1. This is a petition under Article 226 of the Constitution challenging certain orders passed by the respondents under Section 116 of the Customs Act, 1962. The petitioners, who are a private limited company engaged in the business of agents for shopping companies, contend that the orders to be mentioned hereinafter passed by the respondents are not warranted by the provisions of Section 116 of the Customs Act and the fines which have been imposed upon them ought to be refunded.
2. The facts are very few and may straightaway be stated. The petitioners were acting as agents of a vessel known as M.V. LUKITA which had on board cargo for discharge at Colombo and in fact it had called at the port of Colombo. It is stated and it is not disputed that at Colombo there was a strike and after discharging part only of the cargo meant to be discharged at Colombo, m.v. LUKITA hastened back to Bombay some time in December 1969. Since it was not possible for m.v. LUKITA to return to Colombo, the Agents decided that the goods in m.v. LUKITA should be transhipped to another vessel which would then sail to Colombo.
3. As usual, m.v. LUKITA carried a list of the cargo with which she was sailing. Part of that cargo has been as mentioned above, discharged at Colombo and considerable part still remained on the ship when she arrived at Bombay in December 1969. The remaining cargo was discharged at Bombay, but the Master of the ship instead of delivering to the Port Authorities document correctly reflecting the cargo which was being discharged for transhipment to Colombo handed over the import manifest which included not only the cargo that was discharged at Bombay for transhipment but also the cargo which had been discharged at Colombo earlier. On a physical verification therefore it was noticed that the cargo that was actually discharged for transhipment fell short of the quantity of the cargo mentioned in the import manifest.
4. The petitioners were called upon to show cause as to why action under Section 116 of the Customs Act should not be taken against them. The petitioners submitted an explanation narrating the incident which happened at Colombo, the incident which compelled m.v. LUKITA to sail back to Bombay for the purpose of discharging the cargo which was actually meant for Colombo. It was also mentioned that by mistake the import manifest itself was handed over to the Port Authorities instead of giving the document containing the actual cargo discharged at the Port of Bombay.
5. The explanation did not naturally impress the Port Authorities as indeed it would not, unless supported by some other documentary evidence impress upon any body. The normal duty of a Captain of a ship is to hand over a document to the Port Authorities detailing only that cargo which is actually discharging. If it is the petitioners' case that since it was not known to the Captain of the ship as to how much cargo actually had been discharged at Colombo and therefore he could not also know how much cargo was discharged at Bombay, it is the fault of the Captain of the ship and of the petitioners themselves who were acting as agents of this ship.
6. Nevertheless the Port Authorities did give an opportunity to the petitioners satisfy them by pointing out that certain cargo had in fact been discharged at Colombo by m.v. LUKITA before she sailed from Colombo to Bombay. If this information were given, then comparing the same with the actual cargo discharged at Bombay and the import manifest which the Captain of the ship handed over to the Bombay Authorities, it could be ascertained whether there was a genuine shortfall or not.
7. Unfortunately the petitioner were not within a reasonable time able to procure any material from the Colombo Authorities who could have cleared the doubts entertained by the Bombay Authorities. Ultimately by five orders dated 23rd March 1976, the Assistant Collector of Customs, Manifest Clearance Department, imposed penalties of various amounts on the petitioners. It is these matters that are the subject-matter of challenge in this petition.
8. Mr. Korde, the learned Advocate appearing in support of the petition, has sought to inject some new life into the case of the petitioners by contending that the case of the petitioners as unfolded before the Customs Authorities was truthful and even the material which was made available to the authorities was sufficiently persuasive to hold that there was in fact no shortfall in the goods discharged at Bombay Port. Mr. Korde says that m.v. LUKITA had originally intended to discharge goods at Colombo, that due to unforeseen circumstances, she could discharge only half of the cargo at Colombo and that she had to sail back to Bombay - all these are facts which are not disputed as indeed, he said, they could not be disputed. That said ship also discharged goods again at Bombay is also accepted by the respondents, but it must also be borne in mind that all the cargo that was discharged at Bombay was cargo meant for Colombo its destination was Colombo, in fact the goods were intended to be discharged at Colombo initially, but due to certain unforeseen circumstances, the goods had to go back and forth from Colombo to Bombay. At no point of time it has been alleged that the goods which were discharged at Bombay or the goods mentioned in the import manifest carried by the ship m.v. LUKITA were to be discharged at any place other than Colombo.
