India-Nepal Transit Treaty Cannot Override Customs Act Or Security-Based Import Restrictions: Madras High Court

The Court was hearing a writ appeal filed by the Union of India, Customs authorities and the Directorate of Revenue Intelligence against an order holding that the consignments had not been imported into India because they were meant only for transit and had not been cleared for domestic consumption.

A Division Bench of Justice Anita Sumanth and Justice C. Kumarappan observed: “There is no silence or vacuum in the Customs Act that would require us to turn to the Treaty in preference to, and overriding the provisions of the Customs Act. On the contrary, the Indian Customs Act is clear when it comes to our understanding on what import is and how it should be dealt with in different situations.”

Senior Panel Counsel Sai Srujan Tayi appeared for the appellants. Advocates Avanti Balachander and Ashly K. Prakash appeared for the respective respondents.

Background

The first respondent, a Nepal-based importer, imported six containers containing 4,050 bags of raw, unshelled watermelon seeds. The containers had been loaded in the United Arab Emirates and were to transit through Chennai and Kolkata before proceeding by road to Nepal.

At the relevant time, a notification issued under the Foreign Trade (Development and Regulation) Act, 1992, and the Foreign Trade Policy, 2023, prohibited the direct or indirect import or transit of all goods originating in or exported from Pakistan. The restriction was imposed in the interest of national security and public policy.

Acting upon intelligence that the containers contained prohibited goods, the Customs authorities detained and examined them at Chennai Port. They found that 300 bags carried labels describing Pakistan as the country of origin and seized the entire consignment.

The Single Judge quashed the seizure and the summons issued by the Directorate of Revenue Intelligence and directed the goods to be released for onward transhipment. The decision proceeded on the findings that the goods had not been imported into India for domestic consumption and that their accompanying documents indicated Nigeria as the country of origin.

The Customs authorities argued that the Single Judge had misconstrued “import” and had overlooked Sections 11 and 54 of the Customs Act. They submitted that the prohibition expressly covered goods in transit and that the conflicting origin documents raised factual questions which could not be decided in writ jurisdiction.

The importer relied upon the treaty governing transit between India and Nepal and argued that the consignments were intended exclusively for Nepal. It further relied upon commercial invoices, certificates and shipping documents referring to Nigeria as the country of origin.

Court’s Observations

Goods In Transit Constitute Imports For Applying The Prohibition

The Court examined the statutory definitions of “imported goods” and “importer” under Sections 2(25) and 2(26) of the Customs Act. It noted that imported goods are goods brought into India from a place outside India, excluding goods already cleared for home consumption.

The Court further examined Section 54, which permits transhipment without payment of duty subject to Section 11 of the Customs Act. It held that the statutory treatment of transhipment did not place such goods beyond restrictions imposed upon imports.

The Court noted that the notification expressly prohibited both direct and indirect import or transit of goods originating in or exported from Pakistan. It held that the notification had not been challenged and that the parties were bound by its express language.

The Court observed: “In the present case, we need hardly labour this point as the Notification itself proceeds on the basis that goods entering territorial waters for the purposes of transit shall be taken to be imports. The Notification has not been challenged and hence the parties are bound by the clear language employed, and express intention.”

The Court distinguished K.R. Ahmed Shah v. Additional Collector of Customs, Madras (1980) and Lucas T.V.S. Padi, Madras v. Assistant Collector of Customs, Madras (1980). It noted that those decisions concerned the stage at which goods could be treated as exported for claiming drawback under Section 75 and arose in a different statutory context.

The Court also considered In re: Sea Customs Act (1963), Apar Private Ltd. v. Union of India (1985) and Union of India v. Mustafa & Najibai Trading Co. (1998). It held that these authorities supported treating the consignments as imports for determining whether the prohibition applied.

Country Of Origin Was A Disputed Question Of Fact

The Court examined the documents accompanying the consignments. It noted that the commercial invoices, packing lists and some certificates referred to Nigeria as the country of origin, while one customs declaration referred to Sudan. In contrast, 300 bags carried labels declaring Pakistan as the origin.

The Court held that the conflicting material made the country of origin a disputed factual issue. It stated that the dispute could be examined through the procedure prescribed under the Customs Act and the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020.

