as amended? 6. mr. mondal, the ld. sdr, submitted that though all the three questions raised arise from the order, and were questions of law, he would more emphatically press the third question, relating to the scope and ambit of section 147 and section 148 of the customs act. inviting our attention to the letters of authorisation given by the masters of the vessels on 6-6-1988, he stated that the words "to carry out all the formalities regarding the clearance of my vessel" meant and ought to have been read as the final clearance to go back to the foreign country and that till such clearance was given, the respondents continued to remain liable as the agents, and with liability existing, provisions of section 148 would stand attracted. he strenuously urged that the authorisation did not indicate to have been given for a limited or specific purpose, and ought to have been read in broader sense as to mean final clearance, and mis-reading of the said document, gave rise to an issue of law, permitting reference to the high court. he pleaded that the issue called for also interpreting the provisions of section 148 of the customs act.7. shri n.p. jagesha, the ld. adv. for the respondents, however, pleaded that there was no question of law, as the tribunal's finding was based purely on appreciation of the facts.8. when the stress is laid on question no. 3 alone, we would confine our finding basically, on the same. however, when the other two questions are not withdrawn as "not pressed" it becomes necessary to give our findings on those two questions also.9. the first question as to the scope of section 42 of the customs act is ex facie, too vague to be referred to the high court, in reference contemplated under section 130(1) of the customs act, and further there is no finding given by this bench that the vessels were not required to comply with the requirement of the said provisions. when they have been contravened, the penal liability of the wrong doer subsists. this bench having not held anything contrary to that, no question of law in that regards can be said to have arisen.10. the second question has to be read with the third question, as both of them partially overlap. therefore, we cover up the said question, while dealing with the third question raised.11. as per the basic tenets of law, and more particularly the law on agency, the agent is liable for the acts of the principal, provided he is appointed agent for that purpose. agent's liability is co-extensive with that of the principal, provided the liability that accrued fell within the scope and ambit of agents functions. it may also be a debatable point as to whether, the penal liability (which is accepted as quasi criminal liability) of the principal could be attributed and recovered from an agent, but even assuming that by virtue of section 148(2) of the customs act, that could be done, one cannot attribute any liability vide the said provision, to a person, who has not been appointed as an agent in relation to such function or performances by the principal. the submission of mr. mondal, the ld. sdr, that section 148 of the customs act as it stands, makes the agent liable for all or any of the acts of the principal, and further plea that the said provision is incorporated in the statute, specifically for the said purpose, may have a considerable force, but the same has to be circumscribed by the qualification that the person ought to be an agent for that purpose also.12. in the order that this bench has passed, the finding is given that as per the authorisation letters given by the masters of the vessels, the respondents were appointed agents only in relations to the formalities regarding clearance of the vessel and as soon as that function was completed, the agency stood ended. to read the letters of authentication as appointing the respondents as agents till final clearance out of india was given, would be to read something beyond what is written. significantly, even the adjudicating authority has not held the respondents personally liable to any penalty, indicating that they were found to have committed no wrong. reading of section 148(2) shows that the agent too, can be held liable for penalty. even then, when the adjudicating authority chose not to impose any penalty, by holding that it was beyond their powers, it was difficult for the bench to accept that the respondents continued to remain agents.14. what this bench has held is that because the respondents were not the agents for the masters of the vessels, beyond obtaining clearance, they could not be directed to pay penalty imposed, by invoking the provisions of section 148 of the customs act.15. the questions raised for seeking reference to the high court, have a direct nexus to the factual position at issue, and based on appreciation of evidence and reading the documents, where the bench has given a finding of fact that the authorisation in question did not extend beyond obtaining clearance, the issues as formulated, could not be construed to have arisen out of the order. the proposition pleaded may have answers both in affirmative and negative, but each one will depend on the facts and circumstances and when a particular set of facts have weighed with this bench to hold in a way, provisions of section 130(1) of the customs act, cannot be invoked. it is important to note here, that, the department has not contended that the tribunal has committed any error on factual aspects. if it was so alleged, the department could have moved a rectification application, but that is not done.16. for the reasons as stated above, there appears no ground on which reference to the high court, vide section 130(1) of the customs act is called for. the application is therefore rejected.

