2000 (5) TMI 1100 - HC - Customs

Summary

Issues Involved:
1. Interpretation of the Indo-Nepal Treaty of Transit.
2. Applicability of Customs Act, 1962 provisions, specifically Sections 53 and 54.
3. Determination of whether goods are in 'transit' or 'transhipment.'
4. Authority of Indian Customs over Nepal-bound cargo.
5. Legal conflict between international treaties and municipal laws.

Detailed Analysis:

1. Interpretation of the Indo-Nepal Treaty of Transit:
The petitioner, a company from Nepal, imported consignments through Calcutta Port for transit to Nepal. The Treaty of Transit between India and Nepal, signed by their respective Commerce Ministers, recognizes Nepal's need for freedom of transit due to its land-locked status. Article 3 of the treaty defines 'traffic-in-transit' and Article 4 exempts such traffic from customs duties, except for reasonable charges for transportation and services rendered. Articles 5 and 6 further provide for the storage and procedural aspects of traffic-in-transit.

2. Applicability of Customs Act, 1962 Provisions:
Sections 53 and 54 of the Customs Act, 1962, are relevant. Section 53 allows transit of certain goods without payment of duty, while Section 54 pertains to transhipment of goods without duty. The amendment to Section 54 includes a proviso for goods transhipped under an international treaty, requiring a declaration for transhipment instead of a bill of transhipment. Section 111(m) was also amended to address discrepancies in goods under transhipment.

3. Determination of Whether Goods are in 'Transit' or 'Transhipment':
The petitioner argued that the goods were in transit as per the treaty, while the customs authority treated them as transhipped goods under amended Section 54 and Section 111(m). The court found the customs authority's grounds for holding the goods, including discrepancies in consignment descriptions and values, to be vague and unacceptable. The court emphasized that the goods were intended for Nepal and any violation should be addressed by Nepalese customs, not Indian customs.

4. Authority of Indian Customs over Nepal-bound Cargo:
The court ruled that Indian customs have no authority over Nepal-bound cargo under the treaty, as the goods are in transit and not for consumption or warehousing in India. The treaty's provisions and the customs transit declaration fulfill the necessary conditions for transit through India. The court referred to previous judgments supporting the petitioner's position, including decisions by the CEGAT Tribunal and the Division Bench of the Calcutta High Court, which upheld the transit nature of goods under the Indo-Nepal treaty.

5. Legal Conflict Between International Treaties and Municipal Laws:
The court acknowledged that municipal law prevails in conflicts with international law but clarified that the international treaty in this case forms part of municipal law due to Nepal's land-locked status. The court rejected the customs authority's argument that the goods should be treated as transhipped under Section 54, affirming that the treaty's provisions for transit take precedence. The court concluded that the goods should be released and directed the customs authority to facilitate their transit to Nepal.

Judgment:
The court ordered the release of the goods, quashing the notice from the appraiser dated 28th April 2000. The Indian customs authority was instructed to complete the necessary formalities within 15 days to ensure the goods proceed to their destination in Nepal. The court emphasized the responsibility of Indian customs to take the goods to the Indian border and hand them over to Nepalese customs, ensuring compliance with the treaty and protecting the interests of both countries. The writ petition was disposed of without any order as to costs.