S.K. Bhatnagar, Member (T)

1. This is an appeal against the Order of Additional Collector of Customs, Airport, New Delhi dt.13.4.88.

2. The learned counsel stated that in this case the appellants is the Central Warehousing Corporation in whose custody the air cargo is kept pending clearance by Customs.

3. In the instant case, the Customs learnt that some of the imported cargo was being substituted either at the airline's warehouse or at the CWC warehouse. Hence, they investigated the matter and examined the consignment in question. On enquiry thus found that the consignees were fictitious. The examination disclosed that as against Auto-Spares declared in the Air Way Bills, the packages contained nuts and bolts. That apart two packages were found empty.

4. The Customs issued the show cause notice thereon alleging that the goods had been substituted while in the custody of CWC, which were the appointed custodians and were required to ensure that the goods were not removed from the Customs area with the permission of proper officer in terms of Section 45(2)(b).

5. For this alleged failure to comply with 45(2)(b) the appellants were penalised by the Additional Collector to the extent of Rs. 1000/-.

6. It was their contention that although the CWC are appointed custodian they could not be held liable to penalty as they had taken all possible precautions to ensure safe custody of the goods. That apart it has not been established beyond doubt that the substitution and pilferage took place while the goods were in the custody of CWC and there was every possibility that it might have taken place in the airlines godown or otherwise before they were transferred to the custody of CWC.

7. They are a public sector undertaking and had taken the required precautions and by deploying a number of security staff round the clock to watch and ward the warehouse. In this connection, they would like to draw attention to the letter addressed to the Additional Collector dt. 13.11.87 which details all the precautions and security arrangements made by them.

8. In the above circumstances it was their contention that they had not contravened Section 45(2)(b) and were not liable to penalty.

9. The learned SDR drew my attention to the Order of the Additional Collector and mentioned that as custodians they were required to take care of the goods but they have not taken sufficient precautions and enquiry and examination had revealed that the goods had been substituted and pilfered when the packets were in CWC custody. Hence, the appellants were liable to penalty.

10. I have considered the submissions of both the sides.

11. I consider that the learned counsel's submissions have strong force. The appellants, in reply to the show cause notice, have given the details of the security arrangements made by them and the department has not denied or contravened the same. In terms of Section 45(2)(b) all that is required and expected of a custodian is that he should take sufficient precaution to ensure safe custody of the goods and should not allow the goods to be removed without the permission of the proper officer of the Customs granting clearance.

12. In the instant case, although apparently there has been some substitution and pilferage, the very fact that the consignees have been found fictitious indicates some conspiracy and it is not the case of the department that the CWC had participated in such conspiracy . In fact the department has not adduced any evidence to show that there was a deliberate act of negligence on the part of CWC. That apart the possibility of the substitution or pilferage having taken place before the goods were transferred to CWC cannot be entirely ruled out. In any eventuality there is no evidence before us that the CWC had consciously or knowingly permitted removal of such goods without Customs clearance.

13. Hence, violation of Section 45(2)(b) is not established.

14. The Additional Collector's order is apparently based on assumption, presumption