Judgment:
1. The Departmental authorities have filed the present application vide Section 130(1) of the Customs Act, 1962, seeking reference to the High Court on the questions, formulated by them as the questions of law, arising out of our Order No. 25/90 WRB, dated 10-01-1990, in Appeal No.C/328/89 Bom arising out of Order-in-Original No. 9/89-Addl. Collr., dated 30-3-1989 of the Additional Collector of Customs and Central Excise, Panaji, Goa.

2. There is a delay of 27 days in filing the Reference Application. Due cause for delay is shown and we are satisfied that the delay is not on account of any negligence. Delay is accordingly condoned.

3. Two trawlers registered at Panama and chartered by M/s. BRS Marine Ltd., New Delhi, who held the permit to fish, issued by the Ministry of Agriculture, vide permit dated 18-12-1985, had reached the Port of Marmagoa, on 4-3-1988, and their declared base port was Goa. For their entry Inwards etc. papers were filed by M/s. Chowgule Brothers (the Respondents in the application). The vessels were then given Port Clearance for sailing in Bellast for High Seas on 8-3-1988. After their mandatory call at Bombay, the trawlers again called at Marmagoa on 6-6-1988 and were granted Entry Inwards on the basis of authorisation given in favour of the Respondents by the masters of the vessels and the vessels were also given port clearance for sailing to the High Seas on 10-6-1988. The vessels however did not call back at the Base Port, and were reported to have gone away with the fishing catch, without payment of cess or without observing the customs formalities subsequently however the charterers filed shipping bill as also the log book and also paid the cess payable. In the Shipping Bill that the charterers filed, they mentioned the Respondents as the Steamer Agents.

For non compliance of the statutory provisions of the Customs Act, proceedings were initiated against the charterers and masters of the vessels, as also against the Respondents, as their Steamer Agents, for imposition of penalty vide Sections 114 and 117 of the Customs Act, 1962. The plea of the Respondents that they had no control over the vessels, and could not have brought the vessel back for mandatory call, was accepted by the adjudicating authority and no personal penalty was imposed on them. The said Authority, however, imposed personal penalties of Rs. 3.00 lacs on each of the two masters, and ordered recovery thereof from the Respondents vide Section 148 of the Customs Act.

4. The Respondents thereupon approached this Tribunal, by way of appeal, and this Bench, vide its order as aforementioned, observed that even the adjudicating authority had not held the Respondents here, to have themselves contravened the provisions and did not impose any personal penalty on them and held that, there was no undertaking obtained by the Customs authorities from these Respondents, holding them answerable for any penalty that could be imposed on the masters and that the undertaking filed vide Section 42(2)(e) of the Act, was only in relation to the provisions of Section 116 of the Act, and as such, the Respondents were not the agents for any purpose other than filing Entry Inward/Outward papers and obtaining port clearances and once the port clearance was issued, without taking any undertaking, from the Steamer Agents, liability of non action in that regards by the masters of the vessels, could not be passed over to the Steamer Agents, who had not specifically undertaken this function, and as such, provisions of Section 148 of the Customs Act could not stand attracted, and no recovery could be made from the Respondents.

5. The department has submitted that following issues of law arise out of the aforesaid order of the Tribunal: 2. Whether agent's liability ceases once the port clearance is issued to the trawlers to proceed to high seas when it is a fact that the owners/masters are obliged to fulfil certain conditions before they sail to a foreign port with the fish catch.

