Case: Union of India and Another Vs. Mustafa and Najibai Trading Company and Others

hearing if any judicial order is passed in respect of the cargo belonging to Respondent 3 and other persons. The replies that were filed on behalf of Respondent 1 before the Collector in response to the show-cause notice do not, however, support the said averment. Nor is there anything in the order passed by the Collector to show that any such contention was advanced before him. The judgment of the Tribunal also does not indicate that any such plea was raised. The said contention appears to have been raised for the first time before the High Court. Moreover, under the show-cause notices the seized goods were proposed to be confiscated under Sections 111(d) and 111(f) of the Act. The owners of the vessel, MANSCO-3, the Master of the said vessel and the local agents of the owners of the vessel at Bombay were the best persons who could offer an explanation and show that there was no contravention which could justify the confiscation of goods under Sections 111(d) and 111(f) of the Act. Since the owners of the goods were not present on the scene and had no personal knowledge, they could not offer an explanation other than that offered by the owners of the vessel, the Master of the vessel and the local agents of the owners of the vessel at Bombay. In the circumstances, it cannot be said that the failure to issue a notice under Section 124 to the owners of the goods has resulted in any prejudice to the owners of the goods that have been ordered to be confiscated and such failure cannot, therefore, be a ground for setting aside the order of confiscation of goods passed under Sections 111(d) and 111(f) of the Act. We are, therefore, unable to uphold the impugned judgment of the High Court setting aside the order for confiscation of the goods passed under Sections 111(d) and 111(f) of the Act 37. The order of confiscation of the vessel MANSCO-3 was passed under Section 115(2) of the Act. At the relevant time, Section 115 provided as under 115. Confiscation of conveyances. - (1) The following conveyances shall be liable to confiscation - (a) any vessel which is or has been within the Indian Customs waters, any aircraft which is or has been in India, or any vehicle which is or has been in a customs area, while constructed, adapted, altered or fitted in any manner for the purpose of concealing goods; (b) any conveyance from which the whole or any part of the goods is thrown overboard, stayed or destroyed so as to prevent seizure by an officer of customs; (c) any conveyance which having been required to stop or land under Section 106 fails to do so, except for good and sufficient cause; (d) any conveyance from which any warehoused goods cleared for exportation, or any other goods cleared for exportation under a claim for drawback, are unloaded, without the permission of the proper officer; (e) any conveyance carrying imported goods which has entered India and is afterwards found with the whole or substantial portion of such goods missing, unless the master of the vessel or aircraft is able to account for the loss of, or deficiency in, the goods (2) 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 a 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 rulesProvided 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 Explanation. - In this section, market price means market price at the date when the goods are seized. 38. The consideration which weighed with the High Court to set aside the order regarding the confiscation of the goods also weighed with it for setting aside the order for confiscation of the vessel under Section 115(2) of the Act inasmuch as the High Court has found that there was no fraudulent intention on the part of the owners of the vessel in directing the vessel to proceed to Bombay from Karachi to lift additional cargo and the purpose for which the vessel, MANSCO-3, was directed to proceed to Bombay was to lift the said additional cargo and also to have the radar and VHF equipment repaired. We have already considered the said aspect of the case while dealing with the matter of confiscation of the goods and have held that the said finding of the High Court cannot be upheld. The High Court has set aside the confiscation of the vessel also on the ground that no notice was issued to the owners of the vessel under Section 124 of the Act. In this regard, it may be stated that the show-cause notice dated 31-12-1983, indicates that the said notice was issued to Mustafa Najibai, Respondent 2, on behalf of Respondent 1, the owners of the vessel, as well as to Abdul Rahim Khatri, the Master of the vessel and the Promoter and the two Directors of M/s. Regent Shipping and Trade Pvt. Ltd., the agents of the owners of the vessel at Bombay. Respondent 1, the owners of the vessel, had full knowledge of the said show-cause notice because a reply to the said notice was filed on their behalf as well as on behalf of Respondent 2 and they had contested the proceedings before the Collector.