Narayani Trading Concern Pvt. Ltd. Vs. Collector of Customs - Court Judgment

Excerpt:
- altamas kabir, j.1. the petitioner concern is engaged in importation of various goods into nepal for consumption within the territory of nepal.2. in course of its business activities, the petitioner concern claims to have entered into a contract with m/s. yaquob yousuf of karachi, pakistan, for supply of 32 metric tonnes of white poppy seeds in 458 bags at kathmandu, nepal, through the calcutta port in transit to birganj. necessary invoice was accordingly raised and the said goods were shipped to calcutta by m.v. eagle moon breeze under bill of lading no. 5699581, dated 30th june, 1994.3. it appears that in view of the insular location of nepal without access to any sea port, a treaty of transit, a treaty of trade and an agreement of co-operation to control unauthorised trade were entered into between the government of india and the government of nepal to facilitate traffic in transit through their territories and to prevent infringement and circumvention of the laws, rules and regulations of either country in regard to matters relating to customs, narcotics and psychotropic substances, foreign exchange and foreign trade.4. according to the petitioner, after arrival of the aforesaid goods at the calcutta port, its authorised customs house clearing agent filed a customs transit declaration (c.t.d. for short) in accordance with the import procedure prepared in terms of the treaty of transit, containing the required particulars, along with the shipping documents, for the purpose of examination of the goods and necessary clearance for transit of the goods to nepal by the prescribed route.5. according to the agreed procedure, after the customs authorities are satisfied about the goods to be carried in transit through the territory of india, they are to endorse all the copies of the customs transit declaration, the original whereof is to be made over to the importer, and the duplicate and triplicate copies are to be sent to the indian border customs officer. the remaining copies are to be retained by the customs authorities.6. the goods in question appear to have been detained by the directorate of revenue intelligence at the calcutta port. hence this application has been made, inter alia, for a direction upon the concerned respondents to release the goods and to allow the petitioner to transit the same to nepal by the approved route.7. certain other prayers have also been made to which i shall advert at a later stage.8. appearing in support of the writ application, mr. bhaskar sen urged that in view of the provisions of the above-mentioned treaty of transit, and treaty of trade, the customs authorities at the calcutta port were not entitled to detain the goods and that they had acted illegally in doing so.9. referring to the import procedure prepared in pursuance of and subject to the provisions of protocol to the treaty of transit, mr. sen pointed out that paragraph 2 thereof set out the particulars to be included in the customs transit declaration, which, after the customs house was satisfied as regards the checks contemplated in the other paragraphs, are to be endorsed by the customs house and the original is to be handed over to the importer, while the remaining were to be used for official purposes.10. mr. sen submitted that, as could be made out from the affidavit-in-opposition affirmed on behalf of the respondents, the goods had been detained under a mistaken impression that poppy seeds were either narcotics in themselves or that narcotics could be derived therefrom.11. referring to the definition of 'opium poppy' and 'poppy straw' in the narcotic drugs and psychotropic substances act, 1985, mr. sen urged that poppy seeds had been specifically excluded from the purview and ambit of the said act.12. mr. sen urged that the customs authorities were, therefore, wrong in treating poppy seeds as a narcotic or a narcotic derivative and detaining the same as a result thereof.13. mr. sen then submitted that the detention of the goods by the customs authorities gave rise to the question of payment of demurrage charges to the port trust authorities of the calcutta port. mr. sen urged that since the goods had been unlawfully detained by the customs authorities, it is they who should be made liable for payment of such demurrage or port charges.14. in support of his aforesaid contention, mr. sen firstly relied on a single bench decision of the bombay high court in metal distributors ltd. v. union of india, reported in : 1988(37)elt512(bom) , wherein it was held that it was not open to the customs department to unduly delay clearance of the goods, and if such delay occurred, then the importer could not be penalised and after a reasonable period, the customs authorities were bound to issue detention certificate to the importer for the period of delay.15. mr. sen then referred to a decision of this court in the case of s.a. international v. collector of customs reported in : 1988(36)elt445(cal) , where it was held that where illegal proceedings were initiated against an importer by the customs authorities, the importer would be entitled to refund of warehousing and demurrage charges, since he could not be made liable for such payment.16. mr. sen also referred to another decision of this court in om shankar biyani v. collector of customs - : 1992(60)elt54(cal) and the supreme court in padam kumar agarwalla v. the additional collector of customs, calcutta, (a.i.r. 1972 s.c. page 542), wherein similar sentiments had been expressed.17. mr. sen urged that in the last case cited, the supreme court had observed that the appellant had been unlawfully deprived of the possession of his valuable goods because of the illegal action of the customs authorities and had also incurred loss as a result thereof. the supreme court observed further that it was only fair and just that the customs authorities, who were responsible for the situation, should bear the burden.18. mr. sen urged that in the instant case also since the goods had been unlawfully detained by the customs authorities, the petitioner could not be fastened with the liability of the demurrage or port charges after a reasonable period.19. mr. sen urged that while directing the respondents to allow the petitioner to transit the goods in question to nepal on the approved route in keeping with the provisions of the treaty of transit and treaty of trade referred to above, the respondents should also be