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Saira Zackira v. Joint Secretary - Habeas Corpus Petition No.357 of 2003  RD-TN 1088 (12 December 2003)
In the High Court of Judicature at Madras
C O R A M
The Honourable Mr. Justice P. SHANMUGAM
The Honourable Mr. Justice A.K. RAJAN
Habeas Corpus Petition No.357 of 2003
Saira Zackira .. Petitioner
1. Joint Secretary,
Government of India,
Ministry of Finance,
Dept. of Revenue,
2. Union of India, rep. by
Secretary to Government,
Ministry of Finance,
Dept. of Revenue,
New Delhi. .. Respondents
PRAYER : Petition under Article 226 of the Constitution of India
seeking to issue a Writ of Habeas Corpus calling for the records of the first
respondent in relation to the detention order passed in F.No.673
/58/2002-CUS.VIII dated 26.12.2002 under the provisions of the Conservation of
Foreign Exchange and Prevention of Smuggling Activities Act, quash the same
and consequently direct the respondents to produce the body and person of the
detenu, Mohammed Zackria, son of Shafaat Ahmed, now detained at the Central
Prison, Chennai, before this Hon' ble Court and set him at liberty forthwith.
For Petitioner : Mr. B. Kumar, Senior Counsel
for M/s. R. Loganathan and
For Respondents : Mr. V.T. Gopalan,
Addl. Solicitor General of India,
assisted by Mrs. Vanathi Srinivasan,
:O R D E R
P. SHANMUGAM, J.
Petitioner, the wife of the detenu, Mohammed Zackria, challenges the order of detention dated 26.12.2002 passed by the first respondent against her husband, under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
2. The detenu is running a Proprietary firm in the name and style of M/s. Softworrld, engaged in the process of manufacturing blankets made out of artificial fur lining. The raw material meant for the purpose of manufacturing the blankets has been imported by his firm under the D.E.E.C. Licence (Direct Export Entitlement Certificate) Scheme.
3. On the basis of the allegation that the detenu, having imported consignments of artificial fur lining free of duty, has not exported them and thereby failed to comply with the requirement of export obligation and on the basis of the other materials gathered, the first respondent-detaining authority was subjectively satisfied that the activity of the detenu amounted to smuggling as defined under Section 2(39 ) of the Customs Act, 1962 and coming within the meaning of Section 2 (e) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 and the goods involved, therefore, had become liable for confiscation under Sections 111(d), (m) and (o) of the Customs Act, 1962. The first respondent further satisfied that considering the high propensity and potentiality of the detenu to indulge in such activities in future, the detenu should be detained under COFEPOSA Act, 1974 and accordingly passed the order of detention. The order of detention was executed and the detenu was put in prison on 24.1 .2003 and he in prison since then. The said order of detention is now under challenge.
4. Mr. B. Kumar, learned senior counsel appearing on behalf of the petitioner elaborately argued both on factual and legal aspects touching on the order of detention. According to him, the order of detention is vitiated for the reason that the detaining authority had failed to take into account the vital and important aspect that has got a bearing on the order of detention, viz. the retraction made by the detenu in his bail application. On the same lines, he submitted that the failure to furnish the copy of the application sent by the detenu seeking an extension of time for complying with the export obligation under the D.E.E.C. licence which was seized from the office of the detenu and the communication of the respondent that a copy of the same will not be furnished to him as the same is not relevant is sufficient to hold that there is a failure to give a fair opportunity to the detenu and apply the mind to the facts of the case. Learned senior counsel further submitted that the detaining authority has taken into account extraneous and irrelevant matters which has vitiated the order of detention. He also submitted that there is inordinate delay in passing the order of detention and considering the representation sent on behalf of the detenu. In support of the above submissions, learned senior counsel has also referred to a number of decisions.
5. Mr. V.T. Gopalan, learned Additional Solicitor General of India submitted that the retraction made by the detenu was taken into account, the retraction having not been made before the Customs authorities, but made only before the Court, in the bail application filed by the detenu. He submitted that the extension application is not a document relied upon for the purpose of passing the order of detention and that no useful purpose will be served by furnishing the said document, since by that time, the detenu had already sold the imported materials in the open market. Learned Additional Solicitor General also submitted that all the materials taken into account by the detaining authority are relevant and that no extraneous matters were taken into account for the purpose of passing the order of detention. By referring to several dates and events, he submitted that there is no delay in passing the order of detention and in any event, according to him, the Court will not apply the same yardstick in considering the delay after passing the order of detention in reference to the delay, if any, that had occurred prior to the passing of the order of detention. Learned Additional Solicitor General further submitted that while dealing with economic offenders, the Court must take into consideration the interest of the society at large and should not be guided by technical pleas.
6. We have heard the counsel at length and considered the matter carefully.
7. On facts, it is seen that the detenu, the proprietor of M/s. Softworrld, had been manufacturing blankets made out of artificial fur lining. For the purpose of importing artificial fur, the detenu had availed of a Scheme called Direct Export Entitlement Certificate Scheme, under which an exporter is permitted to import without duty and export, value added items. According to the petitioner, which is not disputed in the counter affidavit, the detenu has, since the inception of his firm eight years ago, so far availed of three D.E.E.C. licences and on two occasions, he had complied with his export obligations fully and realized 100 export sale proceeds. The problem arose only in reference to the third licence. The third licence was obtained by the detenu on 30.5.2000. As per the terms of the said licence, the detenu is obliged to export the value added items within 18 months from the date of the issuance of the licence, i.e. on or before 30.11.2 001. The Handbook of Procedure (Volume 1) for the year 2001, in Paragraph 4.22, sets out the conditions which are extracted below :-
"4.22 The period of fulfillment export obligation under an Advance Licence shall commence
from the date of issuance of licence. The export obligation shall be fulfilled within a period of 18 months except in the case of supplies under Advance Licence for Deemed Exports/Advance Licence to the projects/ turnkey projects in India/abroad where the export obligation must be fulfilled during the contracted duration of execution of the project/turnkey project.