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. The Collector held that the seized goods had been imported into India without an import licence and hence, in contravention of the prohibition imposed under Section 3 of the Imports and Exports (Control) Act, 1947 and clause 3 of the Imports (Control) Order, 1955 and were, therefore, liable to confiscation under Section 111(d) of the Act and that the goods were also liable to be confiscated under Section 111(f) of the Act because there was failure on the part of the Master of the vessel MANSCO-3 and the agents of the owners of the vessel at Bombay to file the Import General Manifest as required under Section 30 read with the Import Manifest Regulations within 24 hours of the arrival of the vessel in the Port of Bombay. The submission of the respondents that the goods were not meant for being unloaded in India and being same bottom cargo, they were covered by clause 11(e) of the Import (Control) Order and no import licence was required for bringing them in this country, was rejected by the Collector on the ground that under the Import Manifest Regulations, same bottom cargo or retention cargo carried on a vessel has to be listed on a separate sheet in the Import Manifest which has to be delivered in the manner laid down in Section 30 of the Act within 24 hours of the arrival of the vessel in any customs port in India and that no Import Manifest indicating the goods as same bottom cargo was delivered under Section 30 of the Act. In the absence of an Import Manifest listing the goods as same bottom cargo, the said goods, which had crossed the territorial waters of India, had to be treated as having been imported into India in view of the definition of import contained in Section 2(23) of the Act and, therefore, they were liable to be confiscated under Section 111(d) of the Act since there was no import licence authorising their import20. Shri Usgaocar has assailed the said view of the High Court and has urged that in interfering with the findings of fact recorded by the Collector as well as the Tribunal, the High Court has exceeded the jurisdiction vested in it under Articles 226 and 227 of the Constitution inasmuch as the findings recorded by the Collector and the Tribunal do not suffer from any infirmity which could justify interference by the High Court.The said contention, in our opinion, must be accepted21. While exercising its jurisdiction under Articles 226 and 227 of the Constitution, it is not open to the High Court to reappreciate the evidence produced before the subordinate tribunal and on the basis of such reappreciation of the evidence, to arrive at a finding different from that recorded by such tribunal. The finding of fact recorded by the subordinate tribunal can be interfered with by the High Court only if it is found to be based on no evidence or if such a finding can be regarded as perverse. The High Court cannot convert itself into a court of appeal.23. There is nothing to corroborate the statement of Mohammed Yousuf on which reliance has been placed by the High Court. On the other hand, the said statement about Mohammed Yousuf having promised to arrange for the cargo at Bombay does not find support from the telex received at the office of the agents at Bombay on 16-8-1983 from Dubai and it is belied by the fact that no cargo was available at the Bombay Port for loading on the vessel when it arrived at Bombay24. Similarly, as regards repair of radar and VHF equipment, the Collector and the Tribunal have found that the radar was not functioning when the vessel left Dubai and that it had been repaired at Karachi and that the VHF equipment was working till the vessel reached about 100 to 150 nautical miles from Bombay Port which shows that repair of radar and VHF equipment could not be the reason for the vessel MANSCO-3 proceeding to Bombay from Karachi. The High Court, while accepting the explanation that one of the reasons for the vessel to proceed to Bombay was to have the radar and VHF equipment repaired at Bombay, has laid stress on the fact that at the time when the vessel reached Bombay, VHF equipment was not working and that two mechanics were taken to the vessel for repairing of radar and VHF equipment. The fact that the radar and VHF equipment had to be repaired at Bombay does not, however, mean that they were not functioning when the vessel left Karachi and it cannot be said that the vessel had to proceed to Bombay for repair of radar and VHF equipment25. A perusal of the impugned judgment of the High Court shows that while dealing with the writ petition, the High Court embarked upon reappreciation of the evidence and has dealt with the matter as if it was hearing an appeal on facts. Such a course, as indicated earlier, was not permissible. The Collector and the Tribunal, after carefully considering the evidence produced during the course of the proceedings, had concurrently arrived at the finding that the vessel