United Liner Agencies (India) ... vs Assistant Collector Of Customs ...
2002 Latest Caselaw 1167 Bom

JUDGMENT

J.P. Devadhar, J.

1. The short issue raised in this petition is whether the Customs Authorities are justified in levying penalty upon the local agents in India under Section 112(a) of the Customs Act, 1962 for the alleged breach of Bills of Lading Act, 1855 committed by the principal in a foreign country?

2. The facts relevant for the present petition are as follows :--

3. At the material time, the petitioners were local agents in Mumbai for M/s Equitable Transporter International, Inc. ('ETI' for short), who were freight forwarders at Taipai, Taiwan. M/s American President Lines were the owners of the vessel M/s 'M. V. Macalu' whose local agents in Mumbai were Forbes Forbes Cambell and Co. Ltd.

4. M/s Crystalline Corporation, an Indian importer had placed an order for supply of components of umbrella with a foreign supplier situated at Taiwan. The foreign supplier handed over the consignment to Freight Forwarders namely E.T.I. On receipt of the goods, the E.T.I. as freight forwarders issued two Bills of Lading ('B/L' for short) in Taiwan dated 28-6-1987. Thereafter, the goods were loaded on board the vessel 'M.V. Makalu' on 14-8-1987 and 11-9-1987. On shipment of the goods, the owner of the vessel M/s American President lines issued carriers B/L dated 14-8-1987 and 11-9-1987 to the E.T.L.

5. As per the general practice, the Indian importer was required to surrender the B/L issued by E.T.I. to the petitioner who in turn would hand over the carriers B/L duly endorsed by E.T.I. to the importer. The importer would then file Bills of Entry with the Customs Authorities along with carriers B/L. On assessment, the delivery of goods would be taken by the importer from the carrier's agents namely M/s Forbes Forbes Cambell and Co. Ltd., by surrendering carrier's B/L.

6. It appears that in the instant case, the importer sought clearance of the goods from the Customs Authorities by furnishing the Bills of Lading issued by the Freight Forwarders instead of the Bills of Lading issued by the carrier of the vessel. While scrutinising the documents furnishing by the importer, it was noticed by the Customs Authorities that the importer was seeking clearance of the goods under the licence dated 9-12-1985 which was valid upto 30th June, 1987. On further inquiry, it was noticed by the Customs Authorities that as per the endorsement on the B/L of the Freight Forwarders, the goods in question were put on board the vessel on 28th June, 1987 (before the expiry of the licence on 30th June, 1987); whereas endorsement made on the B/L issued by the Carrier of the vessel the goods in question were shown actually loaded on board the vessel on 14th August, 1987 and 11th September, 1987 i.e. after the expiry of the licence on 30-6-1987.

7. The Customs Authorities, thereupon carried out detailed investigation and after recording statements of employee of the petitioners, issued a show cause notice under Section 124 of the Act on 30-12-1987 calling upon the petitioners to show cause as to why penal action should not be taken against the petitioners under Section 112(a) of the Act. The petitioners filed a detailed reply to the show cause notice stating therein that the show cause notice does not allege any act or omission on the part of the petitioners and further that the Bills of Lading were issued by E.T.I. at Taiwan and the petitioners as the agent of the E.T.I. cannot be held liable for any act or omission that took place, in a foreign country. It was submitted that the delivery of the goods was to be effected on the basis of the Bills of Lading issued by the Carrier of the vessel and not on the basis of the Bills of Lading issued by the Freight Forwarders. The respondent No. 1, thereupon issued supplementary show cause notice to the petitioners on 28th June, 1988 inter alia alleging that E.T.L had falsified the Bills of Lading and violated the provisions of the Bills of Lading Act, 1855 and the petitioners as agents of E.T.I. were liable for penal action. The petitioners replied to the supplementary show cause notice and contended that as the agent, the petitioners were only concerned with the acts done or omitted to be done under Customs Act, 1962 on behalf of E.T.I. in India. It was contended that since the Bills of Lading were issued in Taiwan i.e. outside India and the same being not issued by the petitioners, the petitioners as agents cannot be held liable for any act or omission done by E.T.I. in Taiwan.

8. The Additional Collector of Customs Mumbai, after hearing the petitioners passed an order on 1-2-1989 holding that although the matter relating to the issuance of Bills of Lading are not specifically covered by the Customs Act, in view of the petitioners principles at Taiwan had falsified the B/L by putting an incorrect Stamp to show that the goods were laid on board on 28-6-1987, the petitioners as agents of the principals of Taiwan were liable for penal action under Section 112(a) read with Section 148 of the Customs Act. By the said order, the Additional Collector of Customs levied penalty of Rs. 30,000/- upon the petitioners. Challenging the said order, the present petition has been filed.

