1971 (11) TMI 56 - SC - Customs

Whether on the material before the adjudicating officer any reasonable person could have come to the conclusion that the dal in question was of Indian origin? Assuming that the dal was of Indian origin, did the appellant contravene the terms of the treaty between India and Nepal? Held that - In order to establish that the dal in question was of Indian origin, the customs authorities examined three witnesses. All of them frankly conceded that it was not possible for them to say definitely that the dal in question was of Indian origin. Hence the fact that the exportable surplus of Nepal was only 500 M.T. is not a positive proof to show that if more than 500 M.T. dal was exported from Nepal, the part of the exported dal must be of Indian origin. The dal imported from India might have been consumed and Nepalese dal might have been ex-ported. That apart, there is no material on the basis of which one could reasonably come to the conclusion that 250 M.T. dal which the appellant was seeking to export to Cairo was not Nepalese dal. In our opinion, there was absolutely no basis for the conclusion of the adjudicating officer that the dal in question was of Indian origin. The customs authorities have not placed any material before the court to show that the governments concerned have taken any measure for the purposes mentioned above. Hence there is no basis for coming to the conclusion that any of the terms of the treaty or even the assurances given by means of letters exchanged between them had been contravened. It is clear that the order of the adjudicating officer was without the authority of law and was wholly invalid. We accordingly allow this appeal.

Summary

Issues:
1. Determination of whether the exported dal was of Indian origin.
2. Interpretation of the terms of the trade and transit treaty between India and Nepal.
3. Validity of the order passed by the adjudicating officer.
4. Consideration of issuing a writ of mandamus for possession of the seized goods.

Analysis:
1. The case involved an appellant from Nepal exporting dal to Cairo, facing confiscation and penal action for allegedly re-exporting Indian-origin dal in violation of the India-Nepal treaty. The adjudicating officer concluded the dal was of Indian origin, but the High Court judge found this conclusion unsustainable due to lack of evidence distinguishing Indian and Nepalese dal. The Supreme Court agreed, emphasizing the absence of a basis for the officer's conclusion, ultimately quashing the confiscation order.

2. The Supreme Court analyzed the relevant treaty clauses on trade and transit between India and Nepal. It was noted that the treaty did not expressly prohibit re-exportation of goods imported by Nepal from India. The court highlighted Article 7, emphasizing freedom of transit without distinctions based on the origin of goods. The customs authorities' reliance on letters exchanged between the governments failed to demonstrate a prohibition on re-exportation, leading the court to conclude that no treaty violation had occurred.

3. The court found the adjudicating officer's order invalid and lacking legal authority. The order to confiscate the dal was quashed due to the absence of evidence supporting the claim of Indian origin. The court emphasized the necessity of legal basis and evidence for such actions, ultimately ruling in favor of the appellant and against the customs authorities.

4. Regarding the writ of mandamus for possession of the seized goods, the court acknowledged the appellant's predicament but noted that the goods were held by the Port Commissioners with a legal lien for charges due. The court declined to issue a writ for possession, citing the need to settle outstanding charges with the Port Commissioners. While sympathizing with the appellant's situation, the court highlighted the limitations of the legal remedy sought in the writ petition.

In conclusion, the Supreme Court allowed the appeal in part, quashing the adjudicating officer's order and directing the respondents to pay the appellant's costs. The court declined to issue a writ of mandamus for possession of the seized goods, leaving the resolution of charges with the Port Commissioners to the discretion of the customs authorities.