Legal principle

A steamer or its agent cannot be held liable under Section 116 of the Customs Act, 1962 merely because remission of customs duty was allowed to the importer under Section 23, and invocation of Section 116 long after 9 to 10 years of the actual import and clearance of the goods cannot be countenanced.

Court decision

The Madras High Court allowed the writ petition and quashed the impugned order dated 28.10.2009 by which the Government of India had rejected the petitioner's Section 129DD revision, holding that the levy of penalty on the petitioner under Section 116 could not be sustained, with consequential relief to the petitioner and no costs.

Facts

The petitioner, a steamer agent for the vessel M.V. Lu Karavelow, discharged 50,000 bags of Soda Ash at Tuticorin Port in December 1995 for importer Ultramarine & Pigments Ltd under three bills of lading. The importer, claiming 886 bags short-delivered against the manifested quantity, was granted remission/refund of Rs.1,77,547 under Section 23 by the Commissioner (Appeals), and the department's further appeals before the Tribunal were dismissed. After refunding the importer, the department issued a show cause notice dated 09.08.2000 to the steamer agent proposing penalty under Section 116 and also called for a guarantee under Sections 41, 42 and 97(2). The Deputy Commissioner dropped the proceedings in May 2005, but on departmental review under Section 129D(2) the Commissioner (Appeals) in August 2006 imposed a penalty of twice the duty on the alleged short-landed goods. The Government of India rejected the petitioner's Section 129DD revision by order dated 28.10.2009, which was impugned in this writ petition.

Key provisions

• Section 116, Customs Act, 1962 — Penalty for not accounting for goods
• Section 23, Customs Act, 1962 — Remission of duty on lost, destroyed or abandoned goods
• Section 129, Customs Act, 1962 — Appellate Tribunal
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 42, Customs Act, 1962 — No conveyance to leave without written order
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 97(2), Customs Act, 1962 — No coasting vessel to leave without written order
• Section 26, Customs Act, 1962 — Refund of export duty in certain cases
• Section 45(2)(a), Customs Act, 1962 — Restrictions on custody and removal of imported goods
• Section 129D(2), Customs Act, 1962 — Powers of Committee of Principal Commissioner of Customs or Chief Commissioners of Customs or Principal Commissioner of Customs or Commissioner of Customs to pass certain orders
• Section 29, Customs Act, 1962 — Arrival of vessels and aircrafts in India