Case: M/S. India Steamship Company Ltd.  Vs. Union Of India &amp; Anr.

filed this appeal. 4. Shri Dipanker Gupta, the learned senior counsel appearing for the appellant-company, has urged that the expression "substantial portion" in Section 115(1)(e) of the Customs Act must be construed to mean substantial portion of the goods which have been imported in the vessel. The submission is that the learned single Judge was right in proceeding on that basis and that the Division Bench of the High Court was in error in reversing the said view of the learned Single Judge. It has been contended that it could not be the intention of Parliament to provide for confiscation of the vessel in a case where a portion of a particular consignment, which may be substantial portion of that consignment, is found missing if the said portion which is found missing is insignificant as compared to the goods that have been imported in the vessel.Section 115(1)(e) of the Customs Act provides for confiscation of conveyances and reads as follows:- "115. Confiscation of conveyance, -(1) The following conveyance shall be liable t o confiscation-(a) X X X X X(b) X X X X X(c) X X X X X(d) X X X X Xe) 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 able to account for the loss of, or deficiency in, the goods." * 5. The said provision in Section 115(1)(e) differs from the earlier provision contained in clause (4) of Section 167 of the Sea Customs Act, 1878 which provided for the penalty of confiscation of the vessel in respect of following offences:- "4. If any vessel which has been within the limits of any port in India or within the Indian customs waters, with cargo on board, be afterwards found elsewhere in such waters or in any port, bay, river, creek or arm of the sea in India.(i) light or in ballast, or(ii) with any part of such cargo missing, and the master of the vessel is unable to give due account of how the vessel came to be light or in ballast, or of the missing cargo." * 6. Under the said provision in Section 167 the vessel was liable to be confiscated if any part of the cargo was missing and the master of the vessel was unable to give due account of the missing cargo. Section 115(1) (e) reduces the rigour of the said provision by introducing the requirement that substantial portion of the goods must be found missing to attract the liability of confiscation of the vessel. 7. Section 115(1)(e) contains the expression "any conveyance carrying imported goods". These words refer to the goods which are being imported by the vessel in the country, i.e., the imported goods which are contained in the vessel. The words "such goods" in the expression "whole or substantial portion of such goods" refer to the goods which have been imported in the vessel and, therefore, the said expression must be construed as referring to the whole or substantial portion of the goods which have been imported in the vessel. This means t hat what should be found missing is the whole or substantial portion of the goods that have been imported in the vessel. The learned Judges on the Division Bench of the High Court have pointed out that a difficulty may arise in ascertaining whether the substantial portion of goods is missing by giving an illustration where 100 tonnes of wheat and 4 gold bars were imported in a vessel and out of the 4 gold bars 3 gold bars were found missing and have observed that in such a case if we go by the quantity of the imported goods the owner of the vessel can not be punished by confiscation of the vessel itself even though smuggling of 3 gold bars has taken place and that this could not have been the intention of the legislature. In out opinion, the said illustration does not pose any difficulty because the expression "substantial portion of such goods" in Section 115(1)(e) has been used to mean substantial portion of the goods that have been imported keeping in view the quantity as well as the value of the goods that have been imported. If it is found that the goods found missing were a substantial portion of the goods that have been imported having regard to the quantity of goods or the value of the goods imported, the provisions of Section 115(1)(e) would be attracted. The object underlying the said provision for confiscation of the vessel is to check evasion of customs duty. It seeks to achieve this object by ensuring that after the vessel has entered India the master of the vessel accounts for the goods which have been imported and by providing that if the whole or substantial portion of the imported goods is found missing and the master of the vessel is not able to account for the loss or deficiency in the goods, the vessel would be liable to be confiscated. But, at the same time, it cannot be ignored that the confiscation of the vessel would result in imposing a heavy financial burden on the owner of the vessel. In providing for confiscation of the vessel in Section 115(1)(e) it could not have been the intention of Parliament to penalise the owner of the vessel in a case where a portion, even though substantial, of a particular consignment of goods is found to be missing although the said consignment is only an insignificant part both in the matter of quantity as well as value of the goods that have been imported in the vessel.Applying the aforesaid test, 45, 000 cigarettes that were found missing cannot be held to be a substantial portion of the goods that were imported either in the matter of quantity or in the matter of value of the goods that were imported in the vessel. 8.

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

Explanation:
1[ds]Section 115(1)(e) contains the expression "any conveyance carrying imported goods". These words refer to the goods which are being imported by the vessel in the country, i.e., the imported goods which are contained in the vessel. The words "such goods" in the expression "whole or substantial portion of such goods" refer to the goods which have been imported in the vessel and, therefore, the said expression must be construed as referring to the whole or substantial portion of the goods which have been imported in the vessel. This meanswhat should be found missing is the whole or substantial portion of the goods that have been imported in the vessel. The learned Judges on the Division Bench of the High Court have pointed out that a difficulty may arise in ascertaining whether the substantial portion of goods is missing by giving an illustration where 100 tonnes of wheat and 4 gold bars were imported in a vessel and out of the 4 gold bars 3 gold bars were found missing and have observed that in such a case if we go by the quantity of the imported goods the owner of the vessel can not be punished by confiscation of the vessel itself even though smuggling of 3 gold bars has taken place and that this could not have been the intention of then, the said illustration does not pose any difficulty because the expression "substantial portion of such goods" in Section 115(1)(e) has been used to mean substantial portion of the goods that have been imported keeping in view the quantity as well as the value of the goods that have been imported. If it is found that the goods found missing were a substantial portion of the goods that have been imported having regard to the quantity of goods or the value of the goods imported, the provisions of Section 115(1)(e) would be attracted. The object underlying the said provision for confiscation of the vessel is to check evasion of customs duty. It seeks to achieve this object by ensuring that after the vessel has entered India the master of the vessel accounts for the goods which have been imported and by providing that if the whole or substantial portion of the imported goods is found missing and the master of the vessel is not able to account for the loss or deficiency in the goods, the vessel would be liable to be confiscated. But, at the same time, it cannot be ignored that the confiscation of the vessel would result in imposing a heavy financial burden on the owner of the vessel. In providing for confiscation of the vessel in Section 115(1)(e) it could not have been the intention of Parliament to penalise the owner of the vessel in a case where a portion, even though substantial, of a particular consignment of goods is found to be missing although the said consignment is only an insignificant part both in the matter of quantity as well as value of the goods that have been imported in the vessel.Applying the aforesaid test, 45, 000 cigarettes that were found missing cannot be held to be a substantial portion of the goods that were imported either in the matter of quantity or in the matter of value of the goods that were imported in the vessel.