1998 Supreme(SC) 655

1998(5) Supreme 482
Supreme Court of India
(From Bombay High Court)
S.C. Agrawal & V.N. Khare, JJ.
Union of India & Anr. —Appellants
versus
M/s. Mustafa & Najibai Trading Co. & Ors. —Respondents
Civil Appeal No. 152 of 1988
Decided on 16-7-1998
Counsel for the Parties :
For the Appellants : M.S. Usgaonkar, Additional Solicitor General, N.K. Bajpai, S.D. Sharma, Ms. Sushma Suri, Advocates.
For the Respondents : A.J. Rana, Sr. Advocate, Madhu M. Patel, Manoj Wad, Ashish Wad, Ms. Jayashree Wad, Advocates.

Important Points
1. Since mens rea is not essential for invoking power of confiscation of goods under Section 111of Customs Act, 1962 intention of master of vessel or owners of vessel and circumstances under which vessel containing the goods came to Indian port has no bearing on the exercise of power of confiscation of goods under Section 111(d) and 111(f) of Customs Act, 1962.
2. Time limit of 24 hours for filing import manifest would start from the time when a vessel arrive at port and not from time of payment of portcharges and brought into inner anchorage of port.
3. Issuing of notice to owner of goods under Section 124 of Customs Act, 1962 is not manda­tory failure to give notice to owner of goods under said section, would not by itself invalidate an order of confiscation.

Headnote:(i) Customs Act, 1962—Sec­tions 111(d) and 111(f) read with Sections 30—Confiscation of impro­perly imported goods—Vessel in question bound to Dubai from Karachi arrived at Bombay port—Vessel had 408 packages containing electronic and textile goods of foreign origin—Import manifest not filed within time, nor request made to file after time limit expired—Explanation for voyage to Bombay given by Captain and agent found to be conflicting and not bona fide by lower authorities—Goods and vessel confiscated—High Court set aside con­fiscation order accepting explanation — Not correct — High Court cannot convert itself into a Court of appeal—Question whether person im­porting or bringing goods intended to commit violation of provision of Act would be of no consequence for purposes of Section 111(d) and 111(f)—Confisca­tion justified.

       Held : While exercising its jurisdiction under Articles 226 and 227 of the Constitution it is not open to the High Court to re-appreciate the evidence produced before the subordinate tribunal and on the baiss of such re-appreciation of the evidence to arrive at a finding different from that recorded by such tribunal. The finding of fact recorded by the subordinate tribunal can be interfered with by the High Court only if it is found to be based on no evidence or if such a finding can be regarded as perverse. The High Court cannot convert itself into a court of appeal. (Para 19)

       The High Court embarked upon re-appreciation of the evidence and has dealt with the matter as if it was hearing an appeal on facts. Such a course, as indicated earlier, was not permissible. The Collector and the Tribunal, after carefully considering the evidence produced during the course of the proceed­ings, had concurrently arrived at the finding that the vessel MANSCO-3 had not come to Bombay from Karachi for a bonafide purpose and that the explanation offered for the vessel proceeding to Bombay from Karachi could not be accepted. The said finding cannot be regarded as unreasonable or perverse. We are, therefore, unable to uphold the decision of the High Court in reversing the said finding of fact recorded by the Collector and the Tribunal. Moreover, bona­fides of the owners or the master of the vessel has a bearing only on the applicability of sub-section (3) of Section 30 which enables the proper officer to permit the import manifest or import report to be amended as supplemented if he is satisfied that the said import manifest or import report is in any way incorrect or incomplete and there is no fraudulent intention. In the present case, the question of applicability of sub-section (3) of Section 30 does not arise because no import manifest was delivered by the Master of the vessel at any time. The intention of the owners or master of the vessel has no bearing on the exercise of the power of confiscation of goods under Section 111 of the Act because, as laid down by this Court, confiscation of goods is an action in rem direc­ted against the goods in respect of which the contravention rendering them liable to be confiscated has taken place. (Paras 23 & 24)

