Per Jyoti Balasundaram : On 13/01/1992 on the basis of specific information the officers of Air Intelligence Unit intercepted a consignment of transshipment cargo which arrived from Sharjah by a Gulf Air flight under airway bill describing the goods as "Forged Carbon Steel Blind Flange" in the name of State Bank of India, Bangalore, notify Intech Engineering, Bangalore. Preliminary investigations with the State Bank revealed that they had never dealt with the consignee shown on the airway bill which was a small workshop engaged in the production of steel hoses, and lathe machines; one Veer Bhadra Rao was the owner of the said company and he said that he had nothing to with the consignment and the company had never imported any goods. Thereafter the consignment was cut open and examined, and 1832 gold bars of 10 tolas each bearing foreign marking, totally weighing 213.72 Kgs., was found concealed in it. The gold was seized under a reasonable belief that it had been smuggled into India and hence liable to confiscation under Section 111 (d) of the Customs Act, 1962. Statements of various employees of Air India, who are the handling agents of Gulf Air, the carrier airline, were recorded wherein it was brought out that other similar consignments had arrived from Sharjah by Gulf Air but were not forwarded to their final destinations. The Air India staff stated that on receipt of documents, they physically check all documents, segregate them sectorwise or descriptionwise and place them in their respective pigeon holes or boxes; after getting the check-sheet from flight handling section, checking and segregation takes place but local cargo is transferred to the carting cell for handing over to air cargo complex while the transshipment cargo is kept in their respective sectors to be later collected by the transshipment cell. Documents are collected from the pigeon hole cupboard and on the basis of documents received, they prepare cargo transfer manifest and then retrieve the cargo from their sectors for onward transfer of their final destination. They stated that if a particular document was not received by them from the pigeon hole they would have no way of knowing that such document and the concerned cargo covered under that document had ever arrived and therefore they would not have any record of that consignment. A show cause notice was issued on 10/07/1992 considering the imported consignment seized on 13/01/1992 as unclaimed. An addendum to the show cause notice was issued on 19/10/1994, proposing imposition of penalty on Gulf Air and Air India on the ground that 18 earlier consignments which had arrived by Gulf Air and subsequently handled by Air India were found to be missing and unaccounted in the records of both the carrier as well as the handling agent. These consignments were similar in description, weighment and destination, and therefore presumably contained contraband gold in concealed manner which was surreptitiously removed from the custody of Air India at Mumbai. The notice was adjudicated by the Commissioner who imposed penalty of Rs. 25 lakhs on M/s. Gulf Air and Rs. 1 crore on M/s. Air India under the provisions of Section 112 (b) of the Customs Act, 1962 in addition to ordering absolute confiscation of the gold recovered on 13/01/1992 along with forged carbon steel blind flanges used for concealment of the gold; hence these appeals by the carrier and the handling agent.

2. We have heard both sides. The entire order proceeds on the basis of presumption that the earlier consignments, for the carriage and handling of which the appellants have been penalised, contained concealed smuggled gold. The Commissioner has held that Air India failed in performance of their duties under Section 45 (2) of the Customs Act, which provides that the person having custody of any imported goods in customs area shall keep a record of such goods and sent a copy thereof to the proper officer and shall not permit such goods to be remo