Judgment : Prabha Sridevan, J. The Department has filed this appeal raising a question of law, which is wordy and long, but not clear. Therefore, the learned Senior Central Government Standing Counsel, Mr.Gurulingam submitted that he may be permitted to raise the following question of law for consideration and accordingly, he framed this question of law. "Whether the mere fact that the Master of the Vessel or the owner of the Vessel was not shown to have been privy to the smuggling of contraband goods would be sufficient to exclude the operation of Section 115(2) of the Customs Act ?" 2. The facts are as follows:- M.V. Tiger Bridge (hereinafter referred to as the Vessel) was ordered to be confiscated under Section 115(2) of the Customs Act, 1962 (in short the Act). M/s.Fargo Marine Co. Ltd. were the owners of the Vessel at the relevant point of time and Capt. Georgios Perivolaris was the Master of the Vessel. M/s.James Mackintosh and Company Pvt. Ltd. were the Indian agents of the owners. On 16. 2001 at about 4.00 p.m., the police personnel in-charge of B-1 North Police Station, Chennai, intercepted a Mahindra Jeep with Registration No.TN-02-C-4979 opposite to the R.B.I. Subway and recovered 900 numbers of contraband gold bearing foreign markings and weighing 104.85 kgs. valued at Rs.4,35,84,048 (i.v.) and Rs.4,66,89,705 (m.v.) from nine cloth belts kept concealed in the jeep. Thereafter, one Sadasivan, occupant of the jeep was arrested along with one Ganesan, driver of the said jeep. Enquiry disclosed three more accomplices, namely, Rajan Paul @ K.Rajan, Abdul Nabi and Saleem and they were also arrested. The contraband gold was seized on the reasonable belief that they were smuggled into the country without proper permit or licence. Further enquiry disclosed the involvement of one Kishore, second officer of the Vessel. The Vessel was berthed at the Chennai harbour and therefore, the second officer was also apprehended by the police and all the six persons were produced before the Additional Chief Metropolitan Magistrate, Economic Offences Court-I, Egmore, Chennai. On interrogation, they found that two more crew members were involved in the smuggling, namely, RJ.Patel and H.L.Khalasi. Statements were obtained from them and they admitted, they were involved in the smuggling of contraband gold and they also implicated the aforementioned Kishore, second officer of the Vessel. The statement given by the aforesaid Sadasivan revealed the modus operandi. On interrogation, they found that two more crew members were involved in the smuggling, namely, RJ.Patel and H.L.Khalasi. Statements were obtained from them and they admitted, they were involved in the smuggling of contraband gold and they also implicated the aforementioned Kishore, second officer of the Vessel. The statement given by the aforesaid Sadasivan revealed the modus operandi. The accused persons were taken on board the said Vessel and the three crew members showed the place where the nine cloth belts were actually concealed. According to the statements given, one Jeo would send gold biscuits from Singapore to Chennai through persons working in the Vessel and he would contact them over cell phone. Details regarding the manner in which consideration received in the smuggling activity was spent was also disclosed. The aforesaid Kishore, in his statement also revealed the manner in which the contraband goods was given to him and he too mentioned the involvement of the aforementioned Patel and Khalasi, who were the Able Seaman and Bosun respectively. RJ.Patel and Khalasi in their respective statements implicated the other two. A statement was also recorded from the captain of the Vessel. A show cause notice was issued on 12. 2001 and a copy of the order of adjudication was also issued to them. By the adjudication order, the Commissioner confiscated the Vessel with an option to redeem the same on payment of fine and imposed personal penalties under Section 112 (a) & (b) of the Act. No penalty was imposed on the captain of the Vessel. It is against the order of confiscation that the owners of the Vessel went before the CESTAT. 3. The Two members of the Tribunal differed with each other regarding the findings with regard to Section 115(2) of the Act and thereafter, the matter went before the third Member. The third Member came to the conclusion that there is no evidence that the smuggling of gold in question had taken place with the knowledge of the owners of the Vessel, the agents or the Master of the Vessel and therefore, the confiscation under Section 115(2) of the Act was ordered to be set aside. Against this, the Department has filed the present appeal. 4. Mr.Gurulingam, learned Senior Central Government Standing Counsel, submitted that the facts clearly show that the Captain was involved. Against this, the Department has filed the present appeal. 