Important Point
Clause 115(1)(e) of Customs Act, 1962 which provides for confiscation of a goods importing vessel in case of “substantial portion” of such goods missing mean substantial in the matter of quantity as well as value of the total goods and not of a particular consignment of goods on the vessel.

Judgment

S.C. Agrawal, J.-This appeal raises a question relating to interpre­tation of clause (e) of sub-section (1) of Section 115 of the Customs Act, 1962 (hereinafter referred to as ‘the Customs Act’) which pro­vides for confiscation of “any conveyance carrying imported goods which has entered India and is afterwards found with the whole or substantial portion of such goods missing unless the master of the vessel or aircraft is able to account for the loss of, or deficiency, in the goods”.

2. M/s. India Steamship Company Limited, the appellant herein, (here­inafter referred to as ‘the appellant-company’) was the owner of the sea-going vessel known as ‘M.V. Indian Resolve’. On its voyage from United Kingdom Continental ports to Calcutta Port it touched the ports at Bombay, Colombo, Madras and Visakhapatnam. The ship was carrying cargo imported for delivery at different Indian Ports including the Port of Calcutta. When the vessel arrived at the Port of Calcutta Peter Shera­zee, the Purser of the vessel, handed over the Bonded Stores List of the vessel to the customs officer. The said list mentioned the items of bonded stores and their respective quantities. The said Bonded Stores List stated that there was on board 1,22,400 pieces of ciga­rettes which were contained in unopened large cartons containing 5,000 cigarettes and also in smaller cartons and open cartons. On check­ing by the customs officer the unopened large cartons appeared to be intact and the customs officer locked up and sealed the Bond-Room of the vessel. On two occasions thereafter, on October 12 and October 16, 1974, Peter Sherazee took out some cigarettes from the Bond-Room in the presence of the customs officer and on both these occasions the customs’ seal on the Bond-Room was found to be intact. On October 28, 1974 one S.K. Mukherjee took over charge as Purser of the vessel and on that day the customs officer accompanied S.K. Mukherjee and Peter Sherazee for verification of the stock in the Bond-Room. Some ciga­rettes were taken out for consumption of the crew on the vessel. The large cigarette cartons still appeared to be intact. Thereafter the Bond-Room was duly locked and sealed. On November 4, 1974 S.K. Muk­herji went with the customs officer to the Bond-Room for taking out a further quantity of cigarettes. The seal of the Bond-Room was found to be intact. One of the large cartons, when opened in the presence of the customs officer, was found to be empty. Thereupon all the large unopened cartons were checked and it was found that nine of them were empty. On the basis of the stock statement as submitted there was a shortage of 45,000 cigarettes. On April 9, 1975 the Assistant Collec­tor of Customs for Prevention (Adjudi­cation), Calcutta, issued a notice to the appellant-company wherein it was stated that 45,000 cigarettes were found short in the Bond-Room of the vessel on November 4, 1974 and that no satisfactory explanation was forthcoming from the appel­lant-com­pany for the alleged shortage. In the said notice it was further stated that it is reasonably believed that the said cigarettes had been removed clandestinely from the vessel while she was in port. By the said notice the appellant-company was called upon to show cause why the vessel should not be confiscated under Section 115(1)(e) and why penal action should not be taken under Section 112 of the Customs Act. The appellant-company submitted a reply to the said notice where­in the shortage of 45,000 cigarettes was not disputed but it was contended that the shortage was inconsequential compared to the value of the entire imported cargo carried by the vessel and, therefore, Section 115(1)(e) was not attracted. It was pointed out that the imported goods scheduled to be unloaded at the Port of Calcutta con­sisted of 847 tonnes iron and steel, 200 tonnes of carbon blocks and plates, 6 tonnes of milk powder, 976 tonnes of machinery, spare parts, equipments and other general cargo and as compared to