MANSCO-3 had not come to Bombay from Karachi for a bona fide purpose and that the explanation offered for the vessel proceeding to Bombay from Karachi could not be accepted. The said finding cannot be regarded as unreasonable or perverse. We are, therefore, unable to uphold the decision of the High Court in reversing the said finding of fact recorded by the Collector and the Tribunal26. Moreover, bona fides of the owners or the Master of the vessel have a bearing only on the applicability of sub-section (3) of Section 30 which enables the proper officer to permit the Import Manifest or Import Report to be amended or supplemented if he is satisfied that the said Import Manifest or Import Report is in any way incorrect or incomplete and there is no fraudulent intention. In the present case, the question of applicability of subsection (3) of Section 30 does not arise because no Import Manifest was delivered by the Master of the vessel at any time. The intention of the owners or Master of the vessel has no bearing on the exercise of the power of confiscation of goods under Section 111 of the Act because, as laid down by this Court, confiscation of goods is an action in rem directed against the goods in respect of which the contravention rendering them liable to be confiscated has taken place. (See : Sewpujanrai Indrasanarai Ltd. v. Collector of Customs SCR at p. 838 and Collector of Customs v. D. Bhoormall. In the matter of confiscation of goods under Section 111(d) of the Act intention has, therefore, no bearing. What is required to be seen is whether the goods had been imported or attempted to be imported or brought within the Indian Customs water for the purpose of being imported contrary to any prohibition imposed by or under the Act or any other law for the time being in force. If it is found that any goods have been imported or attempted to be imported or brought within the Indian Customs water for the purpose of being imported contrary to any prohibition imposed by or under the Act or any other law for the time being in force, the said goods would be liable to confiscation under Section 111(d) and the question whether the person importing or bringing the said goods intended to commit violation of the provisions of the Act or any other law for the time being in force would be of no consequence. Similarly, clause (f) of Section 111 provides for confiscation of any dutiable or prohibited goods which are required to be mentioned under the regulations in any Import Manifest or Import Report and which are not so mentioned therein. In the matter of confiscation of goods under Section 111(f), what is required to be seen is whether the goods are dutiable or prohibited goods and are required to be mentioned in the Import Manifest or Import Report under the regulations made under the Act and whether they are mentioned in the Import Manifest/Import Report. If it is found that the goods are dutiable or prohibited goods and are required to be mentioned under the regulations made under the Act in the Import Manifest/Import Report but have not been so mentioned, the goods would be liable to be confiscated and the intention of the defaulter would have no bearing on the exercise of power to confiscate the goods. Since mens rea is not essential for invoking the power of confiscation of the goods under Section 111 of the Act, the intention of the Master of the vessel or the owners of the vessel and the circumstances under which the vessel containing the goods came to Bombay has no bearing on the exercise of the power of confiscation of goods under Sections 111(d) and 111(f) and all that has to be seen is whether the conditions prescribed under the said provisions were fulfilled so as to justify the confiscation of the goods27. As regards the non-filing of the Import General Manifest either by the Captain of the vessel or the agents of the owners of the vessel at Bombay, the High Court has held that the manifest is required to be filed within twenty-four hours after the arrival of the vessel at a customs station and that time for filing the said manifest would have started running only after the Bombay Port Trust charges had been paid and the said cargo charges were paid on 23-8-1983. According to the High Court, the Customs Officials boarded the vessel on the morning of 24-8-1983 at about 9/10 a.m. and seized the goods immediately thereafter mainly on the ground that no Import General Manifest had been filed by that time. According to the High Court, the period of twenty-four hours had not expired and there was still time to file the Import General Manifest. We find it difficult to agree with the said view of the High Court. Under Section 30(1), an Import Manifest has to be delivered within twenty-four hours after the arrival of the conveyance at a customs station. The expression customs station is defined in Section 2(13) to mean any customs port, customs airport or land customs station. The expression customs port is defined in Section 