P.K. Desai, Member (J)
1. Both the appeals filed by the same party have virtually identical facts and common question of law involved and have been argued together, and hence the same are being disposed off by this common order.
2. Appeal No. C/73/87-Bom. is against the Order-in-Original No. 64/Add. Collr./1986, dated 3-9-1986 of the Additional Collector of Customs, Ahmedabad, imposing penalty vide Section 116 of the Customs Act, of Rs. 47,314 on the Appellant, whereas Appeal No. C/74/87-Bom. is against the Order-in-original No. 66/Addl. Collr./1986., dated 3-9-1986 of the same Authority under the same provision imposing penalty of Rs. 38,252/-.
3. The appellants are the shipping Agents for American President Lines Ltd. One Vessel M.V. President Wilson arrived at Bedi Port of Jamnagar with a cargo of Bulgur wheat in bags on 5-1-1984. The manifestated quantity was of 1,30,000 bags but the quantity off loaded/landed was 1,29,185 bags resulting into short landing of 815 bags. The duty liability therefore, was assessed at Rs. 47,314/-. Another vessel President Adams had arrived at the same port on 28-12-1983 with 1,44,000 bags of bulgar wheat, but the quantity landed was 1,43,713 bags resulting into short landing of 287 bags and the duty liability was assessed at Rs. 30,251.10. In both the cases show cause notices were issued against the appellants for imposition of penalty vide Section 116 of the Customs Act. For short landing of bags from M.V. President Wilsons, the appellants pleaded, that the short landing was only of 135 bags which were lost over board at the anchorage during discharge and the said shortage was reflected in their out turn report No. POT/290, dated 4-2-1984. They have pleaded that Bulgar wheat being imported free of duty, provisions of Section 116 would not stand attracted. For short landing from vessel S.S. President Adams, they pleaded that the quantity delivered to the consignee’s clearing agent was more than indicated in the port out turn report No. POI/252, dated 2-1-1984. They also pleaded that as per the independent surveyors only 44 bags were short landed and 77 bags were lost over board.
4. In the adjudication, the plea raised by the appellants were not accepted and the impugned orders were passed.
5. Mr. Gomes, the Ld. Advocate for the appellants has referred to the various documents and has also referred to Bombay High Court’s judgment in Shaw Wallace Ltd. v. Assistant Collector, 1986 (25) E.L.T. 948 (Bom.). He has pleaded that when due explanation is given about the shortage, provisions of Section 116 of the Acts, need not be invoked.
6. Mr. H. Singh, the Ld. JDR has however supported the order and has pleaded that out turn report has to be taken as correct. In his submission no documents now sought to be relied upon, were shown to the Port Authorities or the Customs Authorities, at any stage prior to replying to the Show Cause Notice.
7. Section 116 of the Customs Act, provides for imposing penalty on the party transhipping the goods, for short landing the goods at the destination port, and the object of the penalty seems to be primarily to compensate the Government for the loss of Revenue, though same judicial pronouncements indicate that purpose of such a penalty is also the deter the persons against such a short-landing.
8. The question that arises is what would be the loss of Revenue to the Government. The item imported is “Bulgur Wheat” and the period of import is 1983 and 1984. Entry No. 11.01/07 in the Customs Tariff Act, 1975, indicates that import of wheat would not suffer any Customs Duty. Under the Column “Standard Rate of Duty”, it is mentioned as “FREE”. Vide Notification No. 48-Cus., dated 1-3-1979, the wheat are expressly exempted from levy of Additional Duty. There was also no Excise Duty on wheat during the relevant period, so that any countervailing duty could be levied. In that case, for any import of wheat, no duty, during the relevant period, was chargeable and if no duty is chargeable, there is no loss of Revenue to the Government.
9. Section 116 of the Customs Act, as indicated above, is linked with the loss of Revenue, and if there is no loss of revenue, no penalty could be imposed under that section.
10. Viewing it from different angle, the maximum penalty imposable under Section 116 of the Act is “twice the amount of duty” that would have been chargeable on the goods “not unloaded” and if the duty chargeable would be nil, because no customs duty is leviable, the maximum penalty to be imposed could also be nil.
11. Judgment of Calcutta High Court in Everett (I) Pvt. Ltd. v. Assistant Collector, 1986 (24) E.L.T. 464 (Cal.) though mentions that Section 116 of the Act only invisages imposition of penalty and not payment of duty and as such the same applies to both, dutiable and duty free cargo, but from the facts there, it appears that the question before them was of duty free charge for onward exportation to Nepal, and duty exemption was given under specific Notification issued in that regards, and in Para 18 of the judgment, it is clearly observed:- “Had there been no such notification, Customs and Additional duties would have been leviable thereon on account of their being initially imported into India”. The factual position here is however different from the one there, as here no duty at all is chargeable, notwithstanding any exemption.
12. When the penalty is linked up with the duty imposable, it is also not possible to disect the section into two, as is done by the Calcutta High Court, in the aforesaid case.
13. Under the circumstances, notwithstanding any other aspects, the order cannot be sustained.
14. The authority below has assessed the duty giving some calculations, but has failed to indicate any Tariff heading on which he has calculated 100% duty, 35% Auxilary duty, 15% CVD Basic at 5% Sp. excise. However, with the Customs Tariff Act, indicating the position as mentioned herein above, the calculations made cannot be accepted.
15. When the position is as indicated above, there does not appear any necessity to discuss any other issue. It may however be observed, that the appellants have not come forward with absolutely clean hands and the certificates produced as those for a lost over board produced in Appeal C/74/87-Bom. appear to have been subsequently fabricated. This is evident from (i) Certificate showing the loss of 12 bags allegdly issued on 20-12-1983, bears the dates 20-2-1986 at the bottom (ii) certificates given on 20-12-1983, for loss of 14 bags at 5.45 hours has date erased on the top which read ‘1986’ (iii) Certificates dated 22-12-1983 for loss of 11 bags at 11.45 hours has corrections from 1986 to 1983 at the bottom (iv) certificates for loss 5 bags, at 1930 hours on 22-12-1983 bears the dates “22nd December, 1986″ at the top and correction in the month column at the bottom (v) certificate for loss of 5 bags bears the dated 22-12-1986” both at the top and the bottom. Such a slip of pen in the year 1983 is beyond understanding and only inference could be that these certificates were subsequently fabricated. Further, in appeal No. C/73/87, though the contention initially raised was of no shortage, at the stage of personal hearing, the appellants representative came with the plea that the shortage was on account of excess discharge at Bombay. The contradiction in the plea is apparent. This aspect would have resulted in the dismissal of the appeal.
16. However, with the position as discussed earlier there is no alternative but to allow the appeals. The appeals are allowed. Consequent reliefs to follow.