The Court observed: “The factual dispute in regard to point of origin is apparent with the documents revealing origin either from Nigeria, Sudan or Pakistan.”

The Court noted that it had earlier suggested commencing and completing the statutory determination of origin within three weeks. However, the importer sought to appear without prejudice to its objection concerning the DRI’s jurisdiction and asserted that another authority was competent to decide the issue. In view of its reluctance, the Court did not pursue the proposed course.

The Court declined to determine the factual dispute in writ proceedings and relegated the parties to the alternative procedures available under the statute and rules.

Chennai DRI Had Jurisdiction To Inspect The Consignment

The Court rejected the importer’s argument that only the authorities in Kolkata could inspect or seize the goods because Chennai was merely the transhipment port.

The Court held that the Directorate of Revenue Intelligence possesses all-India jurisdiction under the applicable notification. It further noted that Chennai Port was the consignment’s first point of entry, arrival or import into India.

The Court consequently held that the DRI authorities at Chennai were competent to inspect the containers.

International Law Cannot Override Clear Municipal Law

The Court considered the importer’s reliance on Centre for Public Interest Litigation v. Union of India (2026) and National Legal Services Authority v. Union of India (2014).

The Court noted that Centre for Public Interest Litigation explained three possible approaches to international obligations: international law may fill gaps in domestic law; municipal law prevails where the two directly conflict; and domestic law should be interpreted consistently with international obligations where no contradiction exists.

The Court explained that National Legal Services Authority applied international law because Indian law was then silent on the rights and gender identity of transgender persons. International principles were used to address that domestic legal vacuum.

The Court held that the same reasoning could not apply to the present case because the Customs Act comprehensively governed imports and transhipment. There was no legislative silence requiring the Court to prefer the treaty over municipal law.

The Court further noted that National Legal Services Authority itself referred to Gramophone Company of India Ltd. v. Birendra Bahadur Pandey (1984), which held that Indian courts may apply international law according to comity unless clear domestic rules override it.

Treaty Itself Preserved Security-Based Restrictions

The Court also examined Article 11 of the relevant transit arrangement. It noted that the provision did not oblige a contracting State to permit transit of goods whose importation was prohibited on grounds including public morals, public health or security.

The Court further noted that Article 11 permitted contracting States to adopt reasonable precautions concerning goods in transit and expressly preserved measures necessary to protect their essential security interests.

The Court therefore held: “Thus, even on this score, the argument that Treaty would override municipal law has no legs to stand and we reject the same.”

The Court concluded that the treaty itself did not prevent India from enforcing restrictions imposed for national-security purposes.

Earlier Poppy-Seed Transit Decision Was Distinguishable

The Court considered Narayani Trading Concern (Pvt.) Ltd. v. Collector of Customs (1995), which concerned poppy seeds imported from Pakistan through Kolkata Port for transit to Nepal.

The Court distinguished that decision because it did not involve a prohibition comparable to the notification presently restricting imports and transit from Pakistan. It consequently held that the precedent did not assist the importer.

Entire Consignment Could Remain Seized

The Court rejected the contention that the seizure should be confined to the 300 bags carrying Pakistan-origin labels.

The Court noted that all 4,050 bags were covered by two bills of lading and together constituted one consignment. It further found that discrepancies in the accompanying documents reinforced its conclusion that the origin of the goods was a disputed factual question.

The Court held: “We agree that there need be no demarcation at this stage between those bags containing the offending labels and the other bags.”

The Court therefore declined to bifurcate the consignment at that stage.

Conclusion

The High Court allowed the Customs authorities’ writ appeal and thereby set aside the Single Judge’s order quashing the seizure and directing the release of the six containers for onward transhipment.

The Court held that the prohibition on direct or indirect import or transit from Pakistan applied to goods entering India for transhipment. It declined to determine the disputed country of origin in writ jurisdiction and left the issue to be resolved through the procedures available under the Customs Act and the applicable rules.

The Court also upheld the Chennai DRI’s jurisdiction to inspect the containers and refused to restrict the seizure to the 300 bags bearing Pakistan-origin labels. The connected application was closed, and no costs were imposed.

Cause Title: Union of India and Others v. Dhanalaxmi Food Private Limited and Others [Neutral Citation: 2026:MHC:4056]

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