2(12) to mean any port appointed under clause (a) of Section 7 to be a customs port; and includes a place appointed under clause (aa) of that section to be an inland container depot. In the present case, the vessel MANSCO-3 had arrived at the outer anchorage of the Bombay Port on 20-8-1983. The outer anchorage is a part of the Bombay Port. This would show that the vessel MANSCO-3 had arrived at the customs port of Bombay on 20-8-1983. In view of Section 30(1) of the Act, the Import General Manifest should have been delivered within twenty-four hours of the arrival of the vessel at the outer anchorage on 20-8-1983. The High Court was in error in holding that the vessel would be treated to have arrived at the customs port of Bombay on 23-8-1983 after the Bombay Port Trust charges had been paid and the signal had been given for the vessel to be brought into the inner anchorage on or after 23-8-1983. Proviso (b) to sub-section (1) of Section 30, which empowers the proper officer to accept the Import Manifest or Import Report at any time after the expiry of the period of twenty-four hours if he is satisfied that there was sufficient cause for not delivering the Import Manifest or Import Report or any part thereof within twenty-four hours after the arrival of the conveyance, has no application in the present case because the Collector as well as the Tribunal have found that no request for filing the Import General Manifest after the expiry of the period of twenty-four hours was made at any time either by the Captain of the vessel or by the local agents at Bombay28. The Tribunal has held that the goods that were seized from the vessel were prohibited goods and the said finding has not been upset by the High Court. In the circumstances, it must be held that there was contravention of the requirement regarding mentioning of the goods in the Import General Manifest by the Captain of the vessel and the local agents of the owners of the vessel at Bombay and the goods seized were liable to be confiscated under Section 111(f) of the Act29. The High Court has held that the goods were obviously in transit to Dubai which was the port of clearance and the visit to Bombay Port was not illegitimate or illegal. In holding that there was no contravention of the provisions of clauses (d) and (f) of Section 111, the High Court has proceeded on the basis that since the vessel had come to Bombay for a legitimate purpose and there was no lack of bona fides on the part of the Master and the owners of the vessel in the ship having come to Bombay, it cannot be said that there was violation of the provisions of Section 111(d) and (f) of the Act. As indicated earlier, the finding of the High Court that there was no lack of bona fides on the part of the Master of the vessel and the owners of the ship in the ship having come to Bombay, has been arrived at by the High Court after reversing the finding of fact recorded by the Collector and the Tribunal and it cannot be sustained. We have also indicated that mens rea is not essential for invoking the power of confiscation under Section 111 of the Act and, therefore, the intention of the owners of the vessel or the Master of the vessel has no bearing on the exercise of the power to confiscate the goods under clauses (d) and (f) of Section 111 of the Act34. This distinction between the nature of the two penalties, viz., penalty in rem and penalty in personam, has been maintained in the Act. The provision regarding confiscation of goods contained in Sections 111 and 113 of the Act is a penalty in rem which is enforced against the goods, while the personal penalties imposed under Section 112 and other provisions of the Act are in the nature of penalty in personam which are enforced against the person concerned35. Section 124 of the Act, which incorporates the rule of audi alteram partem, one of the two basic tenets of the principles of natural justice, does not have the effect of making any alteration in the nature of these penalties. There may be situations where the goods are found to be smuggled goods and are seized but the identity of the owner of the goods is not known.In our view, this question must be answered in the negative because confiscation of goods under Section 111 of the Act is a penalty in rem which attaches to the goods which are the subject-matter of the proceedings for confiscation and if it is found that the goods are liable to be confiscated under Section 111 of the Act, they can be confiscated without ascertaining their real owner. Moreover, insofar as the rule of audi alteram partem is concerned, the position is well settled that an order passed in disregard of the said principle would not be a invalidated if it can be shown that as a result of denial of the opportunity contemplated by the said rule, the person seeking to challenge the order has not suffered any prejudice. Since Section 124 of the Act incorporates the said principle of natural justice, failure to give the notice to the owner of