9. In these circumstances it was easy, says Mr. Korde, for the Customs Authorities to compare the various documents which were produced for their perusal and by making a proper correlation of the various items, the Customs Authorities could have easily noticed that there was no short-loading at Bombay, as contended by the Customs Authorities.
10. In order to understand the nature of the difficulty of the petitioners and the nature of the solution which was being offered by Mr. Korde, I requested him to prepare some sort of table which would, if possible, enable me to find out whither such incongruities could be detected. He has with considerable industry prepared a compilation that consists of certain important documents. With the assistance of Mr. Korde I have gone through the same. I have also heard Mr. Bulchandani for the respondents on these documents. I am not satisfied that the documents which formed the compilation furnished by Mr. Korde, if read even along with the other material which is with the Department, if of such a nature as to lead the Customs Authorities to an unerring conclusion that there was no shortage of discharge at all in the Bombay Port. In view of this state of affairs and in view of the fact that despite being given several opportunities the petitioners had failed to produce before the Customs Authorities certain basic material which was required by them, it cannot be said that the orders passed by the respondents are erroneous or are such as to call for any interference by this Court under Article 226 of the Constitution.
11. Mr. Korde, however, then proceeded to contend with considerable justification that if the facts of the petitioners' case are firmly grasped, it is clear that no penalty is attracted under section 116 of the Customs Act. Mr. Korde has suggested an analysis of the said section which would lead to the conclusion that if there is any shortage of goods in the act of transhipping and if the destination of these goods is outside India, then the provisions of section 116 of the Customs Act are not attracted at all. I find great substance in this contention of Mr. Korde. It is therefore necessary to examine the section carefully.
12. I would for the purpose of understanding the correct meaning of section 116 of the Customs Act split it into three parts which would be as follows :-
I. (a) If any goods loaded in conveyance for importation into India;
(b) if any goods transhipped under the provisions of this Act; or
(c) if coastal goods carried in a conveyance;
II. (a) are not unloaded at their place of destination in India; or
(b) if the quantity unloaded is short of the quantity to be unloaded at that destination;
III. the ensuing provisions of section 116 will become applicable.
It is important to notice that what is required by section 116 of the Customs Act is the unloading of the goods at a destination in India to the extent to which the documents accompanying the goods require them to be unloaded in India. The further says that if they are not unloaded in India or if the goods are short-loaded in India, then alone the penal provisions of section 116 would come into play. The crucial words are : "not unloaded at their place of destination in India" or "if the quantity unloaded in short of the quantity to be unloaded at the destination". The words "that destination" necessarily refer to the place of destination in India referred to in the earlier of this section. It is therefore clear that the act of unloading or the act of short-loading must be at a place of destination, which place of destination must necessarily be again in India. If the destination of the goods is somewhere other then India, obviously their not loading or their short-loading in a place in India is totally irrelevant and that obviously could not be the subject-matter of section 116 of the Customs Act.
13. Mr Bulchandani, however, invites my attention to the facts of this case and points out that what is involved in this case is a short-loading in the process of transhipment of goods which had been done under the provisions of this Act. If the good are transhipped and if during the course of transhipment there is found to be short-loading, then the provisions of section 116 will be necessarily applicable. I detect a fallacy in this argument for the simple reason that the argument does not take into account the two parts of section 54 of the Customs Act and dose not also acknowledge the full and correct meaning of the word 'tranship' occurring in section 116 of the Customs Act.