restrained from compelling the petitioner to pay demurrage or port charges in respect of the consignment of poppy seeds wrongfully detained by the customs authorities purportedly on the supposition that they were narcotics or narcotics could be derived therefrom and that a misdeclaration had been made in respect thereof in the customs transit declaration.20. mr. sen also referred to the description of the term 'poppy' in the world book encyclopaedia, volume 15, where it has been categorically stated that poppy seeds have no narcotic properties and are sold as bird food and is also used for human consumption.21. opposing the application, mr. p.k. mullick urged that in accordance with the provisions of the treaty of transit and paragraph 2 of the import procedure, the importer or his agent was not only required to provide the particulars referred to therein on the customs transit declaration, but was also required to make a declaration that the goods in question were for nepal in transit through india and would not be diverted enroute to india or detained in india and that the entries made in the c.t.d. were true and correct to the best of his knowledge and belief.22. mr. mullick urged that in the various documents annexed to the writ petition and the c.t.d., the country of origin of the poppy seeds was shown to be pakistan, although, pakistan had internationally proclaimed that they have no licit or illicit production of opium poppy in their country, which meant that the poppy seeds, which are a by-product of opium poppy, could not have been produced in pakistan and the declaration regarding pakistan being the country of origin was false and amounted to a misdeclaration, mr. mullick urged that such misdeclaration prompted the customs authorities in calcutta to make enquiries and they received confirmation from the deputy director, revenue intelligence, delhi, that since there did not appear to be any licit production of poppy in pakistan, the genuineness of the consignments should be verified and be kept under detention for the said purpose.23. mr. mullick then submitted that the matter was, thereafter, referred to the chairman, pakistan narcotic's control bureau for making enquiries and to confirm whether the exporters mentioned in the letter of 12th august, 1994, written on behalf of the narcotics control bureau in india, were genuine exporters or not.24. mr. mullick submitted that till today, no answer had been received to the said queries from the chairman, pakistan narcotics control bureau.25. in this connection, mr. mullick also drew the attention of the court to the definition of 'opium poppy' and 'poppy straw' in the narcotic drugs and psychotropic substances act, 1985, and urged that since poppy seeds were a by-product of opium poppy and even poppy straw, the same could not be detached therefrom, particularly when pakistan had internationally taken a stand that licit cultivator of opium poppy had been forbidden in pakistan.26. referring to the decisions cited by mr. sen, mr. mullick urged that the same had no application to the facts of this case and that the supreme court made it clear in padam kumar agarwalla's case (supra), that even though the customs authorities were really liable to bear the burden on account of demurrage and port charges payable to the port commissioners, on relief in that regard could be given in the writ petition and the matter was left to the good sense of the customs authorities for taking appropriate steps to avoid further litigation.27. mr. mullick then urged that article ix of the treaty of transit made it very clear that nothing in the said treaty would prevent either contracting party from taking any measures which might prove necessary in pursuance of general international conventions, inter alia, to prevent infringement of industrial, literary on artistic property or relating to false marks, false indications of origin or other methods of unfair competition.28. mr. mullick submitted that in keeping with the above, the customs authorities were well within their jurisdiction in detaining the goods and taking other steps on the basis of the misdeclaration made by the petitioner concern regarding the country of origin of the poppy seeds sought to be exported from pakistan.29. submitting in the same vein, mr. mullick contended that such mis-declaration attracted the provisions of section 111(m) of the customs act, 1962, making the goods liable for confiscation and even penalty under section 112 thereof.30. in support of his aforesaid contentions, mr. mullick referred to and relied upon the decision of the supreme court in gramophone company of india ltd. v. birendra bahadur pandey, reported in : 1984(2)ecc142 , wherein it was held that the doctrine of incorporation recognises the position that the rules of international laws are incorporated into national law and are considered to be part of the national law unless they are in conflict with an act of parliament, in which case the municipal law must prevent. the supreme court also observed that the courts are, however, under an obligation within legitimate limits, to interpret the municipal statute so as to avoid confrontation with the comity of nations or the well-established principles of international laws. but where conflict was unavoidable, the latter would have to yield.31. mr. mullick urged that in the circumstances the local law, that is, the customs act, 1962, would have an over-riding effect over the provisions of the treaty of transit and the treaty of trade executed between india and nepal.32. mr. mullick submitted that if the petitioner concern could satisfy the customs authorities as to the country of origin of the poppy seeds, it would be at liberty to take possession of the goods for transit to nepal.33. from the submissions made on behalf of the respective parties it will have to be ascertained whether there has at all been a misdeclaration of the country of origin of the consignment of poppy seeds, and, if so, whether having regard to the provisions of the treaty of transit and treaty of trade, the provisions of sections 111 and 112 of the customs act, 1962, are attracted to the facts of the case.34. from the documents annexed to the writ petition and the affidavit-in-reply, it will appear that in the bill of lading, letter of credit of himalayan bank ltd., kathmandu, nepal, and phytosanitary/ health certificate issued by the ministry of agriculture, department of plant protection, government of pakistan, the