ORDER
K. Gopal Hegde, Member (J)
1.All these four appeals arise out of and are directed against Order-in-original bearing No. 53/Collr/ 85 dated 25-10-85 passed by the Collector of Customs (Prev), Gujarat, Ahmedabad.
2. As these appeals arise from a common order and though they involve different legal issues, the facts are identical and therefore they are clubbed together and hence this common order.
3. The facts necessary for the disposal of these appeals are few and simple and they are also undisputed.
4. The appellant, Smt. Aminabai Hasam Paleja was the owner of the vessel ‘Umed Pasa’ bearing registration No. MNV-120. One Shri Dawood Mohad. at the relevant time, was the tindal of the vessel. The vessel was intercepted by the Customs during its voyage from Dubai. At the time of inspection, the vessel was carrying a consignment of wet dates. The rummaging of the vessel was done at Mandvi. 1258 wrist watches, 294 watch straps totally valued at Rs. 2,79,260/- were recovered from a specially built secret cavity. On further rummaging, goods of foreign origin, such as T.Vs, V.C.Rs, Cassettes, fabrics, ladies umbrellas, foreign currency etc. totally valued at Rs. 1,18,163.10 were found out. The value of the wet dates carried in the vessel was Rs. 6,58,640/-. Further rummaging of the vessel resulted in the recovery of gold of foreign origin valued at Rs. 4,94,400/- found concealed below the engine foundation. The rummaging was also done on 21-2-85 and during this rummaging some more gold valued at Rs. 2,30,000/- was recovered.
5. Further investigation revealed that the vessel had left Bombay for Dubai on 18-1-85 with a consignment of onion. On 5-2-85 when the date cargo was being loaded at Dubai oen Haji Sattar met the tindel and delivered wrist watches as well as contraband gold to the tindel which were to be delivered at Bombay after the consignment of wet dates have been unloaded at Jamnagar.
6. The contraband goods, the dates as well as the vessel were seized. After completion of the investigation, show cause notices were issued to all the appellants herein and others as to why the seized goods should not be confiscated and why penalty should not be levied. None of the appellants nor the crew members laid claim to the contraband goods. The appellants in appeal No. 79 and 80/86 claimed ownership of dates. They contended that they imported the goods during their legitimate business activities. They are in no way concerned with the smuggling of the contraband goods seized from the vessel. The consignment of wet dates were provisionally released after obtaining security deposit of Rs. 25,000/-from each of the owners and after obtaining bond for a sum of Rs. 1,75,000/-.
7. The Collector of Customs (Preventive), Ahmedabad held the enquiry. We ordered absolute confiscation of the vessel under Section 115(2) of the Customs Act and held that the vessel was also liable for confiscation under Section 72 of the Gold (Control) Act. He also ordered confiscation of all the contraband goods. He, further, ordered confiscation of the wet dates under Section 119 of the Customs Act. But then since the dates were earlier released, he directed that the security deposit shall be adjusted As stated earlier, feeling aggrieved by the order of confiscation of dates and adjustment of the security deposit, the owners of the dates filed two appeals 79 & 80 of 86. Feeling aggrieved by the order of absolute confiscation of the vessel, the owner of the vessel filed the appeal 81 of 86.
8. The appellant, State Bank of Saurashtra challenged the order of confiscation of the vessel on the ground that it destroyed their security namely that they had advanced certain money to the owner of the vessel and a sum of Rs. 59,477.80 with further interest from 1-1-86 at 15.1 are yet to be realised.
Re : Appeals 79/86 and 80/86.
The appellants in these two appeals did not appear for the hearing. They had, however, addressed letters which are identically worded requiring the Tribunal to dispose of their appeals on merits on the available material. In the grounds of the appeal, they had urged that they are the regular and established importers of wet dates. The consignment of wet dates ordered to be confiscated was imported by them. The vessel in question was not engaged by them. The foreign supplier had sent the dates in the vessel in question. The appellants had no hand in the smuggling activities of the crew and they are totally unaware ‘of the smuggling activities. Therefore, the Collector was not at all justified in ordering confiscation of the wet dates.
9. Shri Pattekar, appearing for the Collector, however, contended that the wet dates found in the vessel were used for concealing the contraband goods and therefore they became liable to confiscation under Section 119 of the Customs Act and as such the order of the Collector is correct in law and on facts.
10. The short question that arises for our consideration in these two appeals is whether the Collector was unjustified in ordering confiscation of the dates.
11. The Collector passed the order of confiscation of the dates under Section 119 of the Customs Act. The said Section authorises confiscation of goods used for concealing smuggled goods. It is, therefore, necessary for the Collector to record a finding that the dates were used for concealing the smuggled goods. In para 11 of his order, the Collector had stated :
“As regards the consignments of dates it is seen that the vessel has been used in the smuggling of contraband goods by loading consignment of wet dates. A number of secret cavities had been prepared in the vessel and contraband goods had been concealed in these cavities and also under the consignments of wet dates. Therefore, I hold that the consignment of wet dates are liable to confiscation under Section 119 of the Customs Act, 1962, as amended.”
