2000 (7) TMI 79 - HC - Customs

Summary

Issues Involved:
1. Legality of the seizure and show cause notice.
2. Applicability of Section 111(d) and Section 111(o) of the Customs Act, 1962.
3. Jurisdiction of Customs Authorities under the Indo-Nepal Transit Treaty.

Detailed Analysis:

1. Legality of the Seizure and Show Cause Notice:
The petitioner challenged the seizure of two containers and the issuance of a show cause notice by the Customs Authorities, arguing that the goods were meant for transshipment to Nepal and not for consumption in India. The Learned Single Judge found that the seizure and show cause notice were issued without jurisdiction and directed the respondents to permit the petitioner to re-export the consignments to Dubai. The High Court upheld this decision, stating that the Customs Authorities lacked jurisdiction to issue the show cause notice under Section 124 of the Customs Act, 1962, as the goods were covered under the Indo-Nepal Transit Treaty.

2. Applicability of Section 111(d) and Section 111(o) of the Customs Act, 1962:
The Customs Authorities initially relied on Section 111(d) and Section 111(o) of the Customs Act, 1962, to justify the seizure and show cause notice. However, the High Court found that Section 111(o) was inapplicable as it presupposes that the goods should be of an exempted category, which was not the case here. No exemption notification for these goods was presented. The court also noted that Section 111(d) was not pressed into service by the appellants. Therefore, the invocation of Section 111(o) was deemed irrelevant and inapplicable to the present case.

3. Jurisdiction of Customs Authorities under the Indo-Nepal Transit Treaty:
The High Court emphasized that the goods were being transshipped through Calcutta Port in pursuance of the Indo-Nepal Transit Treaty, which mandates that goods meant for Nepal should be cleared by the Customs Authorities and transported to Nepal without unnecessary hurdles. The court referred to clauses 5, 6, 7, and 8 of the Treaty, which outline the procedure for customs examination and transportation of goods to Nepal. The court also highlighted Clause 9 of the Memorandum issued under the Treaty, which requires goods to be covered by an insurance policy assigned to the Collector of Customs, Calcutta, ensuring that Indian Customs Duty is recoverable if the goods do not reach Nepal. The High Court concluded that the Customs Authorities acted beyond their jurisdiction by seizing the goods and issuing a show cause notice based on a mere apprehension that the goods might be consumed in India.

Conclusion:
The High Court upheld the decision of the Learned Single Judge, dismissing the appeal by the Union of India and confirming that the seizure and show cause notice were issued without jurisdiction. The court reiterated that the goods were protected under the Indo-Nepal Transit Treaty and that the Customs Authorities had no grounds to confiscate the goods under Section 111(o) of the Customs Act, 1962. The appeal was dismissed with no order as to costs.