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2003 DIGILAW 356 (CAL)

UNION OF INDIA v. INDIA STEAMSHIP CO. LTD.

2003-07-17

A.K.MATHUR, ASHIM KUMAR BANERJEE

body2003
ASHIM KUMAR BANERJEE, J. ( 1 ) WHAT is meant by the word "chargeable" contained in section 116 of the Customs Act, 1962 (hereinafter referred to as the "said Act") ? ( 2 ) THE above is the moot question involved in the present appeal. ( 3 ) BRIEF facts of the case : national Thermal Power Corporation Limited (hereinafter referred to as "ntpc") imported certain project equipments from abroad by a vessel belonging to India Steamship Co. Ltd. , the respondent abovenamed. When the goods were unloaded at Calcutta Port there had been short landing of a small quantity of the total consignment. As per the surveyors report the entire consignment was off loaded from the vessel whereas as per the Port Trust report there had been short landing. NTPC got the actual quantity of the goods received by them released by payment of customs duty. The duty payable on the consignment was partially exempted under section 25 of the said Act. NTPC got the actual quantity of the goods released upon payment of actual duty payable on the goods after availing the exemption. The customs authority imposed a penalty upon the shipper being India Steamship Ltd. under section 116 of the said Act twice the duty which was payable on the said goods without taking into account the exemption. Before the Assessing Officer it was contended on behalf of the shipper that since the surveyor's report recorded landing of the entire consignment, the shipper was not liable for any penalty. As and by way of alternative submission it was contended that in case the first contention was rejected the authority could at best impose penalty twice than the actual duty payable on the goods short landed after taking into account the exemption. ( 4 ) THE Assessing Officer negated both the contentions. ( 5 ) AN appeal was preferred before the Appellate Authority wherein the appellate Authority rejected the first contention of the shipper to the extent that the shipper was not liable for short landing. The Appellate Authority, however, accepted other contention of the respondent and held that the shipper was only liable for penalty imposed at the rate of chargeable customs duty i. e. at the rate which was supposed to be paid on the goods had those been landed. ( 6 ) ON a review the order of the Appellate Authority was reversed. The Appellate Authority, however, accepted other contention of the respondent and held that the shipper was only liable for penalty imposed at the rate of chargeable customs duty i. e. at the rate which was supposed to be paid on the goods had those been landed. ( 6 ) ON a review the order of the Appellate Authority was reversed. ( 7 ) THE shipper challenged the order of the Review Authority by initiating the above writ proceedings. The learned Single Judge by his judgment and order dated July 9,1992 set aside the order of the Review Authority and upheld the order of the Appellate Authority. Learned Judge held that no penalty could be imposed at the rate on which customs duty was payable without having any exemption under section 25 of the said Act, 1962. ( 8 ) SECTION 25 and section 116 being relevant herein and are quoted below :"25. Power to grant exemption from duty.- (1) If the Central government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. (2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from payment of duty, for reasons to be stated in such order, any goods, of strategic or secret nature, or for charitable purpose, on which duty is leviable. (3) An exemption under sub-section (1) or sub-section (2) in respect of any goods from any part of the duty of customs leviable thereon (the duty of customs leviable thereon being hereinafter referred to as the statutory duty)may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed the statutory duty. Explanation.- 'form or method', in relation to a rate of duty of customs, means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable. (4) Every notification issued under sub-section (1) shall- (a) unless otherwise provided, come into force on the date of its issue by the central Government for publication in the Official Gazette; (b) also by published and offered for sale on the date of its issue by the directorate of Publicity and Public Relations of the Board, New Delhi. (5) Notwithstanding anything contained in sub-section (4), where a notification comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of publicity and Public Relations on a date on or before the date on which the said notification comes into force. 116. Penalty for not accounting for goods.-If any goods loaded in a conveyance for importation into India, or any goods transhipped under the provisions of this Act or coastal goods carried in a conveyance, are not unloaded at their place of destination in India, or if the quantity unloaded is short of the quantity to be unloaded at that destination, and if the failure to unload or the deficiency is not accounted for to the satisfaction of the [assistant Commissioner of Customs or Deputy Commissioner of Customs], the person-in-charge of the conveyance shall be liable,- (a) in the case of goods loaded in a conveyance for importation into India or goods transhipped under the provisions of the Act, to a penalty not exceeding twice the amount of duty that would have been chargeable, on the goods not unloaded or the deficient goods, as the case may be, had such goods been imported; (b) in the case of coastal goods, to a penalty not exceeding twice the amount of export duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been exported. Under section 116 the person in charge of the conveyance is liable to pay penalty twice the amount of duty that would have been chargeable on the unloaded goods on such goods being imported, meaning thereby the shipper being in charge of the conveyance in the instant case was only liable for penalty twice over the customs duty payable on the short landed goods had those goods been imported and cleared by payment of duty. " ( 9 ) LEARNED Counsel appearing for the customs authority contended that under section 25 of the said Act of 1962 to avail exemption one had to adhere to the terms and conditions imposed by such notification for exemption. Since the goods were not in fact imported although mentioned in the bill of entry those goods were not used for a specific purpose for which exemption was granted by the Government. Hence, there had been a violation of such condition and as such those goods attracted duty as per the prescribed tariff without having any exemption. Consequently, since section 116 provided for penalty twice over the amount of duty, the Reviewing Authority was right in directing penalty to be paid at a said rate. ( 10 ) FOR proper appreciation of the point in issue we should find out the true purport of the aforesaid two sections. Section 25 empowers Central Government to exempt certain duties partially or fully either absolutely or subject to any condition over some goods in public interest. Since the subject consignment was required for a power project the Central Government though it fit to exempt duty partially on the said consignment. That exemption was given so that the consignee could import materials from abroad upon payment of customs duty at a reduced rate. This has nothing to do with penalty attracted under section 116. ( 11 ) SECTION 116 has imposed a penalty on the carrier of the goods in case of short landing. While determining the rate of penalty the said section clearly stipulates that the carrier of the goods and/or the person in charge of the conveyance is liable to pay penalty twice the amount of duty which could be imposed by the authority upon the consignee had the consignee received those goods. While determining the rate of penalty the said section clearly stipulates that the carrier of the goods and/or the person in charge of the conveyance is liable to pay penalty twice the amount of duty which could be imposed by the authority upon the consignee had the consignee received those goods. While determining the rate of penalty the legislature thought it fit that the person responsible for the same should pay penalty twice the amount of actual duty to be paid on the said consignment. This has nothing to do with the exemption. ( 12 ) IN case, there had been no short landing the consignee being NTPC herein was liable to pay customs duty at a reduced rate. Hence, in view of short landing the penalty would bo twice over the said sum and nothing else. This had nothing to do with any stipulation of condition contemplated under section 25. ( 13 ) WE, therefore, hold that the word "chargeable" contained in section 116 means the actual duty payable on the unloaded quantity had there been no short landing at all. Hence, the penalty contemplated under section 116 in the present case would be twice the amount of the actual duty to be paid by NTPC on the said short quantity in case of receipt of those goods. ( 14 ) HENCE, the view taken by the learned Single Judge was accurate and we do not find any scope of interference herein. ( 15 ) IN the result, the appeal fails and is hereby dismissed. ( 16 ) THERE would be order as to costs. Appeal dismissed.