4. Mr.Gurulingam, learned Senior Central Government Standing Counsel, submitted that the facts clearly show that the Captain was involved. The statement of the captain that only these three persons could have engaged in the smuggling activity would clearly show that he had knowledge of the smuggling activity. The learned senior counsel submitted that the facts would show that there was a telex message received by the captain on 23. 2001. It is stated that one of the crew members of the Vessel was recently approached by a stranger at Singapore offering large sums of money for carrying gold to India. In spite of this telex message, the captain of the Vessel had not taken steps to prevent the smuggling activity and when this clear telex message had been sent, it is not possible for the captain to deny that he had knowledge of the smuggling. The learned senior counsel referred to the decision of the Supreme Court in Kripal Singh v. Collector of Customs (Prev), 1998 (104) E.L.T. 305, where the Supreme Court dismissed the appeal filed by the owner of the Truck because he had failed to prove that at the time when the contraband goods were found in the truck, it has been used without his knowledge and connivance. According to the learned counsel, this would clearly apply to the present case. 5. The learned counsel appearing for the second respondent would submit that there is evidence to show that the captain had done everything within his power to prevent any smuggling activity; there is absolutely no evidence that he had knowledge of smuggling; that the captain, in his statement, had proved that he had no knowledge; that even the show cause notice issued does not indicate that he had knowledge; that there is no finding that he had knowledge. In these circumstances, the Tribunals order should not be interfered with. The learned counsel relied on the decision of the Bombay High Court in A.P.Moller Singapore Pvt. Ltd. v. Assistant Director, D.R.I., Bombay [(2004) 174 E.L.T. 156], where the Bombay High Court held that when there is no finding in the impugned order that the owner, agent or the captain of the Vessel was involved in the act of smuggling, the Vessel is not liable to confiscation. He also relied on the decision of the Supreme Court in Amba Lal v. Union of India, 1983 E.L.T. 1321 (S.C.). 6. Here, we are concerned with only whether the Vessel is liable to be confiscated on the ground that the captain of the Vessel had knowledge. 7. Section 115(2) of the Act as it now reads is as follows:- 15.Confiscation of conveyances.- .(1) ... .(2) Any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance or animal: Provided that where any such conveyance is used for the carriage of goods or passengers for hire, the owner of any conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine not exceeding the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be. Explanation.- In this section, "market price" means market price at the date when the goods are seized. Certain words were omitted by Act 26 of 1988 with effect from 15. 1988 and the said section, prior to that, read thus:- (2) Any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance or animal and that each of them had taken all such precautions against such use as are for the time being specified in the rules: Provided that where any such conveyance is used for the carriage of goods or passengers for hire, the owner of any conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine not exceeding the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be. The confiscation is in 2001, long after the amendment. The confiscation is in 2001, long after the amendment. The issue must be decided on the basis of the Section as it reads now. The question then is whether the captain had proved that he had knowledge. In the show cause notice, which is an elaborate one, the only reference to the ship is at paragraph 39, which reads as follows:- "39. The vessel M.V.Tiger Bridge valued at Rs.8,48,11,500/-which was used as a means of transport in the smuggling of the 900 gold bars also appear liable for confiscation under section 115(2) of the Customs Act, 1962." It is true, at paragraph 28, the show cause notice extracts the statement of the captain. But, thereafter, there is not even a whisper that he had knowledge of the smuggling or it is with his connivance that the smuggling activity was done, except to state at paragraph 39, which is extracted above that the Vessel was used as a means of transport for smuggling activity and is liable for confiscation under Section 115(2) of the Act. 8. The reply to this show cause notice on behalf of the owner of the company is dated 2. 