1995 (5) TMI 38 - HC - Customs

Summary

Issues Involved:
1. Detention of goods by Customs Authorities.
2. Misdeclaration of country of origin.
3. Liability for demurrage and port charges.
4. Applicability of the Narcotic Drugs and Psychotropic Substances Act, 1985.
5. Applicability of the Treaty of Transit and Treaty of Trade between India and Nepal.
6. Jurisdiction of Customs Authorities under the Customs Act, 1962.

Detailed Analysis:

1. Detention of Goods by Customs Authorities:
The petitioner, engaged in the importation of goods into Nepal, had their consignment of 32 Metric tonnes of white poppy seeds detained by the Directorate of Revenue Intelligence at the Calcutta Port. The petitioner argued that under the Treaty of Transit and Treaty of Trade between India and Nepal, the Customs authorities were not entitled to detain the goods. The Customs authorities detained the goods under the mistaken impression that poppy seeds were narcotics or that narcotics could be derived from them.

2. Misdeclaration of Country of Origin:
The Customs authorities argued that the country of origin was misdeclared as Pakistan, which had proclaimed no licit or illicit production of opium poppy. This prompted the Customs authorities to detain the goods for verification. The petitioner provided documents showing Pakistan as the country of origin, including a Bill of Lading, Letter of Credit, and Phytosanitary/Health Certificate. The Customs authorities, however, did not receive confirmation from Pakistan's Narcotics Control Bureau regarding the licit production of poppy seeds.

3. Liability for Demurrage and Port Charges:
The petitioner contended that since the goods were unlawfully detained, the Customs authorities should bear the demurrage and port charges. The court referred to previous judgments, including the Supreme Court's decision in Padam Kumar Agarwalla v. The Additional Collector of Customs, which held that the Customs authorities should bear such charges if the detention was unlawful. The court left the matter to the good sense of the Customs authorities to avoid further litigation.

4. Applicability of the Narcotic Drugs and Psychotropic Substances Act, 1985:
The petitioner argued that poppy seeds were specifically excluded from the purview of the Narcotic Drugs and Psychotropic Substances Act, 1985. The court agreed, noting that poppy seeds are harmless and have no narcotic properties, as supported by the World Book Encyclopaedia. The court concluded that the Customs authorities were wrong in treating poppy seeds as narcotics.

5. Applicability of the Treaty of Transit and Treaty of Trade:
The court examined the provisions of the Treaty of Transit and Treaty of Trade, which facilitate the transit of goods through India to Nepal. The court noted that the Customs authorities have the authority to examine goods in transit but found that the detention of poppy seeds was not justified under these treaties. The court directed the release of the goods for transit to Nepal.

6. Jurisdiction of Customs Authorities under the Customs Act, 1962:
The Customs authorities argued that the misdeclaration of the country of origin attracted the provisions of Section 111(m) of the Customs Act, 1962, making the goods liable for confiscation and penalty. The court, however, found that the declaration was made under the Import Procedure forming part of the Treaty of Transit. Since poppy seeds are not narcotics, the local law under the Customs Act did not override the treaty provisions in this case.

Judgment:
The court directed the release of the consignment of poppy seeds and allowed the petitioner to transit the goods to Nepal. The court appointed a receiver to ensure no pilferage enroute and that the goods are not diverted for use in India. The Customs authorities were advised to bear the demurrage and port charges due to the unlawful detention of the goods. The writ application and other related applications were disposed of, with no order as to costs. The operation of the judgment was stayed for two weeks to allow for any further action by the respondents.