country of origin of the poppy seeds has been shown as pakistan. there is also a certificate given by the nepal chamber of commerce on 16th november, 1994, that white poppy seeds can be imported under open general licence.35. as against the above, the respondents have produced certain correspondence where no definite assertion has been made regarding licit cultivation of opium poppy in pakistan.36. the customs authorities appear to have proceeded in the matter on the assumption that poppy seeds are narcotics in themselves and can also be used for deriving narcotics, which, however, is not the case. as explained in the extract from the world book encyclopaedia, poppy seeds are harmless and have no narcotic properties and are consumed by human beings, birds and animals.37. the provisions of article ix of the treaty of transit and article x of the treaty of trade, on which a good deal of reliance has been placed by mr. mullick, appears to deal with cases involving narcotics and psychotropic substances and infringement of trade marks. it is in the context of methods of unfair competition that the phrase 'false indications of origin' appears to have been used in both the articles.38. of course in the import procedure the customs authorities in india have been vested with authority to make a percentage examination of the goods to check whether the goods are in accordance with the customs transit declaration and conform to the import licence where such licence was required. thereafter, if the consignment satisfied the other checks contemplated regarding transportation and the mode of conveyance, the customs house is required to endorse copies of the c.t.d. so that goods could begin moving in transit. as pointed out on behalf of the petitioner, in these cases since the goods are merely in transit no bill of entry was required to be presented in terms of section 46 of the customs act, 1962 so as to attract the provisions of the said act. in fact, section 46 makes it clear that such bill of entry is to be presented by the importer in respect of any goods to be imported other than goods intended for transit or transhipment.39. as far as invocation of section 111(m) of the aforesaid act is concerned, the same would be available to the customs authorities in respect of misdeclaration of goods made under the customs act. in the instant case, however, the declaration is under the import procedure forming part of the treaty of transit.40. the position would have been different, had poppy seeds been a narcotic or a substance from which narcotics could be derived. then, in such event, having regard to the provisions of articles ix and x of the treaty of transit and the treaty of trade, the customs authorities in india would be entitled to apply the local law, namely, the customs act, 1962, which would then have an overriding effect over the terms of the treaty of transit and treaty of trade. the decision in the case of gramophone company of india ltd. (supra), cited by mr. mullick would then assume relevance.41. from the authorities cited, there is little room for doubt that poppy seeds have no narcotic properties and is used for human consumption, both as a seed and also the oil derived therefrom, besides being used as bird seed and cattle food. in fact, poppy seeds have been specifically excluded from the operation of the narcotic drugs and psychotropic substances act, 1985.42. in that view of the matter, even if there is a misdeclaration of the country of origin, it would not be sufficient for the customs authorities to detain the goods in this case.43. as to payment of demurrage and port charges, since the goods in question were detained without authority by the customs authorities, it is they who should bear the said burden. following the decision of the supreme court in the case of padam kumar agarwalla (supra), i leave the matter to the good sense of the customs authorities to take appropriate steps to avoid further litigation.44. the writ application, therefore, succeed. the respondent are directed to forthwith release the consignment of poppy seeds forming the subject matter of this writ application, and to allow the petitioner concern to transit the same to nepal in accordance with and in the manner provided for in the provisions of the treaty of transit and treaty of trade between the government of india and the government of nepal and the import procedure forming part thereof on the route mentioned in the customs transit declaration (import), being annexure 'a' to the writ petition, in the manner indicated below.45. in order to ensure that there is no pilferage enroute and that the goods are not diverted for use in india, mr. surajit samanta, a learned advocate of this court, bar association room no. 5, is appointed receiver over the consignment in question. the receiver will take custody of the goods and accompany the same by road to its destination in nepal.46. the receiver will be paid a remuneration of 300 gms for this purpose, to be borne by the petitioner. the petitioner will also bear the costs of transporting the receiver from calcutta to the destination of the consignment in nepal and back and his expenses enroute.47. this judgment will also govern the following matters in which the receivers appointed on the same terms as in this application have been indicated separately against each matter.matter no. 3015 of 1994 : mr. jiban hari mullick, advocate, bar association room no. 1.matter no. 3016 of 1994 : mr. sk. hasan ali, advocate, bar association room no. 1matter no. 3017 of 1994 : mr. jugal porel, advocate, bar association room no. 10.matter no. 3021 of 1994: mr. subrate mukherjee, advocate, 6, old post- office st., room no. 8.matter no. 3022 of 1994 : mr. shahid imam, advocate, bar association room no. 12.matter no. 3023 of 1994 : mr. mihir kundu, advocate, 11, old post office, 2nd floor,matter no. 3025 of 1994: mr. sandip chakraborty, advocate, bar associa- tion room no. 12.matter no. 3026 of 1994: mr. sahidullah munshi, advocate, bar association room no. 10.48. the writ application and the other writ applications referred to above are accordingly disposed of.49. there will be no order as to costs.50. prayer for stay of operation of this order made on behalf of the respondent is considered and allowed. there will be stay of operation of this judgment for a period of two weeks from date.51. all parties, including the receiver, to act on a signed copy of the operative part of this judgment on the usual undertaking.