ORDER
1. The present appeal is directed against the Order-in-appeal No. S/49-11/82-Oil dated the 6th November, 1982 passed by the Collector of Customs (Appeals) Bombay. By this order, the learned Collector (Appeals) has upheld the original order dated 5-6-1982 passed by the Deputy Collector of Customs, Oil Unit, Bombay.
2. The undisputed facts are :
The appellants imported a consignment of Orthoxylene by the vessel “STOLD SPAN”. The Bill of Lading of the consignment was shown as 1049.840 M.T. The quantity discharged as per the shore Storage tank measurement was found to be 1029.784 M.T. Thus, there was a shortage of 20.056 M.T. The appellants were called upon to explain the shortage of 9.558 M.T., after giving without for leaving ocean loss at 196. The appellants submitted their explanation. Subsequently, the Deputy Collector raised the ocean loss from 1% to L.3% and adjudged the unaccounted quantity to be 6.409 M.T. He, therefore, imposed a penalty of Rs. 23,3961-on the appellants under Section 116 of the Customs Act, 1962. (hereinafter called the Act.) Feeling aggrieved by the Order of the Deputy Collector, the appellants preferred an appeal before the Collector (Appeals) unsuccessful.
3. During the hearing Shri Raman, the learned Advocate of the appellant reiterated the contentions raised on the grounds of the appeal. He pointed out that there were two surveys by independent surveyors as to the quantity found in the ship before discharge. The entire quantity so found were let in to the pipeline and nothing remained in the tank of the ship. Shri Raman pointed out at the surveys indicated that there was no shortage if the ocean loss is taken into consideration. The further submission of Shri Raman was that the custom authorities had quantified the loss with reference to the quantity of the oil received in the shore tank. According to him this was not correct. He maintained that the liability of the appellant under Section 116 had to be determined with reference to the quantity found to be by independent surveyors, particularly when there was evidence that the whole of the quantity surveyed had been let in to the pipeline. He contended that the difference in quantity as recorded to be short by the customs could only be due to leakage in the pipeline or must have been due to certain quantity being left in the pipeline. He, therefore, prayed that the penalty may be set aside.
4. Shri Gidwani, the learned Departmental representative contended that it will never be possible to have accurate measurement of the mineral oil in the ship tank when the ship is alongwith. He disputed that there could be any leakage or intermediate loss. He, further, pointed out that the survey report of M/s. 3.B. Boda Marine & General Survey Agencies Pvt. Ltd. disclosed that there was a continuous survey and it started on board this vessel and until completion of discharge. The report also disclosed total quantity of product received in storage tank. If there had been any leakage in the pipe the surveyors could have noticed the same. Similarly, if any quantity was left behind in the pipeline that could have also been taken into account by the surveyors. Shri Gidwani finally contended that the loss has to be determined on the basis of the quantity received in the shore tank and it is only on that basis the loss has been determined and therefore authorities below have not committed any error. He, therefore, prayed for the dismissal of the appeal.
5. We have carefully considered the records of the case and the submissions made by the parties to this appeal. The point for our determination in this appeal is whether the customs authorities are justified in taking the shore tank measurement as the basis for the determination of the shortage. The goods in question is mineral oil. The discharge or unloading of the mineral oil is only through pipelines and the quantity so discharged or unloaded is recieved in the shore tanks. In the survey report of M/s. J.B. Boda Marine & General Survey Agencies Pvt. Ltd., it has been mentioned that the vessel commenced discharging the oil from tank No. 6 wings on 6th November, 1981 at 0850 hours and completed discharge on the same day at 1840 hours. The product was discharged from the ship’s tanks by means of ship’s pumps. The receivers connected a flexible hose to the discharge pipe on board and led the oil into the storage tank through 6″ pipeline. On completion of discharge, the shore pipeline contents were cleared with Nitrogen Gas preceded by a batching pig, pushing the product into storage tank. The report further disclosed that the surveyors have inspected the storage tanks prior to receiving the product and was found empty and clean to receive the product. The report also disclosed that the surveyors gauged the storage tanks on completion of receipt of the product from the ship. The quantity received in the storage tank was calculated on the basis of the calibration table available at the Installation. Shri Raman did not dispute the procedure followed for discharge of mineral oil from the ship’s tank to the storage tank. He also did not dispute the total quantity received in the storage tank as found by the surveyors. In the said circumstances, the contentions urged on behalf of the appellants that the difference in quantity as recorded to be shortage by the customs could only have been due to leakage in the pipeline or that some quantity of oil must have left behind the pipeline cannot be accepted having regard to the procedure followed for emptying the contents of the pipeline. Further, the contention of Shri Raman that the shipping agent cannot be made liable on the basis of the storage tank measurement cannot also be accepted for the following reasons :
When the ship is along, within the Govt. the accurate measurement of the oil in the storage tank cannot be ascertained. This is because, the ship will not be steady and the level of the oil on board the ship will also not be steady. The accurate measurement is not possible can be demonstrated in this case. The surveys of the quantity found in the ship’s tank were held on the same day viz. on 6th November, 1981 by two different survey agencies M/s. J.B. Boda Marine & General Survey Agencies Pvt. Ltd. and M/s. Ericson & Richards (Surveyors) Pvt. Ltd. M/s. Ericson & Richards (Surveyors) Pvt. Ltd. found the difference between the manifested quantity and ship’s calibration table to be 3.992 M.T. whereas M/s. J.B. Boda Marine & General Survey Agencies Pvt. Ltd. found the difference between the Bill of Lading quantity and the total quantity on board of arrival prior to discharge to 6.218 M.T. Secondly, that there is no means of ascertaining the quantity after the oil is let in to pipeline and till it is received in the storage tank. It has been submitted by Shri Gidwani, the learned Departmental representative that storage tank measurement is taken after the goods reached a stage of stability in their level. Shri Gidwani submitted that this has been the procedure followed by several decades. In our view, the only acceptable objective method of finding out the quantity of unloading or discharge in the case of mineral oil is by taking the measurement of the storage tank after the oil in the storage tank reaches the stage of stability. Any other method of determination of the quantum does not seem to be possible. We are in agreement with the view expressed by this Bench in Appeal No. 81 of 1983 (South India Corporation (Agencies) Ltd. v. Collector of Customs, Bombay] wherein this Bench consisting of different Members had held that the system of determining the landed quantities of oil on the basis of dip reports of the storage tank in which the oil is received after discharge from ship is more accurate and the same has to be prevailed in preference to the ullage survey on board the ship.
6. In the above view of the matter we see no merit in the appeal and therefore we dismiss the same.