Legal principle

No penalty under Section 116 can be imposed on a steamer agent for short-landing based solely on a destuffing out-turn report; the burden lies on the revenue to prove short-landing at the time of discharge from the vessel, and non-production of the statutorily custodial tally sheet cannot be held against the agent.

Court decision

The petition succeeded: the High Court held that the impugned order dated 29th November 1986 could not be sustained and quashed and set it aside, making the rule absolute in terms of prayer clause (a), with no order as to costs, in favour of the petitioner steamer agents.

Facts

The petitioners were steamer agents for the foreign flag vessel 'President Roosevelt', which discharged containerised cargo (FCL and LCL) at the Port of Bombay in August 1979 after they filed the Import General Manifest. On the basis of the Bombay Port Trust's out-turn report prepared at destuffing, the department alleged short-landing and, after a show cause notice dated 14th July 1980, levied a penalty of Rs. 6,25,772.96 on the agents under Section 116 of the Customs Act, 1962. An earlier penalty order dated 26th May 1986 was set aside by the High Court in Writ Petition No. 2527 of 1986, which remanded the matter for fresh adjudication per the guidelines in Writ Petition No. 1889 of 1986. On remand, the Deputy Collector again imposed the identical penalty solely on the out-turn report, without evidence on the condition of container seals at the time of discharge from the vessel, and that order dated 29th November 1986 was challenged in the present petition.

Key provisions

• Section 116, Customs Act, 1962 — Penalty for not accounting for goods
• Section 45, Customs Act, 1962 — Restrictions on custody and removal of imported goods
• Section 2(34), Customs Act, 1962 — Definitions