ORDER
Moheb Ali M., Member (T)
1. These three appeals arise out of the order of the Commissioner of Customs (Preventive), Mumbai.
2. Pradip L. Mehta is a proprietor of M/s. Raj Enterprises. He floats firms in different names and imports Mitsubishi colour film rolls mostly to fool the Japanese supplier who, for some reason, docs not want to sell a lot of his product to the same importer in India. On this occasion, the appellant imported 100,000 of such rolls in the name of Raj Enterprises. The Japanese, according to Mehta, have come to know that the Indian Government imposes a stiff customs duty on colour films and, therefore, decided to reduce their price in such a way that their product sells in India at the same price as it does, say in America and Singapore. Mehta has taken advantage of this pricing policy of the Japanese thrice before. His strategy is simplicity itself. He imports colour films all the way from Japan, warehouses them after their clearance without payment of customs duly, procures an export order from M/s. Jackeys International of Singapore, ships the rolls paying freight and insurance to the Singapore party who then sells them in Singapore at the same price that other sellers who import the rolls directly from Japan do. And the Japs are blissfully unaware of Mehta’s antics. For all his troubles, Raj Enterprises achieves 10% value addition as required under para 128 of the Exim Policy. We arc not concerned with how all this is possible. But stranger things have happened in international trade. The sleuths of the department did not find it necessary to check the basics of Mehta’s version – say the price at which the colour films are imported into Singapore from Japan. So Mehta’s theory that it is possible to import colour films from Japan, warehouse them, export to Singapore and make the whole exercise profitable both to himself and his Singapore customer goes unchecked.
3. Barkat Ali and his gang specialise in emptying colour film rolls of Mitsubishi brand from sealed containers when they are on their way to Nhava Sheva Port from Dronagiri CWC Warehouse. On 30th of June 1997 Mehta’s consignment of film rolls was inching its way towards JNPT from Dronagiri to be shipped to Singapore.
4. Barkat Ali knows all. He waylaid the trailer carrying the container, unloaded the consignment of 100 cartons containing film rolls (100,000 rolls), loaded them into a waiting truck and moved away with his loot.
5. In these matters not everything goes according to plan. The sleuths of Marine & Preventive Wing of Customs Preventive Commissionerate were on the prowl that night. They noticed the truck, asked a few questions, got the whole story out, seized the rolls, the truck, the container, the trailer, arrested the Hamals who did the loading, the drivers etc. Barkat Ali was nowhere in sight. After due process of law, the Commissioner confiscated the film rolls, under Section 111(h) (j) and (o) of the Customs Act, the truck, the trailer, the container under Section 115(1)(d), 115(2) and 118(b), imposed penalties on Raj Enterprises, the exporter, W.W. Shipping Agency, the shipping company who issued the bill of lading for the consignment, GAD Shipping and Transport Co. who earned the container from Drongiri and host of others including Hamals who were involved in the misadventure. He kept the proceedings open on Barkat Ali and his gang with a promise to proceed against them as and when they are apprehended. Neither the police nor the customs could apprehend them so far. But one lives on hope.
6. Only three appeals were filed against the order of the Commissioner – Raj Enterprises, W.W. Shipping Agency and GAD Shipping and Transport Co. The last named did not find it worth the while to pursue the appeal and, therefore, his appeal is dismissed for non-prosecution.
7. We deal with the other two appeals.
8. The learned advocate for Raj Enterprises argued that his client was a victim of the nefarious activities of Barkat Ali. The Commissioner added insult to injury by confiscating his goods and imposing a penalty. Normally, when it is established that imported goods arc stolen or pilfered, duly is not charged on them till they are restored to the owner under Section 13 of the Customs Act; that in the present case the stolen goods are recovered and they should have been ordered to be restored to the owner, Raj Enterprises, instead of confiscating them; that in any case the goods (100 cartons of film rolls) are not liable to confiscation under Section 111(h), (j) and. (o) as ordered by the Commissioner; that his client’s connivance has not come out during the investigation (that appears to be the problem) and therefore no penalty could be imposed; that the goods are meant for export and would have been exported but for the gang of Barkat Ali and their misdeeds.
9. The learned DR. Shri Srivastava, submitted that the goods have been rightly confiscated under Section 111 (o) as they violate the condition under which they were allowed clearance without payment of duty when they were originally imported. He supported the finding of the Commissioner that penalty is leviable under the Customs Act on all the appellants.
10. We have examined the rival contentions. The goods were seized from a truck which was proceeding towards the town and not to Singapore. These goods were non-duty paid and were removed unauthorisedly. They were being removed in violation of the condition under which they were given duty free clearance. We are of the opinion that Section 11(o) has been rightly invoked. The goods render themselves liable to confiscation under any one or mare condition enumerated in Section 111. Section 13 of the Customs Act applies to goods which are with the custodian under Section 45 and, therefore, is inapplicable to the present case. The circumstances, however, are such that one is compelled to take a lenient view and particularly when the Commissioner has given an option to the appellant to re-export the goods. We, therefore, reduce the redemption fine to a nominal figure of Rs. 1,00,000/- (Rupees one lakh only) while holding that the goods in question are liable to confiscation.
11. Penalty is a different kettle of fish. The Commissioner imposes a penalty on Raj Enterprises, observing that Barkat Ali could not have done what he did without the knowledge of the appellant. Indeed Barkat Ali seems to know a little too much about the consignment. One could perhaps surmise that such deep knowledge may have been provided by a person who is undertaking a rather dubious import from Japan and export to Singapore. But then, surmises can’t take the place of proof, it appears. Penalty imposed is set aside.
12. Coming to W.W. Shipping Agency who were the shippers, we observe that the Commissioner has imposed a penalty on them, observing that they had no business to issue a bill of lading even before the goods were put on board which they did. He says that even if it is a practice to issue bills of lading before the goods are put on board, the shipping company should not have followed a wrong practice. The basis for holding that issuing a bill of lading before the goods are put on board the ship is a wrong practice is not known. Secondly, he also says that the shipping stuffed in Dronagiri CFS. As if it is a Phantom’s seat that scares away Barkat Ali from opening the container! The reasons given by the Commissioner to impose penalty, according to us, are not enough to conclude that the shipping company was facilitating smuggling activity undertaken by now infamous Barkat Ali. Penalty imposed on the shipping company is set aside.
13. Before parting with the appeal, we may suggest that it is a good idea to escort such export consignments as these, if for nothing else at least to prevent the exporters from having their goods stolen by Barkat Ali.
14. Appeal of Raj Enterprises is partly allowed by setting aside the penalty and reducing the redemption fine to Rs. 1,00,000/- (Rupees one lakh only). Appeal of W.W. Shipping Agency is allowed. Appeal of GAD Shipping & Transport Co. is dismissed for non-prosecution.
(Operative part pronounced in court)