S.S. Sekhon, Member(T)
1. The appellant are an international Airlines operating in India at Bombay Airport. The Officers of Customs Department entered the cargo hold unloading inside Flight No. : KU-301 on 07.07.95 and found two pallets meant for loading at Mumbai and on searching the said pallets., they recovered two packets of rectangular shape packed with brown colour t ape around it without any description the on or included in the manifest of he said flight which on opening were found to contain 50 pieces market Union Bank of Switzerland 10 tolas 999. On testing the representative samples of the said bars, from the seizure of bars, it was ascertained and reported vide essay report dt. 18.09.95 of the General Manager India Government Mint, Bombay to be gold of 999.20 purity. the show-cause notice was thereafter issued interalia to the present appellant asking them:-
"M/s. Kuwait Airways and other known/ unknown persons concerned in smuggling of gold and others, who were concerned in carrying/removing, depositing or harbouring, keeping consealing or purchasing or in any other manner dealing with the goods and who did or omitted to do acts, which acts or omission rendered the said goods liable for confiscation as afores sstated are also liable to penal action under Section 112 of the Customs Act. 1962.
Now, therefore M/s. Kuwait Airways and who-so-ever is concerned with the above mentioned seized gold or consider himself to be a claiment of the afore-mentioned gold is require to sow cause in writing to the Commissioner of Customs (Airport), NIPT Sahar, Bombay-400099. Within 15 days of the receipt of this show cause notice as to why:-
(a) the said 50 gold bars totally weighing 500 tolas equivalent to 5.83 Kgs. valued at Rs. 27,20,000/- (LMV) should not be confiscated under Section 111(d) of the Customs Act, 1962.
(b) The packing material used for packing 50 gold bars should not be confiscated under Section 118 of the Customs Act, 1962
(c) Penalty under Section 112 of the Customs Act, 1962 should not be imposed on them."
2. After considering the replies of the appellants the Collector came to the findings as follows:-
" Shri Fahad A1-Rashid in his statement has accepted the fact that the packets containing gold were loaded in the pallets and these pallets were loaded in their aircraft at Kuwait. But he could not say how these packets were loaded at Kuwait. Here I will like to discuss the procedure about accepting baggage and cargo for carrying from one place to another by Air. For the checked in baggage a baggage and check is delivered to the passenger which indicated place of departure and destination and a tag is affixed on the package. In case of cargo 'Air way bill's is prepared in triplicate and one of copy is given to the consignor, second copy is signed by the consignor and the carrier (Airlines) and accompanies the cargo and the third copy remains withe the carrier which is signed by the consignor also. No goods are accepted without the baggage checks or airway bill/consignment not for loading in the aircraft. All the goods are physically checked by the carrier or their agents while loading on the pallets and the loading of pallets in aircraft is also supervised by the airlines. During the course of these checks and supervision, no other agency or individual has any access to the pallets, carrying the cargo.
Such cargo is manifested before the departure of flight. From the brief discussion on the procedure, I have no hesitation to say that the unmanifested two packets containing the contraband gold were loaded on the pallets by some one attached to M/s. Kuwait Airways and no one else. the lapse has also been accepted by M/s. Kuwait Airways and thus they have rendered themselves liable to a penal action under Customs Act 1962.
The Gold under seizure was found to be liable for confiscation under Section 67G FERA read with Section 111(d) of the Customs Act and under Section 111(e), (f) &(i) of the Customs Act 1962. It was further held that the appellants herein, whose Aircraft was used for reaching these unmanifested packages containing gold, were liable for penal action under Section 112 of the Customs Act 1962 and on finding that this was the first instance in which the appellants were involved, a lenient view was taken and penalty of Rs. 2 Lacs under Section 112A & b of the Customs Act. 1962 was imposed.
3. After hearing both the sides and considering the submissions made I find:-
a.) Since provisions of the Sea Customs Act did not provide for personal penalty on all concerned person for every contravention of the Sea Customs Act. Section 112 has enlarged scope to bring in all persons concerned with bringing in the liability for confiscation of the gods under Section 111 of the Customs Act 1962. In this case, for the gold under seizure, contravention's of Section 111(d) (e), (f) & (i) sub section has been arrived at. Sub Section (d) (e) & (i) relate to dutiable or prohibited goods on a conveyance brought into India. the carries in whose Aircraft the gold under confiscation has been found, many not be liable for confiscation arrived at under (d) (e) (i) sub section of Section 111 of the Customs Act. Though they have not challenged that confiscation of the gold, yet the liability for penalty, the subject matter of this appeal, has to be examined and determined vis-a-vis liability for confiscation under Sub-section 111(f). Sub-section 111(f) reads as follows:-
"Any dutiable or prohibited goods require to be mentioned under the regulations in an import report manifest or import report which are not so mentioned.