In his order, the Collector did not state which contraband goods were kept underneath the consignments of wet dates. The manner of concealment is also not indicated. The finding of the Collector that the consignment of wet dates were used for concealing contraband goods is not only no based on evidence but it is opposed to the evidence on record. The vessel was intercepted on 10-2-85. It was brought to Mandvi. The Collector’s order did not indicate when it was rummaged on first time. The rummaging resulted in the recovery of wrist watches and watch strap. Further rummaging was done. The Collector’s order did not indicate when this rummaging was done. This resulted in the recovery of goods of foreign origin such as, T.Vs, V.C.Rs, Cassettes, fabrics, ladies umbrella, foreign currency etc. The order of the Collector does not indicate how these goods were packed and in which part of the ship they were found. In short, the Collector does not refer to the panchnama prepared at the time of seizure. The vessel was further rummaged on two more days. Then certain contraband gold was recovered. The order of the Collector discloses that watches, watch straps and gold were recovered from the secret cavities. Therefore, the consignment of wet dates would not have been used for concealing the said contraband goods. As stated earlier, the Collector’s order does not indicate from which part of the vessel, the T.Vs, V.C.Rs, Cassettes, fabrics and umbrellas, foreign currencies were recovered. Simply stating that certain contraband goods were concealed under the consignment of wet dates would not be sufficient to order confiscation. One cannot expect the persons engaged in smuggling to exhibit the contraband goods on the top of the legitimate cargo. If the illegitimate cargo were found at the bottom and if legitimate cargo were found over them, no inference of concealment can be drawn. Significantly, the Collector lost sight of an important factor, namely, that Haji Sattar who loaded the contraband goods had instructed to the Tindel to deliver the contraband goods at Bombay after the consignment of wet dates have been unloaded at Jamnagar. So if wet dates were to be unloaded at Jamnagar then it cannot be said that the wet dates were used for concealing contraband goods. Even at the initial stage, there was no intention to conceal the contraband goods underneath the wet dates. The evidence is highly insufficient and inconclusive to come to a conclusion that the legitimate goods, namely, wet dates were used for concealing smuggled goods. We, therefore set aside the confiscation of the wet dates. We direct that the security amounts adjusted towards the fine in lieu of confiscation shall be refunded to the two appellants. Re : 81 of 86. The only contention urged in this appeal by Shri B.M. Parikh was that the order of absolute confiscation of the vessel passed by the Collector is illegal, .and unsustainable in law. Shri Parikh rightly did not contend that the vessel in question was not liable to confiscation under Section 115(2) or under Section 72 of the Gold (Control) Act. He only contended that since the vessel was used for the carriage of goods for hire an option should have been given to the owner to redeem the vessel on payment of fine in lieu of Confiscation as provided in the proviso to Sub-section (2) of Section 115. In support of his contention that it was a vessel for the use of carriage of goods for hire, Shri Parikh submitted that the vessel had carried onion to Dubai and had brought dates on its return journey and the said goods were carried for hire. Shri Parikh further submitted that the owner of the vessel is an old woman. She entirely depends on the vessel for her livelihood. The value of the vessel was not, as stated by the Collector and it had been valued by the Marine Surveyors at Rs. 2,50,000/- during September, 1981 and the vessel was insured for the said amount on 25-10-82 and in the said circumstances the value at the time of seizure would be not more than Rs. 2,50,000/-. Shri Parikh pleaded that there may be a direction to release the vessel on payment of reasonable fine.
12. Shri Pattekar for the respondent Collector, however, contended that the vessel was used for smuggling activities and therefore, the Collector was justified in ordering absolute confiscation.
13. Having regard to the rival contentions, the points that arise for consideration are :
(1) Whether the order of absolute confiscation of the vessel is not lawful, and
(2) What, if any, is the fine to be paid in lieu of confiscation.
14. Section 115 provides for confiscation of conveyances. The confisca-tion in this case was ordered by the Collector under Section 115(2). The said Section provides that any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person-in-charge of the conveyance or animal and that each of them had taken all such precautions against such use as are for the time being specified in the rules.
The Proviso to this Sub-section reads :
“Provided that where any such conveyance is used for the carriage of goods or passengers for hire, the owner of any conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine not exceeding the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be -“.
