Legal principle

Where container seals are found intact and the Bill of Lading bears a 'Shipper's Load, Stow & Count' clause, no penalty under Section 116 of the Customs Act, 1962 can be imposed on the steamer agent/carrier for short landing in the absence of proof of its role in the shortage.

Court decision

The Tribunal (P.K. Choudhary, Member (Judicial)) set aside Orders KOL/CUS/AC/AC(MCD)/42 & /41 dated 16.10.2017 and allowed both appeals with consequential relief as per law, in favour of M/s. MSC Agency (India) Pvt. Ltd., holding the Section 116 penalty unsustainable.

Facts

MSC Agency (India) Pvt. Ltd., steamer agent and port-of-discharge agent for shipper Bigstar Alliance L.P. (on behalf of Agrozan Commodities DMCC, Dubai), received a show cause notice dated 11.04.2017 for short landing of 230,100 kgs of rape seeds (out of 246,510 kgs) in 11 x 20' FCL containers under Line No. 21, BL MSCU0244 9699, carried by M.V. Vega Delta under Custom Transit Declaration S51/4422/J/16A dated 01.07.2016. The cargo, consigned to M/s. Bagmati Overseas, Biratnagar, Nepal, was discharged at Kolkata under a transhipment permit; the assessable value of the shortage was Rs. 69,67,163 with duty of Rs. 52,25,372. A joint survey on 15.07.2016 found the containers apparently intact with seals affixed as per the Bill of Lading, though cut/holes in the floors were found blocked by plywood sheets fixed with screws and painted black. The Commissioner of Customs (Port), Kolkata, by Order KOL/CUS/AC/AC(MCD)/42 dated 16.10.2017, imposed a penalty of Rs. 10 lakhs on the steamer agent under Section 116 of the Customs Act, 1962 for short landing, prompting the appeal.

Key provisions

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