2000 and in the said reply notice it is stated that the Vessel is liable to be confiscated only if it is proved that it was used with the knowledge or connivance of the owner and that none of the persons, whose statements had been recorded, had even suggested or mentioned that the owners or master were aware or had connived in the concealment or carriage of the contraband gold. It was also stated that the captain had clearly stated that the Vessel had an unblemished record. It is categorically denied that they had any knowledge and it is stated that "none of our clients had either knowledge or had connived at such clandestine activities". It is also stated that the companys requirement was that frequent committee meetings should be held with regard to the management and safety and awareness videos were shown to crew periodically; films were included regarding stowaways and illegal smuggling of goods and the crew was reminded not to smuggle goods. At the safety meeting held on 15. 2001, the captain had specifically reminded the crew of the telex message regarding smuggling and all gangway watch-keepers and deck duty officers were strictly instructed to control gangway access and to prevent unauthorised boarding. At the safety meeting held on 15. 2001, the captain had specifically reminded the crew of the telex message regarding smuggling and all gangway watch-keepers and deck duty officers were strictly instructed to control gangway access and to prevent unauthorised boarding. The captain also informed that if any persons approached any of the crew members, then the captain should be immediately informed. The true copy of the minutes of the Safety Meeting is also enclosed in the typed set of papers. 9. In the order in original, at paragraph 71, it is observed as follows:- "71. As regards M/s.James Mackintosh & Co. Pvt. Ltd., it is clearly seen that they do not figure anywhere in the statements given by the staff of M/s Moonlight Chandling and the crew of M.V. Tiger Bridge and as they had come into picture only at the time of executing a bond for the vessels and in the absence of any implication by the persons who admitted to have committed the smuggling it can be concluded that the had no role in this smuggling operation. As regards the vessel M.V. Tiger Bridge, the ratio envisaged in Mogul Line Ltd Vs Addl Collector of Customs Bombay 1982 ELT 397 (BOM) does not apply as it is seen from the statements of the persons involved in this smuggling operation that they had smuggled gold on earlier occasions also. Thus it is evident that the owners of the vessel have not taken sufficient precautions to desist the crew from involving in smuggling activities. It is also seen that the smuggled goods find no place in crews effect declaration nor in any manifest declaration. Thus I hold the vessel M.V. Tiger Bridge liable for confiscation under Section 115(2) of Customs Act, 1962 for being involved in this smuggling operation and also the owners liable for the action of their employees." Therefore, even here, the Commissioner has not recorded any finding regarding knowledge or connivance, except to state thus, "it is evident that the owners have not taken sufficient precautions". There is nothing in the order-in-original to indicate that the captain had knowledge or it is with his connivance that the smuggling activity was done. The statement of the captain is extracted hereunder:- "My name is captain Georgios Perivolaris. My father name is Mr.Constantinos. I am aged 52 years. Resident of Athens, Greece. My S.B.No.54347A. There is nothing in the order-in-original to indicate that the captain had knowledge or it is with his connivance that the smuggling activity was done. The statement of the captain is extracted hereunder:- "My name is captain Georgios Perivolaris. My father name is Mr.Constantinos. I am aged 52 years. Resident of Athens, Greece. My S.B.No.54347A. I am Greek National, I am Master of the Vessel MV.Tiger Bridge since 13. 2001. I have been explained the provision of the Customs Act and the fact that the statements given to the customs officers can be used against me and my Vessel in the Court of Law. I am narrating the true events to the best of my knowledge. Today at about 11 a.m. a team of customs officers came to my Vessel alongwith 6 persons, three of which were identified by me, i.e. second officer of my Vessel Mr.Damaraju Kishore, Bosun Khalasi Hirabhai and A.B.Ratilal Patel. Other three persons were not known to me, were identified by customs officer as Mr.Rajan, Mr.Salim and Mr.Nabi. I was told by the customs officer that 900 bars of gold landed from the Vessel MV.Tiger Bridge has been taken delivery on 16. 2001 from the room of Mr.Ratilal Patel A.B. In the presence of second officer Mr.Damaraju Kishore and Mr.Khalasi Hirabhai Bosun by the above said three persons. As stated by them which I do not know anything I made the enquiries from my officers and crew Mr.Kishore, Mr.Patel and Mr.Khalasi and they confirmed the identity of Mr.Rajan, Mr.Salim and Mr.Nabi as the persons having taken delivery of 9 belts of gold each carrying 100 bars on 13.06.2001. Mr.Kishore, Mr.Patel and Mr.Khalasi admitted having transported the gold from Singapore and handing over to Mr.Rajan, Mr.Salim and Mr.Nabi. Thereafter customs officers asked Mr.Patel to identify the place of storage of 9 belts of gold carrying 900 bars. Mr.Patel stated that he stored the gold under his bed lower most drawers holes by removing the movable part of the drawer. He