M/S INDIAN STEAMSHIP CO. LTD. versus UNION OF INDIA AND ANR.

Citation: [1998] 2 S.C.R. 1120 · Decided: 21-04-1998 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
MIS INDIAN STEAMSHIP CO. LTD. 
v. 
UNION OF INDIA AND ANR. 
APRIL 21, 1998 
B 
[S.C. AGRA WAL, S. RAJENDRA BABU AND A.P. MISRA, JJ.] 
Customs Act, 1962 : 
S.115(1) (e)-Confiscation of Conveyance-Several types of imported 
C goods on vessel-Portion of one of the consignments found missing-
Additional Collector of customs taking the view that "substantial portion" 
of imported goods was missing and holding the vessel liable to confiscation-
Imposition of fine in lieu of confiscation-Held, expression "substantial 
portion" must be construed as referring to quantity as well as value of whole 
D or substantial portion of the goods which have been imported in the vessel-
Order of Single Judge of High Court setting aside imposition of fine upheld. 
The appellant-company was the owner of a ship which on its voyage 
from United Kingdom to Calcutta port touched some other ports of India. The 
ship was carrying cargo imported for delivery at different Indian ports 
E including the port of Calcutta. When the ship reached the port of Calcutta, 
the Purser of the vessel handed over to the Customs Officer the bonded store 
list of the vessel indicating that there were goods on Board including 1,22,400 
pieces of cigarettes placed in cartons. However, later when checked, it was 
found that on the basis of stock statement , there was a shortage of 45,000 
F 
cigarettes. 
A notice was issued to the appellant-company to show cause why the 
vessel should not be confiscated under s. IIS(l)(e) and why penal action 
should not be taken under s. 112 of the Act as the cigarettes had been 
removed clandestinely from the vessel when she was in the port. The company 
G contended that the shortage was inconsquential and insignificant as regards 
the value of the entire imported cargo carried by the vessel, namely, several 
tonnes of iron and steel, carbon blocks an~ plates, milk powder, machinery, 
spare parts equipments and other general cargo; and, therefore, s. I 15(1)(e) 
was not attracted. 
H 
The Additional Collector of Customs held that the expression 
1120 
> 
INDIAN STEAMSHIP CO. LTD. v. U.0.1. 
1121 
"substantial portion" in s. 115(1) (e) referred to the value of the missing A 
goods in themselves ; that missing quantity of cigarettes was substantial 
portion of the imported goods and the amount of duty leviable thereon being 
more than Rs. 31,000, the loss or deficiency of the missing goods rendered 
the vessel liable to confiscation under s. 115(l)(e). He imposed a fine of Rs. 
50,000 in liew of confiscation and also imposed a penalty of Rs. 10,000 on B 
the Purser under s. 112 of the Act The company filed a writ petition before 
the High Court. The Single Judge accepting the case of the company allowed 
the writ petition as regards the order under s. 115(l)(e). However, on appeal, 
the Division Bench restored the order of the Additional Collector of Customs. 
Aggrieved, the Company filed the present appeal. 
It was contended for the appellant that the expression "substantial 
portion" ins. 115(1)(e) of the Act must be construed to mean substantial 
portion of the goods imported in the vessel, as it could not be the intention 
c 
of Parliament to provide for confiscation of the vessel in a case where a 
missing portion of a particul?r consignment, though substantial portion of 
that consignment, was insignificant as compared to the goods imported in the D 
vessel. 
Allowing the appeal, this Court 
HELD: 1.1. The number of cigarettes that were found missing cannot 
be held to be a substantial portion, either in the matter of quantity or in the E 
matter of value of the goods that were imported in the vessel. (1127-D] 
1.2. The words " such goods" in the expression whole or substantial 
portion of such goods" contained ins. 115(l)(e) of the Customs Act, 1962 
refer to the goods which have been imported in the vessel therefore, the said 
expression must be construed as referring to the whole or substantial portion 
of the goods which have been imported in the vessel, keeping in view their 
quantity as well as value. Having regl\rd to the quantity or the valur of the 
goods imported, ifit is found that the goods found missing were a substantial 
portion of the goods that have been imported the provisions ofs. 115(1)(e) 
F 
would be attracted. [1126-E-Hl 
G 
1.3. The object underlying the provisions of s. 115(1)(e) is to check 
evasion of customs duty. But, at the same time, it cannot be ignored that the 
confiscation of the vessel wou

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