1995 (10) TMI 52 - HC - Customs

Summary

Issues Involved:
1. Legality of the detention of Poppy Seeds imported from Pakistan in transit to Nepal.
2. Applicability of the Customs Act to the detained goods.
3. Validity of the declaration regarding the origin of the Poppy Seeds.
4. Right of the Indian Government to verify the origin of goods under the Treaty of Transit.
5. Good faith and intentions behind the detention of the goods.
6. Entitlement to damages or demurrage for the delay in the release of goods.

Issue-wise Detailed Analysis:

1. Legality of the detention of Poppy Seeds imported from Pakistan in transit to Nepal:
The respondent imported 32 Metric Tonnes of White Poppy Seeds from Pakistan to Nepal through the Calcutta Port. The goods were detained by the Indian authorities, which was challenged by the respondent. The court found that the detention during the course of traffic in transit was unjustified, emphasizing that the goods were in transit and not subject to customs duty.

2. Applicability of the Customs Act to the detained goods:
The Customs Act was invoked by the appellants to justify the detention of the goods. However, the court ruled that the Customs Act does not apply in this case since the goods were not imported for consumption in India but were in transit to Nepal. The court also noted that Poppy Seeds are not classified as narcotic drugs under the Narcotic Drug and Psychotropic Substances Act, 1985, and hence, not prohibited goods under the Customs Act.

3. Validity of the declaration regarding the origin of the Poppy Seeds:
The appellants argued that the declaration made by the respondent regarding the origin of the Poppy Seeds was false. However, the court observed that the declaration was based on a certificate issued by the Pakistan Government, and there was no evidence of false declaration or connivance. The court concluded that the declaration was made to the best of the respondent's knowledge and belief and could not be considered false.

4. Right of the Indian Government to verify the origin of goods under the Treaty of Transit:
The Treaty of Transit between India and Nepal allows the Indian Government to take measures necessary to verify the origin of goods. The court acknowledged this right but emphasized that the verification process should not cause unnecessary delay or harassment. The court found that the Indian Government acted in good faith but should have been more careful to avoid unnecessary detention.

5. Good faith and intentions behind the detention of the goods:
The court concluded that the Indian Government acted honestly and without malice in detaining the goods. The intention was to verify the correctness of the declaration, not to harass the respondent. The court found no evidence of deliberate misconduct by the Indian authorities.

6. Entitlement to damages or demurrage for the delay in the release of goods:
The court ruled that the Indian Government was not responsible for damages or demurrage due to the delay in releasing the goods. The court noted that the quantum of damages or demurrage was not established, and the Government acted in good faith during the verification process.

Conclusion:
The appeal was dismissed, and the court ordered the release of the Poppy Seeds to the respondent. There was no order as to costs. The court emphasized the importance of respecting international treaties and acting in good faith in international trade relations.