Cus - Custodianship carries with it responsibility that is acknowledged in contract law - liability to duty on pilfered goods arises from this responsibility and not by any express provision in CA, 1962: CESTAT
By TIOL News Service
MUMBAI, JUNE 01, 2018: THE Commissioner of Customs (Import), JNCH held that the appellant is liable to pay Customs duty on the goods valued at Rs.1,16,92,946/- which were allegedly pilfered during their custodianship besides confiscating the remaining goods which were allowed to be redeemed on payment of fine of Rs. 10,00,000/- and a penalty of Rs. 10,000/- was also imposed u/s 117 of Customs Act, 1962.
In appeal before the CESTAT, the appellant submits that the allegation of pilferage is based on presumption and that their request for cross-examination had also been rejected.
The AR justified the demand by reiterating the findings of the adjudicating authority.
The Bench considered the submissions and inter alia observed –
On Merits:
+ It is on record that the container after landing in India was in the custody of the appellant and that the keys of the padlock securing the container was in their possession.
+ Custodianship carries with it a responsibility that is acknowledged in contract law. Handlers of containers in the transit from the address of the shipper to that of the consignee are liable to be proceeded against by one or the other for non-delivery or insufficient delivery. It is in the context of such responsibility that the custodian being in possession of a container sealed with a padlock must be seen.
+ It is only reasonable that the custodian, at the time of substitution of the padlock, is expected to take stock of the goods within, before taking over the responsibility for safe delivery of the goods. Having failed to do so, and being in full possession of the container with its contents, the claim of ‘short-shipment' does not stand the test of logic.
+ Custodianship is institutionalized in the Customs Act, 1962 to ensure that there is no loss of revenue between the landing of a consignment and its clearance for home consumption. Inherent in such custodianship is the presumption of conformity with the declaration unless asserted otherwise at the time of taking over of custodianship of the cargo. In the absence of such assertion, there is no reason to accept the claim of ‘short shipment'. It would, therefore, appear that the adjudicating authority has rightly fastened the liability for duty on the pilfered goods on the custodian, who is the appellant in the present proceedings.
+ The liability to duty on pilfered goods arises from the responsibility of the custodian and not by any other express provision in the Customs Act, 1962 .
+ Section 13 of Customs Act, 1962 enables an importer to escape duty on pilfered goods; it is that escapement which transfers the liability from the importer to the custodian .
Confiscation, Redemption fine, Penalty:
+ The goods that were available are not offending goods. There is no allegation that these have been imported contrary to any prohibition under the Customs Act, 1962 or any other law in force. They are yet to be subject to the process of importation prescribed in section 46 of Customs Act, 1962. Consequently, there is no ground for confiscation of these goods.
+ There is no requirement under the Customs Act, 1962 for declaration of any pilferage nor there is any apparent act of omission or commission that warrants imposition of penalty under section 117.
+ The appellant has been derelict in its responsibilities as custodian. The Customs Act, 1962 is not the proper provision to be invoked for that negligence.
Conclusion:
++ No flaw in the demand for recovery of duty from the appellant.
++ No justification for confiscation of the goods or of imposition of penalty - both are set aside.
The Appeal was disposed of.
(See 2018-TIOL-1687-CESTAT-MUM)
