2002 (5) TMI 62 - HC - Customs

Summary

Issues Involved:
1. Detention and confiscation of containers.
2. Validity of the Customs Authority's investigation.
3. Release of containers pending investigation.
4. Conditions imposed by the Customs Authority for release of containers.
5. Application of Customs Act provisions and relevant Circulars.

Detailed Analysis:

1. Detention and Confiscation of Containers:
The petitioner argued that containers, being distinct from the goods they carry, should not be detained or confiscated under the Customs Act. The containers were hired by the exporter and are not subject to investigation. The Customs Authority and the exporter contended that containers could be considered "packages" under Section 118 of the Customs Act and thus liable to confiscation. However, the court clarified that containers are not packages within the meaning of the Act. Containers are receptacles for transport, differing from packages, which are liable to confiscation. The court referenced the Tribunal's decision in AP. Muller (Maersk Line) v. Collector of Customs (Preventive), Bombay, supporting that containers cannot be confiscated even if they contain smuggled goods.

2. Validity of the Customs Authority's Investigation:
The Customs Authority's right to investigate and seize goods was challenged by the exporter. The court upheld the Customs Authority's jurisdiction to investigate and seize goods under Sections 110 and 113 of the Customs Act if there is an attempt to export improperly. The court ruled that the investigation was competent and within the jurisdiction of the Customs Authority, dismissing the exporter's contention.

3. Release of Containers Pending Investigation:
The petitioner sought the release of containers while the goods were under investigation. The Customs Authority did not object to releasing the containers, provided the petitioner obtained a no-objection certificate from the exporter. The court examined whether such a condition was permissible. The court noted that the Customs Authority could detain or seize goods but not containers. The court referenced Circulars issued by the Ministry of Finance, which instructed that containers should not be detained longer than six months and should be released if the goods are detained for a longer period.

4. Conditions Imposed by the Customs Authority for Release of Containers:
The Customs Authority's condition for releasing containers, requiring a no-objection certificate from the exporter, was challenged. The court observed that the Customs Authority could store goods in warehouses pending investigation and release containers. The court referenced Circular No. 83/98-Cus., which mandates that containers should be released within six months, and goods should be destuffed and stored in warehouses if detained for detailed examination or investigation. The court emphasized that the Customs Authority must ensure proper care of goods stored in warehouses.

5. Application of Customs Act Provisions and Relevant Circulars:
The court discussed the application of Section 49 of the Customs Act, which provides for storing imported goods in warehouses pending clearance. The court extended this provision to goods meant for exportation, subject to investigation. The court referenced the Privy Council's decision in Khwaja Nazir Ahmed v. King Emperor, emphasizing that actions must be taken as prescribed by law. The court ruled that the Customs Authority must complete the investigation and take appropriate action within three months, and the containers should be released within a fortnight from the date of the order.

Order:
The court allowed the writ petition, directing the Customs Authority to issue a notice to the exporter for destuffing the goods from the containers and storing them in a warehouse. The cost of warehousing and destuffing is to be borne by the exporter. The investigation should be completed within three months, and the containers should be released within a fortnight from the date of the order.