identified the place. He also stated that the gold belts were kept on the bed under the blanket just before delivery to Mr.Salim, Mr.Nabi and Mr.Rajan. Customs Officers further enquired and insisted Mr.Patel to show the place of storage of 9 belts of gold enroute to Singapore to Chennai. He identified the place. He also stated that the gold belts were kept on the bed under the blanket just before delivery to Mr.Salim, Mr.Nabi and Mr.Rajan. Customs Officers further enquired and insisted Mr.Patel to show the place of storage of 9 belts of gold enroute to Singapore to Chennai. After initial hesitation Mr.Patel took custom officers to first crane near the fore peak at the top most movable portion were under the long electrical cables. There were hollow space. Mr.Patel confirmed that he transported 9 gold belts from Singapore to Chennai-hiding in those hollow spaces. The rooms of all the three employees of my Ship and hollow space were photographed by customs team. In this regard I would like to state that Mr.Patel was incharge of operating the crane and no other crane officers were generally visiting that area. My Ship was searched by customs team with "Nil" recovery. In this regard, I wish to state that entire incident is very unfortunate and shocking to me as myself and my company have always warned my crew and officers against indulging in any smuggling activities. My company has an unblemished record offering from Singapore to Chennai for many years without any such incident. This entire operation could have been executed only by those three individuals and no other person of my Ship are involved. I promise to inform customs if anything I come to know further in this matter I request that whatever legal actions possible be taken only against three involved persons and rest of my crew and officers alongwith the Ship be allowed to sail to Singapore. We are already delayed and incurring heavy loss. Therefore, these are the materials which were before the Tribunal. 10. As stated earlier, two Members of the Tribunal differed in their view and therefore, the matter was referred to the Third Member and therefore, this third Member decision which decided the issue. 11. Section 115(2) of the Act underwent a change in 1988. Therefore, these are the materials which were before the Tribunal. 10. As stated earlier, two Members of the Tribunal differed in their view and therefore, the matter was referred to the Third Member and therefore, this third Member decision which decided the issue. 11. Section 115(2) of the Act underwent a change in 1988. Because of the deletion of the words - "and that each of them had taken all such precautions against such use as are for the time being specified in the rules", it is sufficient for the captain, the owner, his agent or the person in-charge of the Vessel to show that he did not have knowledge of the use of the Vessel for smuggling activity and had not connived at the smuggling activity. There is absolutely no finding that any of these persons had any knowledge of the smuggling activity or had connived at the smuggling activity. In fact, the order-in-original does not record a factual finding to this effect. Even in the show cause notice, which is quite elaborate and deals with the entire narration of events, there is nothing to the effect that it is with the captains knowledge or the captains connivance that the smuggling activity was undertaken. Statements had been recorded from all the six persons, who were apprehended. While they implicated one another, none of them implicated the captain nor did they say that it was with the knowledge and connivance of the captain that they could manage to bring on board the contraband gold. 12. Kripal Singh v. Collector of Customs (Prev), 1998 (104) E.L.T. 305 does not help the Department since it is evident that there the owner could not prove that the contraband goods were used without his knowledge. Whereas A.P.Moller Singapore Pvt. Ltd. v. Assistant Director, D.R.I., Bombay, (2004) 174 ELT 156 (BOM), cited supra, is directly on the point. There, the captain of the Vessel had stated that he had conducted inspection of the entire Vessel and thereafter, the Vessel had been confiscated under Section 115(2) of the Act. The Bench of the Bombay High Court observed that the adjudicating authority purported to confiscate the Vessel on the ground that appropriate precautionary steps had not been taken. The Bench observed further in paragraphs 6, 7 and 8 as follows:- "6. The Bench of the Bombay High Court observed that the adjudicating authority purported to confiscate the Vessel on the ground that appropriate precautionary steps had not been taken. The Bench observed further in paragraphs 6, 7 and 8 as follows:- "6. It appears that the adjudicating authority purported to confiscate the vessel on the ground that appropriate precautionary steps had not been taken to prevent the smuggling of the goods on board the vessel. It is pertinent to note that prior to the amendment of Section 115 of the Customs Act with effect from 13th May, 1988, a vessel was liable to be confiscated even if it was proved that there was a lapse on the part of the owner to take appropriate precautionary steps. However, that provision has been deleted with effect from 13th May, 1988. The present case pertains to the period after the amendment of Section 115 of the Customs Act. Therefore, the confiscation of the vessel on the ground that the owner or the captain of the vessel have not taken sufficient precautionary measures, cannot be a ground for confiscation of the vessel. 