S. DURAIAPPA Vs. CC

JUDGEMENT

(1.) A vessel viz. M.T. STEREGUSHCHIY was purchased by M/s. Jesudasans Private Ltd. [Appellants in Appeal No. C/69/1999] for the purpose of ship breaking and the same was towed from Dubai to Valinokkam where the company had ship breaking facilities. The ship reached Valinokkan on 17.5.94 and the same was inspected and assessed to duty of Rs. 6,28,331/ -, which was paid by the above company. Subsequently, on 18.7.94, Customs officers searched the vessel and found 1,31,076/ - ball bearings [of Russian and Japanese origin] in 824 cardboard boxes having been concealed in a cavity in the hind part of the vessel. Gas cylinder and gas torch used for cutting steel plate covering the cavity were also found along with the boxes. All these goods were seized along with the vessel. Thereafter statements of some officials of the company and others were recorded. These persons included S/Shri R. Ravi [Appellant in C/1452/1998], M. Udayakumar [Appellant in C/1454/1998], N. Ramesh [Appellant in C/1453/1998], N. Suresh [Appellant in C/l455/1998], M. Muthusingaram [Appellant in C/l462/1998], S. Ramamoorthy [Appellant in C/1461/1998 and C/70/99], Duraiappa [Appellant in C/1451/1998] and T.R. Kannan [Managing Director of M/s. Jesudasans Pvt. Ltd.]. The Customs officers also searched the office premises of the company and recovered certain documents. The residential premises of some of the above persons were also searched but nothing was recovered. On the basis of the evidence gathered in the investigations, the department issued a show -cause notice to the appellants and others proposing to confiscate the seized vessel, ball bearings, etc. and to impose penalties on the noticees. The show -cause notice alleged that the vessel had been used for smuggling the ball bearings of foreign origin into India; that on its arrival at Valinokkam S/Shri R. Ravi, Duraiappa and Udayakumar cut open the cavity in the hind part of the vessel by engaging gas cutter; that the gas cylinder and gas torch employed for the purpose were brought in a jeep by Shri N. Ramesh, driver; that 175 boxes were removed from the vessel and loaded on to a lorry by 12 loading, workers with the help of Shri N. Suresh; and that one Shri Alagu, who had come with the lorry, returned with the load of 175 boxes of ball bearings at 5.00 a.m. on 17.7.94. It was also alleged that one Shri Ramesh J. Shah of the Singapore -based company from whom the vessel had been purchased by M/s. Jesudasans had concealed the ball bearings in the hind part of the ship abroad and that it was he who, in connivance with his business partner one Sh. Issac, came to India and pointed out the cavity containing ball bearings to Ramamoorthy and others. The show -cause notice alleged that the vessel was liable to confiscation under Section 115 of the Customs Act and that the ball bearings were liable to confiscation under Section 111(d) of the said Act. The show -cause notice also held all the noticees liable to penalty under Section 112 of the Act. In adjudication of the show -cause notice, the Commissioner of Customs ordered absolute confiscation of the 1,31,076 ball bearings [in 824 boxes] valued at over Rs.1.80 crores, under Section 111 (d) of the Act. He also confiscated the vessel under Section 115 of the Act, giving an option to M/s. Jesudasans Pvt. Ltd. to redeem the same on payment of a fine of Rs. 50.00 lakhs under Section 125 of the Act. The other items [gas cylinder, etc.] were confiscated under Section 118 of the Act. The Commissioner imposed penalties of Rs. 50.00 lakhs each on S/Shri S. Ramamoorthy, Muthusingaram and 3 others. He also imposed penalties of Rs. 5.00, lakhs each on S/Shri R. Ravi, Duraiappa, Udayakumar, N. Ramesh and N. Suresh. Shri T.R. Kannan [Managing Director] and other Directors of the above company were exonerated from penal liability. The present appeals are against the decision of the Commissioner.

(2.) HEARD both sides. It was submitted by ld. Senior Advocate for the appellants that Appeal No. C/70/1999 filed by Shri S. Ramamoorthy was not being pressed. Accordingly, Appeal No. C/70/99 is dismissed.

(3.) IN Appeal No. C/1461/1998 filed by Shri S. Ramamoorthy, who later died on 15.1.2003 as evidenced by the death certificate brought on record, an application [C/OT1/732/2004] was moved by ld. Senior Advocate seeking impleadment of the legal heirs of the deceased as appellants. We have allowed this application as per Miscellaneous Order No. 387/2005 dated 10.8.2005, by virtue of which the deceased's wife, son, daughter and mother are co -appellants in the appeal. 4. In Appeal No. C/69/1999 filed by M/s. Jesudasans Pvt. Ltd., it was submitted by ld. Senior Advocate that the confiscation of the vessel by the Commissioner was inconsistent with his own finding. The. Commissioner had found that neither the Managing Director nor any of the Directors of the company had the knowledge that the ball bearings had been concealed in, or removed from, the ship. Accordingly, ld. Commissioner exonerated them from penal liability. In this view of the matter, ld. Senior Advocate argued, there was no justification for confiscation of the vessel. After perusing the Commissioner's order, we have found the counsel's submissions to be factually correct. We have also noticed that there is no finding in the impugned order that the company had any such knowledge as above. In the absence of a finding that the vessel was used for smuggling of ball bearings with the knowledge or connivance of the company or its agents, Section 115 of the Act was not attracted. We have accordingly taken the view that the order of confiscation of the vessel under Section 115 is unsustainable. Appeal No. C/69/1999 is allowed.