       In the matter of confiscation of goods under Section 111(d) of the Act intention has, therefore, no bearing. What is required to be seen is whether the goods had been imported or attempted to be imported or brought within the Indian customs water for the purpose of being imported contrary to any prohi­bition imposed by or under the Act or any other law for the time being in force. If it is found that any goods have been imported or attempt­ed to be imported or brought within the Indian customs water for the purpose of being imported contrary to any prohibition imposed by or under the Act or any other law for the time being in force the said goods would be liable to confiscation under Section 111(d) and the question whether the person importing or bringing the said goods intended to commit violation of the provisions of the Act or any other law for the time being in force would be of no consequence. Similarly, clause (f) of Section 111 provides for confiscation of any dutiable or prohibited goods which are required to be mentioned under the regula­tions in any import manifest or import report and which are not so mentioned therein. In the matter of confiscation of goods under Section 111(f) what is required to be seen is whether the goods are dutiable or prohibited goods and are required to be mentioned in the import manifest or import report under the regulations made under the Act and whether they are mentioned in the import manifest/import report. If it is found that the goods are dutiable or prohibited goods and are required to be mentioned under the regulations made under the Act in the import manifest/import report but have not been so men­tioned, the goods would be liable to be confiscated and the intention of the defaulter would have no bearing on the exercise of power to confiscate the goods. Since mens rea is not essential for invoking the power of confiscation of the goods under Section 111 of the Act, the intention of the master of the vessel or the owners of the vessel and the circumstances under which the vessel containing the goods came to Bombay has no bearing on the exercise of the power of confiscation of goods under Sections 111(d) and 111(f) and all that has to be seen is whether the conditions prescribed under the said provisions were fulfilled so as to justify the confiscation of the goods. (Para 24)

       (ii) Customs Act, 1962—Section 30—Import manifest—Time limit for delivery of—Starts from the time vessel arrive at outer anchorage of port and not from time when port charges are paid and vessel is brought into inner anchorage. (Para 25)

       (iii) Customs Act, 1962—Section 124 read with Section 111—Confiscation of goods—Show Cause Notice—Notice to owner of goods is not mandatory.

       Held : Distinction between the nature of the two penalties, viz., penalty in rem and penalty in personam, has been maintained in the Act. The provision regarding confiscation of goods contained in Sec­tions 111 and 113 of the Act is a penalty in rem which is enforced against the goods, while the personal penalties imposed under Section 112 and other provisions of the Act are in the nature of penalty in personam which are enforced against the person concerned. Section 124 of the Act, which incorporates the rule of audi altrem partem, one of the two basic tenets of the principles of natural justice, does not have the effect of making any alteration in the nature of these penalties. There may be situations where the goods are found to be smuggled goods and are seized but the identity of the owner of the goods is not known. Can it be said that since notice cannot be issued to the owner of the goods under Section 124 of the Act, the goods which are found to be smuggled goods cannot be confis­cated under Section 111 of the Act? In our view, this question must be answered in the negative because confiscation of goods under Section 111 of the Act is a penalty in rem which attaches to the goods which are the subject matter of the proceedings for confiscation and if it is found that the goods are liable to be confiscated under Section 111 of the Act, they can be confiscated without ascertaining their real owner. Moreover, in so far as the rule of audi altrem partem is concerned, the position is well settled that an order passed in disregard of the said principle would not be invalidated if it can be shown that as a result of denial of the opportunity contemplated by the said rule the person speaking to challenge the order has not suffered any prejudice. Since Section 124 of the Act incorporates the said principle of natu­ral justice, failure to give the notice to the owner of goods would not, by itself, invalidate an order of confiscation. What has to be seen is whether the owner of the goods has suffered prejudice on account of the failure on the part of the officer passing the order for confiscation of goods to give a notice to the owner of the goods before passing the order for confiscation of goods. The owner of goods ordered to be confiscated cannot be said to have suffered any preju­dice in a case where notice has been given to the person responsible for the alleged contravention on which the order for confiscation of goods is founded and who alone is in a position to offer an explana­tion for such contravention. The requirement regarding issuing of notice to the owner of the goods under Section 124 cannot, therefore, be construed as a mandatory requirement so as to have the effect of invalidating an order. An order of confiscation would not be rendered invalid if there is substantial compliance with the requirements of Section 124 in the sense that before passing an order of confiscation a notice has been given either to the owner of the goods or a person who is responsible for the contravention on which the order for con­fiscation of goods is founded and who alone is in a position to offer an explanation for such contravention. (Paras 32 & 33)