7. It was contended by the Counsel for the Revenue, that the negligence on the part of the Company/Captain in not replacing the lock of the cabin even after being noticed that the duplicate key has been misplaced, was sufficient to confiscate the vessel under Section 115(2) of the Customs Act. We are unable to agree with this submission, because, in the absence of a finding that the negligence on the part of the owner or the Captain of the vessel was with a view aid or abet the act of smuggling, no action could be taken against the owner of the vessel or the master of the vessel. In the present case, having found that there is no nexus between the negligence and the act of smuggling, the adjudicating authority has not levied any penalty on the owner/captain of the vessel. There is no finding recorded in the order in original that negligence on the part of the owner/Captain was deliberate with intent to facilitate the smuggling activity. Under these circumstances, it is not possible to uphold the confiscation of the vessel. 8. There is no finding recorded in the order in original that negligence on the part of the owner/Captain was deliberate with intent to facilitate the smuggling activity. Under these circumstances, it is not possible to uphold the confiscation of the vessel. 8. Heavy reliance was placed by the Counsel for the Revenue on the decision of the Apex Court in the case of Union of India v. Mustafa & Najibai Trading Co. reported in 1998 (101) E.L.T. 529 (S.C.). In our opinion, the said decision is totally distinguishable on facts. In that case, it was held that there was a lapse on the part of the Captain of the ship in not filing the Import General Manifest (IGM) and that the failure to file IGM was with fraudulent intention and, therefore, confiscation of the vessel as well as the penalty levied upon the owner of the vessel was upheld. In the present case, no such finding has been recorded. On the contrary, it is clearly held that no penalty can be levied on the owner or Captain of the vessel. Therefore, in the absence of a finding that the owner/master of the vessel had knowledge or connived with the act of smuggling, the vessel in question could not be confiscated under Section 115 of the Customs Act." 13. The above decision of the Bombay High Court squarely applies to the present case. Here, after receiving the telex message, instructions had been given to all the gangway operators to be vigilant and the statement recorded from the Captain does not indicate, as submitted by the learned Senior Central Government Standing Counsel, that he knew that these three persons were involved. He had clearly stated that he had no knowledge and that he was shocked when these three persons had indicated where they had concealed the goods and that he had stated that only they could have done it and no one else. This only means that the Captain had clearly stated that it was not with the complicity of any other crew member. This cannot and this does not mean that he knew that these three were involved. He has indicated his shock and surprise regarding the smuggling activity. This only means that the Captain had clearly stated that it was not with the complicity of any other crew member. This cannot and this does not mean that he knew that these three were involved. He has indicated his shock and surprise regarding the smuggling activity. He has also given a statement as to the steps he had taken to warn the crew and also told them if anyone approaches them, the crew has to inform the captain and the gangway operators have to be vigilant. 14. We are in entire agreement with the reasoning of the Bombay High Court in that case and we conclude that in the absence of a finding regarding the captains or the owners knowledge and in the absence of any allegation even in the show cause notice regarding the captains knowledge or connivance, we are unable to support the order of confiscation and we have to confirm that the Tribunal was right in concluding that the order of confiscation must be set aside. 15. Accordingly, we dismiss this appeal. No costs. We make it clear that our decision in this appeal is only with regard to whether the captain had knowledge and whether the Vessel can be confiscated under Section 115(2) and we have not gone into the merits of the involvement of other persons mentioned above and if any appeal has been filed in respect of that, the same will be dealt with separately.