9. Mr. Pratap, learned Counsel appearing on behalf of the petitioners submitted that the issue of Bills of Lading is not a matter under the Customs Act, 1962 and, therefore, any discrepancy in the Bills of Lading cannot be subject matter under the provisions of the Customs Act. That there is no obligation imposed on the petitioners or the E.T.I. under the Customs Act in respect of the B/L and, therefore, the Customs Authorities had no jurisdiction to impose penalty on the petitioners under the Customs Act, 1962 for the alleged breach of provisions of the Bills of Lading Act, 1855. That the petitioner is not the agent of the person in charge of the conveyance and, therefore, Section 148 of the Act was not applicable to the petitioners. It was submitted that no act has been done by the petitioners and neither has the petitioners abetted in doing of any act which has rendered the imported goods liable for confiscation and hence the penal action against the petitioner is unjustified and is liable to be quashed and set aside.

10. On the other hand, learned Counsel for revenue contended that the endorsement made on the Bills of Lading issued by E.T.I. to the effect that the goods were put on board the vessel on 28th June, 1987 was ex-facie false and the said endorsement was done with a view to enable the importer to clear the goods under the licence which was to expire on 30th June, 1987 and the petitioners as agents of E.T.I. are liable for penal action. Accordingly, it was submitted that the penalty levied upon the petitioners was justified.

11. We have heard the Counsel on both the sides and perused records placed before us. From the order impugned in the petition, it is seen that it is not the case of the revenue that the petitioner has committed any illegality or impropriety. It is not even alleged in the show cause notice or in the impugned order that the petitioner has abetted in antedating the endorsement on the B/L issued by their principal at Taiwan. Thus, admittedly, it is not the case of the revenue that the petitioners have committed any offence under the Customs Act. It is only because the Customs Authorities hold that E.T.I. have committed an offence of antedating the B/L, the petitioners as local agents of E.T.L are sought to be penalised by invoking Section 148 of the Customs Act.

12. Section 148 of the Customs Act makes the agents appointed by the person in charge of the conveyance liable for fulfilling the obligation imposed upon the in-charge of the conveyance under the Customs Act. In the instant case, the person in charge of the conveyance namely M/s American President Line have not committed breach of any obligation cast upon them under the Customs Act. Moreover, the petitioners are not agents appointed by the person in charge of the conveyance. Under the circumstances, the petitioners do not fall in the category specified in Section 148 of the Customs Act. Therefore, taking recourse to that section against the petitioners is wholly unjustified.

13. The liability of the agent under Section 148 of the Customs Act, 1962 is limited to the fulfilment of the obligations cast upon the carrier of the vessel under the Customs Act and not under another Act. In the absence of any breach committed under the Customs Act, it is not open to the respondents to invoke Section 148 of the Customs Act. In the instant case, there is no breach committed by the carrier of the vessel. Assuming that the freight forwarder had committed any violation of the Bills of Lading Act, that cannot be a ground for taking action against the petitioners under Section 148 of the Customs Act who are agents of the freight forwarders.

14. Even independent of Section 148 of the Customs Act, there is no reason for penalising the petitioners under Section 112(a) of the Customs Act. Because, under the Customs Act, for clearance of the goods, the importer is required to file the Bill of Entry under Section 46(2) of the Customs Act along with the B/L given by the carrier of the vessel. Therefore, for clearance of the goods what is necessary under the statute is the B/L issued by the carrier of the vessel and not the B/L given by the freight forwarders. In their statement recorded under Section 108 of the Customs Act, the employee of the petitioners had clearly stated that in the B/L issued by E.T.I., the column regarding the dates on which the goods were loaded on board the vessel was not filled and that column was kept blank. The Customs Authorities have not chosen to issue show cause notice to E.T.I. Therefore, the conclusion drawn behind the back of E.T.L that they have antedated the B/L by endorsing that the goods were put on board the vessel on 28th June, 1987 cannot be accepted. Counsel for the petitioners placed before us a copy of the B/L issued by E.T.I. where the column pertaining to the date of shipment is kept blank. Therefore, in the absence of any corroborative evidence on record, the E.T.I. cannot be held to be guilty of antedating the B/L issued by them. Consequently, taking any action against the petitioners, as agents of E.T.L, does not arise at all. Accordingly, we hold that the respondents have failed to establish any lapse on the part of the petitioners either under the Customs Act or under the Bills of Lading Act, 1855. Hence the penalty levied under Section 112(a) of the Customs Act, 1962 cannot be sustained.

15. In the premise aforesaid, the order impugned in the petition is quashed and set aside. Rule is made absolute in terms of prayer (a) of the petition. The respondents shall cancel the Bank guarantee and or cash deposit furnished by the petitioners pursuant to the order of this Court and return the same to the petitioners within 4 weeks from today. In the facts and circumstances of the case, there will be no order as to costs.

16. C. C. expedited.