Which casts an exclusive liability, of confiscation, for non mention in the import manifest reports etc of the Gold under seizure. This liability would only relate to Acts of ommission by the master of the vessel/Aircraft or an his agents. Section 30 of the Customs Act casts an obligation to manifest all goods imported in the prescribed form and Sub-section 2 of the Section 30 casts a responsibility to submit a declaration about truth of the contents of such declaration. If confiscation of the imported goods under Section 111 (f) is arrived at, then it is very clear that the goods were not declared and or mentioned the import manifest, as required. In the present case such a liability of confiscation has been arrived at by the Ld. adjudicator conclusions, arrived at by him; therefore the person responsible for the liability for confiscation are ones concerned with the declaration under Section 30 which is strict liability. In this case the appellants who are the owners and also the agents of the Master of the Aircraft at Bombay would thus be li able for penalty under Section 112(a) of the Customs Act 1962. In this view of the law, I do not find any infirmity int he liability arrived at by the Commissioner,for the unmanifested packages of gold found in the Aircraft. Since the Airline Co. was concerned in this case with carrying these unmanifested goods to India.I cannot accept the plea that they were not knowing or have no reason to believe that unmanifested goods are liable for confiscation under Section 111(f).
b.) In view of the extension of the coverage of the persons who are liable for penalty and the specific concern of the carrier for having brought unmanifested packages, which have been found in confiscation under Section 111(f). I do nt consider,all the submissions made by the Ld. Advocate before me regarding the absence of mensrea and or absence of concern, relying on the Supreme Court decision in the case of Radha Kishan Bhatia, AIR 1965 Supreme Court 1072, Gian Chand v. State of Punjab AIR 1962 Supreme Court 496, Commissioner of Customs (PREV.P Shillong v. Pir Khongsider reported in 1998 (97) ELT 332 and in the case of Killick Air Couriers and Forwarders Ltd. v. Commr. Of Customs Mumbai reported in 1998(97) ELT 182 Bernado Steenhold Ultrich Plaintiff v. Collector Of Customs, Cochin AIR 1960 Kerala 170 R.P. Hussain v. Collector of Customs reported in 1990(49) ELT 452 and Extrusion v. Collector of Customs, Calcutta reported in 1994 (70) ELT 52, to help the case of the appellant to come out unscathed from the harsh visit of the provisions of Section 112(a)
c.) I find that provisions of Section 112(b) are wide enough to penal which has been involved to penal the Aircraft Carrier Co. who had brought the goods unmanifested in their Aircraft which have been found liable for confiscation. A Lack of knowledge and absence of malafides would not save them; they have omitted to dos so an act, as required on their part i.e. to declare all the goods brought by them into India in the manifest. This ommission casts liability of penalty, as it emerges from the consequence of confiscation arrived at under Section 111(f). I would rely on 1997(67) ELT 255, 1998 (106) ELT 175(T) and 1987 (30) ELT 988 in this regard and uphold the liabilities arrived at.
d.) From the order impugned before me, I find that the Commissioner has come to a conclusion that this was the first incident of this nature in which the Appellant company was involved and taking in view the assurance given by them to the department, he took a lenient view. Thereafter penalty of Rs. 2 Lacs was imposed by the Commissioner without ascribing the same separately under Section 112 (a) or 112(b). I find position of a penalty of Rs. 2 lacs is definitely not a lenient view. The amount is considerably high especially when this was the first occurrence of its kind. The Commissioner need not have imposed a heavy penalty of Rs. 2 Lacs. A minimum penalty could have served the purpose. The Ld. Advocate relied upon the decision in the case of B. Laxmichand v. Govt. of India reported in 1983 ELT 322 to submit that t he charges against the accused should be clear and not ambiguous and the authorities must be clear in their minds whether Clause (a), (b) of Section. 112 will apply or both would apply. When such application of mind is not exhibited the penalties cannot be uphold. The proceedings were liable to be quashed. In this view of the matter, what I find that the show-cause notice does not stipulates the reasons/charges for invoking Clauses (a) or (b) of Section 112 or both, the clauses separately an order arrived at on finding as to why penal action under Section 112 of the Custom Act 1962, both the clauses is called for or only one of the clause is called for is required to be set aside. I would therefore order setting aside the penalty following the Madras High Court decision relied by the Ld. advocate.
e.) When I find, that the Liability is only for unmanifested packets and the appellants have submitted that they have taken proper steps t o keep strict vigilance on all Cargo being loaded form Kuwait, to avoid such instance in future and the assurance has been accepted and also when I find that no material has been arrived at to indicate the complicity of t he liability of confiscation under Section 111(d), (e) & (i) & Mercy is being granted. Then I find no reason to withhold & withdraw abruptly, the benefaction of mercy, to expose the Foreign Airline Carrier, to a harsh penalty of Rs. 2 Lacs, when minimum liability prescribed is Rs. One Thousand only. Mercy cannot be dispensed in proportions. Mercy cannot be tampered. In this case when penalty is found to be liable, Mercy can be a reason for not increasing, it over the minimum prescribed.
4. In view of my findings I would set aside the penalty of Rs. 2 Lacs and impose the same Rs. One Thousand only and (SIC) allow the appeal, since this was the first instant where in the appellant were involved for non declaration of a confiscation manifest of goods imported by the Airline Co.
5. Appeal disposed off in above terms.
(Pronounced in Court)