Court Rules Notification Banning Import or Transit of Goods Originating from Pakistan Applies to Transhipments; Disputed Origin to Be Decided by Statutory Authorities
In a significant ruling delivered on September 24, 2026, the Madras High Court (Division Bench comprising Justices Dr. Anita Sumanth and C. Kumarappan) upheld the seizure of a consignment of watermelon seeds imported through Chennai port, intended for transhipment to Nepal via Kolkata. The Court reversed a lower writ court's order that had quashed the seizure and directed release of the goods, emphasizing that the prohibition on import or transit of goods originating in or exported from Pakistan applies equally to goods brought into India for transhipment.
The case arose when Dhanalaxmi Food Pvt. Ltd. (Respondent) imported six containers of watermelon seeds, shipped from Dubai, with some bags bearing labels indicating origin from Pakistan. The Directorate of Revenue Intelligence (DRI) and Customs authorities (Appellants) seized the consignment under Notification No. 06/2025-26 dated May 2, 2025, issued under the Foreign Trade (Development & Regulation) Act, 1992, which prohibits direct or indirect import or transit of Pakistani goods in the interest of national security.
The writ petition filed by the importer challenging the seizure was allowed by the single Judge on the ground that the consignment was not cleared for home consumption in India and was only meant for transhipment to Nepal, a landlocked country with which India has a treaty facilitating transit. The lower court also found that the documents accompanying the consignment showed origin from Nigeria, not Pakistan.
However, the Division Bench held that goods entering Indian territorial waters for transhipment purposes qualify as imports under the Customs Act, 1962, and hence fall within the scope of the Notification banning import or transit of Pakistani goods. The Court emphasized that the mere fact that goods are not cleared for home consumption or mingled with domestic goods does not exempt them from the prohibition. The prohibition explicitly covers both direct and indirect import and transit.
Rejecting the importer's argument that the India-Nepal transit treaty overrides domestic customs law, the Court clarified that where municipal law clearly occupies the field and imposes prohibitions in the interest of national security, such domestic laws prevail over international treaties. The Court relied on Article 11 of the Treaty, which permits exceptions on grounds of public health, security, and protection of intellectual property, thereby allowing India to restrict transit of prohibited goods.
The Court also refused to delve into the disputed question of the goods' country of origin in writ jurisdiction, noting that the documents showed conflicting origins including Nigeria, Sudan, and Pakistan. Instead, the Court directed that the determination of origin be conducted through the statutory Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020.
In addition, the Court affirmed the jurisdiction of the DRI officers at Chennai Port to inspect and seize the goods, dismissing the importer's contention that only Kolkata authorities had such jurisdiction, since Chennai was the first point of entry into India.
Finally, the Court endorsed the seizure of the entire consignment of 4050 bags, rather than limiting it to only the 300 bags bearing Pakistani labels, since the entire consignment was packed together under two bills of lading and could be treated as tainted pending determination of origin.
The appeal filed by the Customs authorities was accordingly allowed, setting aside the writ court's order and upholding the seizure.
This judgment reinforces the strict stance of Indian Customs law against prohibited imports from Pakistan, including transhipments, and clarifies that international treaties will not override domestic prohibitory laws enacted in the interest of national security.
Bottom Line:
Customs - Prohibition on import or transit of goods originating in or exported from Pakistan - Goods brought into India for transhipment to Nepal through Chennai/Kolkata ports fall within scope of Notification prohibiting direct or indirect import or transit - Treaty of transit with Nepal does not override clear municipal law or prohibition imposed in interest of national security - Disputed question regarding country of origin cannot be decided in writ jurisdiction and must be relegated to statutory procedure.
Statutory provision(s):
Customs Act, 1962 Sections 2(25), 2(26), 11, 46, 54, 111(d), 111(f); Foreign Trade (Development & Regulation) Act, 1992 Section 3; Foreign Trade Policy, 2023 Para 2.20A; Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020
Union of India v. Dhanalaxmi Food Pvt, Ltd., (Madras)(DB) : Law Finder Doc Id # 2990807