goods would not, by itself, invalidate an order of confiscation. What has to be seen is whether the owner of the goods has suffered prejudice on account of the failure on the part of the officer passing the order for confiscation of goods to give a notice to the owner of the goods before passing the order for confiscation of goods. The owner of goods ordered to be confiscated cannot be said to have suffered any prejudice in a case where notice has been given to the person responsible for the alleged contravention on which the order for confiscation of goods is founded and who alone is in a position to offer an explanation for such contravention. The requirement regarding issuing of notice to the owner of the goods under Section 124 cannot, therefore, be construed as a mandatory requirement so as to have the effect of invalidating an order. An order of confiscation would not be rendered invalid if there is substantial compliance with the requirements of Section 124 in the sense that before passing an order of confiscation, a notice has been given either to the owner of the goods or a person who is responsible for the contravention on which the order for confiscation of goods is founded and who alone is in a position to offer an explanation for such contravention36. In the present case, show-cause notices dated 31-12-1983 were issued by the Assistant Collector of Customs, R&I, Bombay, to M/s. Mustafa & Najibai Trading Co., Dubai, Respondent 1, the owners of the vessel, MANSCO-3, Nuruddin Mustafa, Respondent 2, the Managing Director of Respondent 1, Abdul Rahim Khatri, the Captain of the vessel, MANSCO-3, the Promoter and the two Directors of M/s. Regent Shipping and Trade Pvt. Ltd., the local agents of the owners of the vessel at Bombay, M/s. Aero Maritime Ltd., the agents of the owners of the vessel at Karachi and certain other persons. Replies to the said show-cause notices were filed on behalf of the owners of the vessel as well as by the Master of the vessel and the local agents of the owners at Bombay. The owners of the cargo did not appear before the Collector. None of the owners of the cargo challenged the order for confiscation of goods passed by the Collector before the Tribunal and the order of the Collector regarding confiscation of goods became final as against the owners of the goods. In the writ petition filed before the High Court, Respondent 3, claiming to be the owner of a part of the cargo which was seized and confiscated, for the first time sought to challenge the orders passed by the Collector as well as the Tribunal regarding the confiscation of the goods. In para 8 of the writ petition, it has been averred that before Collector it was pointed out that the cargo belonged to various parties and mainly to Respondent 3 and the names of the owners and other persons were furnished to the Collector and other Customs Officers and that they should be given an opportunity of hearing if any judicial order is passed in respect of the cargo belonging to Respondent 3 and other persons. The replies that were filed on behalf of Respondent 1 before the Collector in response to the show-cause notice do not, however, support the said averment. Nor is there anything in the order passed by the Collector to show that any such contention was advanced before him. The judgment of the Tribunal also does not indicate that any such plea was raised. The said contention appears to have been raised for the first time before the High Court. Moreover, under the show-cause notices the seized goods were proposed to be confiscated under Sections 111(d) and 111(f) of the Act. The owners of the vessel, MANSCO-3, the Master of the said vessel and the local agents of the owners of the vessel at Bombay were the best persons who could offer an explanation and show that there was no contravention which could justify the confiscation of goods under Sections 111(d) and 111(f) of the Act. Since the owners of the goods were not present on the scene and had no personal knowledge, they could not offer an explanation other than that offered by the owners of the vessel, the Master of the vessel and the local agents of the owners of the vessel at Bombay. In the circumstances, it cannot be said that the failure to issue a notice under Section 124 to the owners of the goods has resulted in any prejudice to the owners of the goods that have been ordered to be confiscated and such failure cannot, therefore, be a ground for setting aside the order of confiscation of goods passed under Sections 111(d) and 111(f) of the Act. We are, therefore, unable to uphold the impugned judgment of the High Court setting aside the order for confiscation of the goods passed under Sections 111(d) and 111(f) of the ActThe order of confiscation of the vessel MANSCO-3 was passed under Section 115(2) of the Act.38. The consideration which weighed with the High Court to set aside the order regarding the confiscation of the goods also weighed with it for setting aside the order for