14. What is being contended by Mr. Bulchandani is that if any good transhipped under the provisions of this Act 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, then the facts of the present case are covered by the said provision. According to him, if m.v. LUKITA discharged a certain cargo in Bombay for the purpose of transhipping the same to another ship which was to carry the cargo to anther destination though outside India, the destination of the goods that were being discharged for transhipment must be held to be Bombay itself and therefore it should be further held that the quantity was short of the quantity to unloaded at that destination.
15. It is impossible to accept this interpretation. The word 'destination' means the goal or the final place where the goods were to be unloaded. Admittedly the documents on m.v. LUKITA showed that the entire cargo was meant for the ultimate destination of Colombo and but for the strike that took place at Colombo, the entire cargo would have been unloaded at Colombo. But due to a sudden stoppage of the loading facilities at Colombo, the ship had to return to Bombay where the facilities of transhipping were availed of not for the purpose of landing the goods in Bombay but for the purpose of enabling the cargo to reach its destination, namely, Colombo which it had missed on the earlier occasion. The destination must necessarily mean the place which the manifest of the bills of lading or other trade documents show and not the other places where for one reason or the other the goods are loaded or unloaded.
16. Mr. Bulchandani, however, insists that section 116 refers to the goods transhipped under the provisions of this Act and therefore it is necessary to refer to the provisions of section 54 of the Customs Act. Indeed it is necessary to do so. But if one notices the provisions of section 54 it will be, in my opinion, easy to see that the said section envisages transhipment of cargo to domestic ports as will as to international ports. Section 54(1) states that where any goods imported into a customs port or customs airport are intended for transhipment, a bill of transhipment shall be presented to the proper officers in the prescribed form. Sub-section (2) deals with the transhipment of goods to any port outside India, whereas sub-section (3) refers to goods imported into a customs port but whose transhipment is with the object of despatching the same to any port within India.
17. When section 116 of the Customs Act talks of goods transhipped under the provisions of this Act not being unloaded or being short-loaded at a place of destination in India, it necessarily refers to the transhipment that takes place under sub-section (3) of section 54 and not the transhipment that takes place under sub-section (2) of section 54. This is so for the obvious reason that the destination of the goods whose transhipment takes place under sub-section (2) of section 54, as the provision itself says, is to a port outside India or airport outside India. It is thus clear that the transhipment of goods that takes place under sub-section (2) of section 54 is necessarily of goods whose destination is not in India but outside India. Though Mr. Bulchandani is justified in insisting that the works "goods transhipped under the provisions of the this Act" occurring in section 116 of the Customs Act must be read in context of section 54 of the Customs Act, he is not further justified in insisting that even goods whose transhipment takes place under section 54(2) of the Act must necessarily be governed by the provisions of section 116. This is so far the simple reason that the destination of the goods whose transhipment takes place under section 54(2) is outside India. Therefore, the goods involved in such a transhipment are not the goods covered by section 116 of the Customs Act.
18. If one considers the meaning of the word 'transhipment' it will further be clear that the question of not loading or short-loading as contemplated by section 116 does not arise. The word 'tranship' means to transfer from one ship or conveyance to another. In such an operation obviously the importance of the ultimate destination and not of the place where the transhipment takes place must be appreciated. Section 116 of the Customs Act seeks to deal with unloading or short-loading of goods meant to be unloaded at a place of destination in India. If as a result of the transhipment the goods are ultimately to be unloaded at a place outside India, section 116 will not come into operation.
19. I, therefore, uphold the contention of Mr. Korde that the proceedings held and the penalty imposed upon the petitioners under section 116 of the Customs Act in the instant case are illegal and are liable to be quashed.
20. In the result, the petition is allowed. Rule made absolute in terms of prayer clauses (a) and (b). But the peculiar facts of this case there will be no order as to costs. The petitioners are at liberty to withdraw any amount that they might have deposited in this Court pursuant to the order passed by this Court.