Legal principle

Shortlanding is the very basis for attracting penal liability under Section 116 of the Customs Act, 1962, and that fact must be established like any other fact by the Customs authorities - the outturn report alone is not conclusive, sweepings recorded as landed from the same cargo must be adjusted in arriving at net shortlanding, and where two views are possible the benefit of doubt goes to the person charged.

Court decision

The High Court answered both reference questions in the affirmative and in favour of Scindia Steam Navigation, holding the Tribunal's finding that the sweepings had no relation to the consignment was perverse and arbitrary. On adjustment of the 630 bags (52 MT, i.e., 1,040 bag-equivalents) of sweepings landed and cleared by FCI, there was no net shortlanding (indeed an excess of 219 bags), the petitioner had duly accounted for the cargo in full, the onus of proof was on the Customs authorities, and the appellant was entitled to the benefit of doubt; there was no order as to costs.

Facts

Scindia Steam Navigation Co. Ltd., steamer agents of S.S. 'Jalagirija', were called upon to explain a Calcutta Port Trust outturn report showing shortlanding of 821 bags of Ammonium Nitrate Phosphate under Line No. 1 (Rot No. 698/73). They explained that 630 bags (52 MT) of sweepings of the same cargo had been landed, surveyed and cleared by the consignee, Food Corporation of India. The Deputy Collector of Customs found the shortlanding established and imposed a penalty of Rs. 11,960 on the steamer agents under Section 116 of the Customs Act, 1962. The Appellate Collector dismissed the appeal and CEGAT dismissed the revision, holding the sweepings were not connected with the consignment and there was no evidence of their clearance. The Tribunal thereafter referred two questions to the Calcutta High Court for determination.

Key provisions

• Section 116, Customs Act, 1962 — Penalty for not accounting for goods