3. Whether agents are liable for payment of the penalty/fine imposed on the masters of trawlers for their acts of omission and commission in terms of Sections 147 and 148 of the Customs Act, as amended? 6. Mr. Mondal, the Ld. SDR, submitted that though all the three questions raised arise from the order, and were questions of law, he would more emphatically press the third question, relating to the scope and ambit of Section 147 and Section 148 of the Customs Act. Inviting our attention to the letters of authorisation given by the masters of the vessels on 6-6-1988, he stated that the words "to carry out all the formalities regarding the clearance of my vessel" meant and ought to have been read as the final clearance to go back to the foreign country and that till such clearance was given, the Respondents continued to remain liable as the Agents, and with liability existing, provisions of Section 148 would stand attracted. He strenuously urged that the authorisation did not indicate to have been given for a limited or specific purpose, and ought to have been read in broader sense as to mean final clearance, and mis-reading of the said document, gave rise to an issue of law, permitting reference to the High Court. He pleaded that the issue called for also interpreting the provisions of Section 148 of the Customs Act.

7. Shri N.P. Jagesha, the Ld. Adv. for the Respondents, however, pleaded that there was no question of law, as the Tribunal's finding was based purely on appreciation of the facts.

8. When the stress is laid on question No. 3 alone, we would confine our finding basically, on the same. However, when the other two questions are not withdrawn as "not pressed" it becomes necessary to give our findings on those two questions also.

9. The first question as to the scope of Section 42 of the Customs Act is ex facie, too vague to be referred to the High Court, in reference contemplated under Section 130(1) of the Customs Act, and further there is no finding given by this Bench that the vessels were not required to comply with the requirement of the said provisions. When they have been contravened, the penal liability of the wrong doer subsists. This Bench having not held anything contrary to that, no question of law in that regards can be said to have arisen.

10. The second question has to be read with the third question, as both of them partially overlap. Therefore, we cover up the said question, while dealing with the third question raised.

11. As per the basic tenets of law, and more particularly the law on Agency, the Agent is liable for the acts of the principal, provided he is appointed agent for that purpose. Agent's liability is co-extensive with that of the principal, provided the liability that accrued fell within the scope and ambit of agents functions. It may also be a debatable point as to whether, the penal liability (which is accepted as quasi criminal liability) of the principal could be attributed and recovered from an Agent, but even assuming that by virtue of Section 148(2) of the Customs Act, that could be done, one cannot attribute any liability vide the said provision, to a person, who has not been appointed as an agent in relation to such function or performances by the principal. The submission of Mr. Mondal, the Ld. SDR, that Section 148 of the Customs Act as it stands, makes the agent liable for all or any of the acts of the principal, and further plea that the said provision is incorporated in the statute, specifically for the said purpose, may have a considerable force, but the same has to be circumscribed by the qualification that the person ought to be an Agent for that purpose also.

12. In the order that this Bench has passed, the finding is given that as per the authorisation letters given by the masters of the vessels, the Respondents were appointed Agents only in relations to the formalities regarding clearance of the vessel and as soon as that function was completed, the agency stood ended. To read the letters of authentication as appointing the Respondents as Agents till final clearance out of India was given, would be to read something beyond what is written. Significantly, even the adjudicating authority has not held the Respondents personally liable to any penalty, indicating that they were found to have committed no wrong. Reading of Section 148(2) shows that the Agent too, can be held liable for penalty. Even then, when the adjudicating authority chose not to impose any penalty, by holding that it was beyond their powers, it was difficult for the Bench to accept that the Respondents continued to remain agents.

14. What this Bench has held is that because the Respondents were not the Agents for the Masters of the vessels, beyond obtaining clearance, they could not be directed to pay penalty imposed, by invoking the provisions of Section 148 of the Customs Act.

15. The questions raised for seeking reference to the High Court, have a direct nexus to the factual position at issue, and based on appreciation of evidence and reading the documents, where the Bench has given a finding of fact that the authorisation in question did not extend beyond obtaining clearance, the issues as formulated, could not be construed to have arisen out of the order. The proposition pleaded may have answers both in affirmative and negative, but each one will depend on the facts and circumstances and when a particular set of facts have weighed with this Bench to hold in a way, provisions of Section 130(1) of the Customs Act, cannot be invoked. It is important to note here, that, the department has not contended that the Tribunal has committed any error on factual aspects. If it was so alleged, the department could have moved a rectification application, but that is not done.

16. For the reasons as stated above, there appears no ground on which reference to the High Court, vide Section 130(1) of the Customs Act is called for. The application is therefore rejected.