A steamer agent filing the IGM is liable under Section 116 for unaccounted cargo deficiency.

MSC Agency India Pvt. Ltd., the Indian steamer agent and representative of Mediterranean Shipping Company, handled 150 containers declared in the Import General Manifest (IGM) and Bills of Lading as containing shredded steel scrap and heavy melting steel scrap.

Upon examination by the Docks Intelligence Unit, 143 containers were found to contain substantial quantities of broken roof tiles and only negligible quantities of the declared scrap; the remaining seven containers also showed significant shortages.

The average actual weight was approximately 12.5% of the declared weight.

The Commissioner of Customs confiscated the goods and containers and imposed a penalty of Rs.90,15,924 on MSC Agency under Section 116 of the Customs Act for failure to make a truthful declaration and to account satisfactorily for the manifested goods.

Proceedings against the importers were dropped after accepting their explanation that they had been deceived by the foreign suppliers.

The CESTAT set aside the penalty, holding that the case involved short shipment rather than short landing, that the containers had arrived with intact seals, and that there was no evidence of the agent’s knowledge of the misdeclaration.

Whether a steamer agent who files the IGM and represents the person-in-charge of a vessel before Customs can be held liable to penalty under Section 116 of the Customs Act for failure to account for the goods declared in the manifest?

Whether the contractual stipulations in the Bills of Lading that the cargo particulars were furnished by the shipper and were unchecked by the carrier absolve the steamer agent from statutory liability under Section 116?

Whether the CESTAT was justified in relying on Shaw Wallace & Co. Ltd. v. Assistant Collector of Customs despite the principles laid down by the Supreme Court in British Airways PLC v. Union of India?

The Court applied Sections 2(31), 30, 31, 116 and 148 of the Customs Act, 1962.

Section 116 imposes liability where goods manifested for import are not unloaded or are deficient and the deficiency is not satisfactorily accounted for; the liability extends beyond the person-in-charge of the conveyance to the agent or representative accepted by Customs for dealing with the cargo.

Under Section 30, the person delivering the IGM must subscribe to a declaration regarding the truth of its contents, making the IGM more than a mere notice of arrival.

In British Airways PLC v. Union of India, 2002 (2) SCC 95, the Supreme Court held that an agent or representative of the person-in-charge may be proceeded against under Section 116.

Following Caravel Logistics Pvt. Ltd. v. The Joint Secretary, the Court held that a person who lodges the import manifest and acts before Customs on behalf of the vessel’s master assumes corresponding statutory responsibility.

The Court treated the principles in Shaw Wallace as fact-specific and not controlling where the statutory requirements and factual circumstances establish agency and failure to account.

Contractual terms in a Bill of Lading cannot override statutory obligations under the Customs Act.

The Court found that MSC Agency had admittedly lodged the IGM, subscribed to the declaration of its truth, and acted before Customs as the agent of the vessel’s master.

It therefore fell within the category of an agent or representative of the person-in-charge contemplated in British Airways and Caravel Logistics, irrespective of whether it was formally the person-in-charge under Section 2(31).

The extreme discrepancy—150 containers transported through the same shipping line, with the actual cargo averaging only 12.5% of the declared weight—required a satisfactory explanation, which the agent failed to provide.

The intact seals and the Bills of Lading clauses did not discharge the statutory obligation because the agent had filed and verified the IGM, and the contractual allocation of risk between shipper and carrier could not prevail over the Customs Act.

The CESTAT’s conclusion that the matter was merely one of short shipment, based principally on Shaw Wallace, was held to be inadequately reasoned and inconsistent with the binding Supreme Court precedent.

The appeal was allowed; the CESTAT’s order dated 23 October 2013 was set aside, and the Commissioner’s order dated 27 November 2012—including the penalty of Rs.90,15,924—was restored.

MSC Agency was directed to comply with the order-in-original within twelve weeks of receiving the judgment.