       Further held : In the present case, Show Cause Notices dated December 31, 1983 were issued by the Assistant Collector of Customs, R & I, Bombay, to M/s. Mustafa and Najibai Trading Co., Dubai, respondent No. 1, the owners of the vessel, MANSCO-3, Nuruddin Mustafa, respondent No. 2, the Managing Director of respondent No. 1, Abdul Rahim Kharti, the Captain of the vessel, MANSCO-3, the Promoter and the two Directors of M/s. Regent Shipping and Trade Pvt. Ltd., the local agents of the owners of the vessel at Bombay, M/s. Aero Meritimes Ltd., the agents of the owners of the vessel at Karachi and certain other persons. Replies to the said Show Cause Notices were filed on behalf of the owners of the vessel as well as by the Master of the vessel and the local agents of the owners at Bombay. The owners of the cargo did not appear before the Collector. None of the owners of the cargo chal­lenged the order for confiscation of goods passed by the Collector before the Tribunal and the order of the Collector regarding confisca­tion of goods became final as against the owners of the goods. In the Writ Petition filed before the High Court respondent No. 3, claiming to be the owner of a part of the cargo which was seized and confiscat­ed, for the first time sought to challenge the orders passed by the Collector as well as the Tribunal regarding the confiscation of the goods. In Para 8 of the Writ Petition it has been averred that before the Collector it was pointed out that the cargo belonged to various parties and mainly to respondent No. 3 and the names of the owners and other persons were furnished to the Collector and other customs offi­cers and that they should be given an opportunity of hearing if any judicial order is passed in respect of the cargo belonging to respondent No. 3 and other persons. The replies that were filed on behalf of respondent No. 1 before the Collector in response to the Show Cause Notice do not, however, support the said averment. Nor is there anything in the order passed by the Collector to show that any such contention was advanced before him. The judgment of the Tribunal also does not indicate that any such plea was raised. The said contention appears to have been raised for the first time before the High Court. Moreover, under the Show Cause Notices the seized goods were proposed to be confiscated under Sections 111(d) and 111(f) of the Act. The owners of the vessel, MANSCO-3, the Master of the said vessel and the local agents of the owners of the vessel at Bombay were the best persons who could offer an explanation and show that there was no contravention which could justify the confiscation of goods under Sections 111(d) and 111(f) of the Act. Since the owners of the goods were not present on the scene and had no personal knowledge, they could not offer an explanation other than that offered by the owners of the vessel, the Master of the vessel and the local agents of the owners of the vessel at Bombay. In the circumstances, it cannot be said that the failure to issue a notice under Section 124 to the owners of the goods has resulted in any prejudice to the owners of the goods that have been ordered to be confiscated and such failure can­not, therefore, be a ground for setting aside the order of confisca­tion of goods passed under Sections 111(d) and 111(f) of the Act. We are, therefore, unable to uphold the impugned judgment of the High Court setting aside the order for confiscation of the goods passed under Sections 111(d) and 111(f) of the Act. (Paras 34)

       (iv) Customs Act, 1962—Sec­tion 115 and Section 124—Con­fiscation of con­veyance—Vessel bound for Dubai from Karachi deviated voyage and arrived at Bombay port with goods of foreign origin—Import manifest not filed—Explanation for voyage to Bombay found to be not bona fide—Confiscation of vessel—Owners of vessel had knowledge of show cause notice under Section 124 and filed replies—Merely because show cause notice was not issued to owners confiscation cannot be quashed. (Paras 35 & 36)