Custodian of Goods cannot deny his liability for export of Illicit Goods

The appellant is a Customer Freight Station (CFS) and a custodian of goods for the purpose of import and export in terms of section 45 of the Customs Act 1962 (hereinafter referred to as ‘Act’). A show cause notice dated 16.10.2007 was issued by the Directorate of Revenue Intelligence (DRI) pursuant to the seizure of 30.212 metric tonnes of ‘red sanders logs’, being prohibited goods, falsely declaring the same to be ‘natural granite chips’. A response was filed by the appellant on 20.2.2008 denying any involvement in the transaction. The defence taken was to the effect that the goods originally packed in the container, ‘natural granite chips’, were substituted clandestinely and without the knowledge of the appellant at the time of transportation to the port for export. Once the containers were packed and sealed, they were beyond the control or responsibility of the custodian and no liability could, according to the appellant, be fastened on it on this account. Thus, since the role of the CFS as custodian did not extend to the supervision of transportation from the CFS to the port, there was no liability in regard to any event that may transpire after the goods left the freight station. According to the appellant, transportation was the domain of custom house agent and not the custodian.

Held by High Court

Custody is a dynamic process commencing with the receipt of cargo, movement of goods by the custodian and concluding with the presentation of shipping documents by the representative of the custodian at the gateway ports/airports and including all events in between. Any attempt to dilute the responsibility of the custodian in this sequence would clearly be contrary to the apparent intention. The custodian is, but one link in the chain of events relating to the movement of goods in the course of import and export. Accepting the argument of the appellant would weaken one link of the chain, thus compromising the entire network.

That a custodian is involved, and is thus responsible for all aspects of a transaction within the contours of circular 57/98 dated 04.08.1998 would thus admit of no doubt. As a consequence the provisions of section 114 will stand automatically attracted in the event of violations by way of omission and commission of the acts stated therein.

FULL TEXT OF HIGH COURT JUDGMENT

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