1997 (8) TMI 263 - AT - Customs

Summary

Issues:
Imposition of penalties on applicants for alleged diversion of goods meant for Nepal to India based on discrepancies in Customs Transit Declaration (CTD) and letter of credit.

Analysis:
The judgment addresses the imposition of penalties on the applicants for alleged diversion of goods meant for Nepal to India. The authorities found discrepancies in the documents related to the Customs Transit Declaration (CTD) of goods imported at Calcutta Port. The letter of credit mentioned in the invoice did not match the goods imported, leading to the belief that the goods were intended for diversion to India. The goods were confiscated in an earlier proceeding due to incomplete investigations, and penalties were imposed on the applicants in subsequent proceedings.

The appellant's counsel argued that under the Indo-Nepal Treaty of Trade & Transit, no confiscation of goods can be made if they do not reach the land Customs station bordering Nepal. The counsel contended that there is no provision in the Customs Act to confiscate goods meant for Nepal unless they are actually diverted to India. The provisions of Section 111(d) and (j) invoked in the show cause notice were deemed inapplicable to the present case as the goods were in transit to Nepal and had not been removed without permission.

The respondent contended that investigations revealed the letter of credit did not relate to the imported goods, indicating the goods were not intended for Nepal but for diversion to India. It was argued that the importer was not registered with the relevant authorities in Nepal, further supporting the allegation of diversion. The respondent emphasized that the Indian law is suspended under the treaty if goods are genuinely meant for Nepal, which was not the case here.

The Tribunal observed that the Indo-Nepal Treaty of Trade and Transit governs goods in transit to Nepal, requiring a Customs Transit Declaration (CTD) to be filed. The Customs authorities are tasked with verifying the goods against the CTD and ensuring proper sealing before transport to the border post. The Tribunal held that the Customs authorities' role is limited to verifying the goods' transit to Nepal, and allegations regarding the authenticity of documents should be addressed by Nepalese Customs authorities.

The Tribunal concluded that the authorities lacked the power to confiscate the goods based on discrepancies in the documents and that penalties under Section 112 could not be imposed. It was noted that the proper course would have been to proceed against the concerned persons under Customs House Agents Regulations. The impugned penalties on the applicants were set aside, and the Appeals were allowed, with directions for potential actions under the Regulations against the Customs House Agent involved.