confiscation of the vessel under Section 115(2) of the Act inasmuch as the High Court has found that there was no fraudulent intention on the part of the owners of the vessel in directing the vessel to proceed to Bombay from Karachi to lift additional cargo and the purpose for which the vessel, MANSCO-3, was directed to proceed to Bombay was to lift the said additional cargo and also to have the radar and VHF equipment repaired. We have already considered the said aspect of the case while dealing with the matter of confiscation of the goods and have held that the said finding of the High Court cannot be upheld. The High Court has set aside the confiscation of the vessel also on the ground that no notice was issued to the owners of the vessel under Section 124 of the Act. In this regard, it may be stated that the show-cause notice dated 31-12-1983, indicates that the said notice was issued to Mustafa Najibai, Respondent 2, on behalf of Respondent 1, the owners of the vessel, as well as to Abdul Rahim Khatri, the Master of the vessel and the Promoter and the two Directors of M/s. Regent Shipping and Trade Pvt. Ltd., the agents of the owners of the vessel at Bombay. Respondent 1, the owners of the vessel, had full knowledge of the said show-cause notice because a reply to the said notice was filed on their behalf as well as on behalf of Respondent 2 and they had contested the proceedings before the Collector.38. The consideration which weighed with the High Court to set aside the order regarding the confiscation of the goods also weighed with it for setting aside the order for confiscation of the vessel under Section 115(2) of the Act inasmuch as the High Court has found that there was no fraudulent intention on the part of the owners of the vessel in directing the vessel to proceed to Bombay from Karachi to lift additional cargo and the purpose for which the vessel, MANSCO-3, was directed to proceed to Bombay was to lift the said additional cargo and also to have the radar and VHF equipment repaired. We have already considered the said aspect of the case while dealing with the matter of confiscation of the goods and have held that the said finding of the High Court cannot be upheld. The High Court has set aside the confiscation of the vessel also on the ground that no notice was issued to the owners of the vessel under Section 124 of the Act. In this regard, it may be stated that the show-cause notice dated 31-12-1983, indicates that the said notice was issued to Mustafa Najibai, Respondent 2, on behalf of Respondent 1, the owners of the vessel, as well as to Abdul Rahim Khatri, the Master of the vessel and the Promoter and the two Directors of M/s. Regent Shipping and Trade Pvt. Ltd., the agents of the owners of the vessel at Bombay. Respondent 1, the owners of the vessel, had full knowledge of the said show-cause notice because a reply to the said notice was filed on their behalf as well as on behalf of Respondent 2 and they had contested the proceedings before the Collector.In these circumstances, we are of the view that the order regarding confiscation of the vessel could not be set aside on the ground that no notice under Section 124 of the Act was issued to the owners of the vesselThe order passed by the Collector proceeds on the basis that respondent No. 2 is the owner of the vessel. It appears that no contention was raised before the Collector that respondent No. 2 was not the owner of the vessel and that he had no particular role in the vessel being directed to proceed to Bombay from Karachi. Before the Tribunal. however, a contention was raised that respondent NO. 2 was only the Managing Director of respondent No. 1 company and not the owner of the vessel and reliance was placed on the affidavit of respondent No. 2 dated March 25, 1985 which was filed before the Tribunal wherein it was stated that the deviation of voyage from Karachi to Bombay was without his pre knowledge as at that time he was away from Dubai and was in Europe in connection with his business.The Tribunal rejected the contention urged on behalf of respondent No. 2 and has observed that no independent evidence has been adduced to establish that respondent No. 1 company is owned by any other person other than respondent No. 2 and that it in the reply to the Show Cause Notice respondent No. 2 had been mentioned as the owner of the vessel. The Tribunal has also referred to the statement of Mohammed Yousef that he had received the telex dated August 16, 1983 from respondent No. 2 and has observed that the said statement clearly established that respondent NO. 2 knew about the voyage of the vessel from Karachi to Bombay. On that view the Tribunal upheld the penalty imposed on respondent No. 2 under Section 112 of the Act. We do not find any infirmity in the said view of the Tribunal. We are, therefore, unable to uphold the contention of Shri Rana that the Tribunal was in error in affirming the penalty of Rs. 3,00,000/- imposed on respondent No. 2 by the Collector.