15. It is thus seen that even though Sub-section (2) authorises confiscation of a conveyance used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods the proviso to that Sub-section requires giving of an option to pay in lieu of confiscation a fine not exceeding the market price of the goods which are sought to be smuggled or the smuggled goods if the conveyance is used for the carriage of the goods or passenger for hire. The vessel in question was registered at Mandvi-Kutch Port. It was a sailing vessel. The evidence disclosed that it carried onions to Dubai and on its return journey it carried dates on hire. Therefore, it could be safely concluded that it was a vessel used in the carriage of goods for hire. Therefore, the Collector committed an error in ordering absolute confiscation. In his order, the Collector observed :
“I find, while the vessel had carried wet dates, the vessel had a number of secret cavities and these secret cavities had been used by the tindel and other crew members for smuggling. The tindel was a close relation of the owner and had actively helped the owner to obtain a loan from the bank. Therefore, I do not find any valid reason on the basis of the facts relating to the seizure of contraband goods to consider this as a fit case, where an option could be extended to the owner to pay in lieu of confiscation, since the proviso clause stipulates that the option is to be given only, when a conveyance is used in the carriage of goods for hire. In this case the conveyance, though used for carriage of goods for hire, was so used, in order to conceal the contraband goods. In other words, commercial cargo was carried by the tindel of the vessel to conceal and camouflage the smuggling of the contraband goods”.
The Collector did not order confiscation under Section 115(1) which authorises confiscation or a vessel which was constructed, adapted, altered or fitted in any manner for the purpose of concealing goods. The order of confiscation was under Section 115(2). The Collector’s finding that the consignment of dates were used for concealing the contraband goods was not accepted by us. Even if the consignment was used for concealing the contraband goods, the Collector, in law, cannot refuse to give an option when he is satisfied that the vessel was used for the carriage of goods for hire. Just because the vessel carried goods for hire and also carried some illegitimate cargo, the Collector cannot refuse to grant the option. Having regard to the finding of the Collector that the vessel was used for carriage of commercial cargo and was for hire, the Collector ought to have granted an option to the owner on payment of fine in lieu of confiscation. We, therefore, hold that the absolute confiscation of the vessel, in the circumstances of the case, was illegal.
(2) In his order, the Collector had mentioned the value of the vessel at Rs. 7,13,200/-. The basis for this valuation is not forthcoming in the order. The appellant had produced the Marine Surveyor’s report as well as the insurance cover note. The Marine Surveyors have valued the vessel with its accessories and engine at Rs. 2,50,000/- in the year 1981. The insurance cover note indicates that the vessel was insured for Rs. 2,00,000/-during October, 1982. The authenticity of these documents has not been questioned. The fine in lieu of confiscation should not normally exceed the market value of the vessel. If it exceeds the market value, one cannot expect the owner to exercise the option. Right conferred under the statute becomes illusory if the fine in lieu of confiscation were to exceed the market value. In the absence of precise evidence as to the market value of the vessel on the date of confiscation, we take the value determined by the independent surveyors, namely, Marine Surveyors and direct that the vessel be released to the appellant on payment of fine of Rs. 2,50,000/-(Rupees two. lakhs, fifty thousand only) in lieu of confiscation. The appellant shall exercise this option within a period of two months from the date of communication of this order.
CD(BOM)-124/86.
16. During the hearing of this appeal, Shri Rawal made it very clear that he is not questioning either the order of confiscation of the vessel or the confiscation of the goods. He only Submitted that the bank had advanced certain amounts and the vessel was hypothecated to the bank. And therefore, the bank’s interest should be safeguarded. Shri Rawal further submitted that there should be a direction to the Collector of Customs to discharge the loan amount due to the bank in the event of the vessel being sold. Shri Rawal submitted as a result of order of confiscation, the vessel vests in the Central Government but then it does not vest free from all encumberances and therefore the equity of the bank would subsist and the bank is entitled to enforce its lein. In that connection, Shri Rawal relied an the decision of the Supreme Court reported in (1971) 41 Company case page 591. He further relied upon another decision of the Supreme Court AIR 1957 page 1. After hearing Shri Rawal we did not call upon Shri Pattekar to address his arguments.
17. The only order which is before us is the order of the Collector by which he ordered the confiscation of the vessel absolutely. Shri Rawal has not challenged the said order. His contention is that the bank had advanced certain loan to the owner of the vessel and certain amount is still outstanding and that the bank is entitled to realise the said loan amount. Just because the bank had advanced certain amount to the owner of the vessel, the bank cannot be heard to say that the vessel should not be confiscated if the vessel became liable to confiscation under law. Under Section 126 of the Customs Act the goods confiscated under the Act vests in the Central Government. After the order of confiscation, the Collector becomes functus officio. The claim, if any of the bank, could be only against the Central Government in which the confiscated goods vests. If the appellant bank is entitled to enforce its mortgage it can either file a civil suit or approach the Central Government and it cannot approach the Tribunal for issue of any direction to the Collector or to the Central Government. This appeal is therefore misconceived. We, therefore reject the same.
18. In the result, we allow the appeals CD(BOM) 79 of 86, and 80 of 86, and penalty allow appeal 81/86.
19. The order of confiscation of wet dates is set aside. The security amounts adjusted towards fine in lieu of confiscation shall be refunded to the appellants in the said two appeals.
20. The order of absolute confiscation of the vessel is set aside. The owner of the vessel is given an option to pay a fine of Rs. 2,50,000/-in lieu of confiscation. The owner shall exercise the option within a period of two months from the date of communication of this order.
21. The appeal No. 124/86 is rejected.