By TIOL News Service

CHENNAI, MAR 07, 2018: THE petitioner is a Steamer Agent for the Ship, named ''M.V. Merini''.

The 'Vessel' arrived at the Port of Cuddalore on 13.11.1992 and carried urea in bulk, weighing 30,000 metric tonnes (MTs), under two Bills of Lading.

The Landing Certificate issued by the Superintendent of Customs Department, dated 19.03.1993 , confirmed the Survey Reports, indicating short landing of 483.739 MTs of cargo.

Discharge of the cargo was completed during February, 1993, however, a show cause notice was issued after a period of two years, i.e. on 09.03.1995, proposing to impose penalty on the petitioner for the shortage of cargo.

The petitioner submitted their reply, dated 15.04.1995, and the Order-in-Original was passed by the Joint Commissioner on 04.08.1999 imposing penalty of Rs.30,00,000/-.

By his order dated 31.01.2003 , the Commissioner(A) upheld the o-in-o dated 04.08.1999.

The Revisional Authority, by the impugned order dated 31.03.2004 , while confirming the order of the lower authority, granted a partial relief with regard to penalty alone by reducing the penalty to Rs.14,55,556/-.

In their Writ Petition filed in the year 2004, the order(s) are under challenge on the grounds of -

i) delay in adjudication process;

ii) The quantity mentioned in the Bills of Lading is not prima facie evidence for the quantity loaded on board the vessel.

By taking the Bench virtually to the Cuddalore Port, the petitioner made a detailed narration of various events which had taken place after the vessel had anchored in the port and submitted that the vessel was carrying the cargo under Charter Party Terms, in which, loading and discharge was the responsibility of the receivers of the cargo, and if there was any loss/damage, the Carrier or Steamer Agent cannot be held liable; that Cuddalore Port, being an Anchorage Port, without berthing facilities, the cargo, which is discharged by slings in non-standardized and the minimum stitched bags, into the barges, would result in loss of cargo, and further loss will occur at the pier point, where, the labourers use hooks to carry the goods, and further loss will occur at the time of storing, which is not the petitioner's responsibility and, therefore, cannot be held liable for such loss.

It is further submitted that the vessel commenced its discharge on 23.11.1992, and took two and half months for the entire cargo to be discharged.

It is further submitted that, there is a huge delay in passing the adjudication order by the first respondent/Revisoinal Authority, viz., period of six years, and such a long delay will vitiate the entire proceedings.

The counsel for the Respondent Revenue justified the order by submitting that the show cause notice was issued well within the period of five years from the date of discharge, and therefore, the decisions referred to by the petitioner are distinguishable; that, if the steamer agent was of the view that, Import Manifest or Import Report is in any away incorrect or in complete, they should have taken steps to amend the same.

After considering the submissions, the Bench observed that the sheet anchor of the submission made is that the enormous unexplained delay in concluding the proceedings will vitiate the same and the impugned orders are liable to be set aside.

Taking note of the case laws cited by both sides, the High Court observed -

+ The respondents, while exercising the powers under Section 116 of the Customs Act, have to exercise the same within the reasonable period, though the Act does not provide for a limitation, within which, the said power should be exercised.

+ The Courts have consistently held that the period of five years to complete the adjudication proceedings should be reasonable period, as the bond executed by the agent is required to be kept alive for a period of five years. The Government of India, in exercise of its revisional powers, followed the decision of various Court and held to the same effect.

+ The underlying principle in all the decisions is that, though an Authority, exercising power under the statute can do so, and if such an action has the effect of disturbing rights of a citizen, it should be done within a reasonable time, even if period of limitation is not stipulated under the relevant statute. What is the required time would depend upon the facts and circumstances of each case.

+ The petitioner, being the steamer agent, was required to execute a bond and the bond to be kept alive for a period of five years. The Courts have held that, if adjudication process is completed within the period of five years, it would be reasonable as the Agent cannot be directed to endlessly keep the bond alive.

+ In the cases on hand, though cargo was completely discharged on 19.02.1993, it took two years for the Department to issue show cause notice, (i.e. on 19.03.1995). The petitioner appears to have been prompt in responding to the show cause notice by submitting reply, dated 15.04.1995, and nothing happened thereafter for four years and the order-in-original was passed on 04.08.1999. Immediately thereafter, the petitioner preferred Appeal to the second respondent/Appellate Authority, which was rejected only after four years, i.e., 31.01.2003. The petitioner's Revision Petition, which was filed within the limitation, took one year, to be disposed of by the first respondent, by order, dated 31.03.2004. Only saving grace being that the penalty was reduced.

+ Thus, from the date of discharge, it has taken 11 years for the matter to attain finality. However, it is yet to attain finality since this Writ Petition has been pending since 2004. The time taken by the first respondent/Revisional Authority cannot be stated to be either unreasonable or suffers from inordinate delay and laches, as it is little over one year only. However, the Court cannot shut its eyes to the delay in adjudication of the show cause notice and the delay in disposing the Appeal Petition. This has taken 10 years from the date of discharge. The facts clearly disclose that the delay is inordinate and arbitrary.

+ In my considered view, the time taken for adjudication is what is important to be noted, and if the said time is reckoned, it has taken six years for the Authorities to complete the adjudication from the date of discharge, which is found to be unreasonable in all the decisions referred to above.

+ The penalty, which was imposed by the Adjudicating Authority and confirmed by the Appellate Authority was twice the shortage. On revision, the first respondent/Government of India noted that, there is nothing on record to show that the petitioner is intentionally or actively responsible to the said short landing in goods, and having rendered such a finding, the first respondent ought to have exercised its powers, and deleted the entire penalty. In other words, the first respondent was satisfied that there is no mens rea on the part of the petitioner.

+ Therefore, I have no hesitation to hold that the inordinate delay in concluding the adjudication proceedings is unreasonable. Further, the Revisional Authority, Government of India, having found that, no blame can be fastened on the petitioner for intentionally being the cause for the short landing, this is a fit case, where, the entire penalty imposed on the petitioner requires to be vacated.

The Writ Petition was allowed.

(See 2018-TIOL-385-HC-MAD-CUS)