4.21 The request for extension in export obligation period may be made in the form given in Appendix - 10G. The regional licensing authority shall grant one extension for a period of six months from the date of expiry of the original export obligation period to the licencee subject to payment of composition fee of 1 of the unfulfilled FOB value of export obligation with reference to CIF value of imports made for which extension is being sought. Request for further extension may be considered by the regional licensing authorities subject to payment of composition fee of 5 of the unfulfilled FOB value of export obligation with reference to the CIF value of imports made for which extension is being sought. Such extension shall however not exceed a period of six months from the date of expiry of earlier extension." (emphasis added)
8. The provision under which the detenu was permitted to import and export the value added items and have the benefit of the exemption from duty makes it clear that one extension of the period of the export obligation is automatic. The rule also says that further extension may also be considered on payment of composition fee of 5 of the unfulfilled FOB value of the export obligation. It is also not in dispute that the detenu had already provided Bank Guarantee for a sum of Rs.4,00,000/-. Besides, the detenu was asked to deposit a further sum of Rs.4,00,000/- towards the possible duty liability and he had also paid the said amount.
9. In pursuance to an enquiry conducted against one M/s. Global Exports, who have alleged to have submitted a fake bank guarantee and which, in turn, is alleged to have originated from the office of the detenu and one M/s. Millennium Impex, the detenu was summoned to appear before the Department by Summons dated 20.2.2002. The detenu appeared before the Department on 4.3.2002 and gave a statement. The relevant portion of the said statement, as extracted in paragraph 39 of the grounds of detention, is set out below :-
"All the export obligation in respect of M/s. Zac Trading Company had been fulfilled; that you had made 20-25 (approx.) imports under DEEC in respect of M/s. Softworrld; that you had got three DEEC licences in the year 1998 to 2000 out of three licences, export obligation for the first two licences had been fulfilled; that for the third licence, export obligation was still pending; that the entire quantity pertaining to the third licence were imported and utilised; that out of the imported material only 60 approx. were lying in your factory premises; that balance quantity had been diverted to the local market; that this was done due to cancellation of the orders; that approximately about 5 to 6 thousands metres of artificial fur lining imported under the DEEC licence have been diverted to the local market." .....
"That you had converted about 75 of 60% of total imports under the last DEEC licences as finished product and the balance was lying as raw material; that the finished product namely artificial fur blanket and raw materials were lying in your factory."
"That you have agreed to pay duty for the diverted materials as admitted by you within 15 days ....."
The premises of the detenu was searched and the materials were seized and a further statement was recorded from the detenu on 19.3.2003, on which date the detenu was arrested.
10. The detenu filed an application for bail on 27.3.2003. In the said petition, he has stated as follows :
"On 19.3.2002, the petitioner was summoned by the respondent over the telephone to appear before them. The officers interrogated the petitioner continuously from 2.30 pm in the afternoon of 19.3.2003 and was detained by the officers thereafter. The petitioner was not allowed to go out or seek any assistance. He was forced to give a statement as directed by the officers and was informed that if he did not give statements as per their directions, he will be arrested. The petitioner pleaded that he has been co-operating with them and has already paid a sum of Rs.4,00,000/- and he has also offered to the Customs authorities that they can encash the Bank guarantees worth Rs.4 lakhs, which were already available with them towards duty payable by M/ s. Soft World. In all a sum of Rs.8,00,000/- has been paid towards duty payable by M/s. Soft World. However, the Customs authorities on untenable reasons and without appreciating the co-operation extended by the petitioner arrested the petitioner on 19.3.2002 at 16.00 hours. The petitioner was remanded before this Hon'ble Court at 4.30 pm on 20.3.2002. According to the Arrest Memo, the petitioner was arrested at 16 hours on 19.3.2002. There was no reason for the authorities to keep the petitioner in the Customs House for nearly 24 hours after arrest at 16 hours on 19.3.2002. The reason is that they wanted the petitioner to pay more duty and when he petitioner pleaded difficulty, he was arrested. The arrest is illegal." The detenu made a representation on 25.2.2003 requesting for a copy of the extension application filed by him. The Under Secretary to the Government of India, in his communication dated 12.3.2003, informed the detenu that the document was not a relied upon document for the purpose of the detention order issued against the detenu and that it is regretted that the same will not be supplied to him.
11. The point that arises for consideration is whether the failure to take into account a vital document which has got a bearing on the order of detention and the failure to supply the same has vitiated the order of detention. It has also to be considered at this stage whether the retraction made by the detenu in his bail application has been considered by the detaining authority properly.
12. The basis of the order of detention insofar as the detenu is concerned is that he had imported consignments and sold the imported materials in violation of the conditions of the Customs Notification and that the activity of the detenu amounted to smuggling, thus rendering the goods liable for confiscation. The case of the detenu is that he had taken three licences under the D.E.E.C. Scheme in the period of eight years of the inception of his firm and of that three licences, in reference to two licences he has fully complied with the export obligations and regarding the third licence, as per his statement made before the Department, he had imported totally 25,430 sq.mts. Of artificial fur and 60 of the imported materials are in the factory. He had converted 75 of the 60% raw materials into blankets and they were ready for export. Only 5 to 6 thousand metres of the imported material had been sold in the local market in view of the cancellation of orders.
13. The detaining authority has proceeded on the basis that once the period of 18 months expired on 30.11.2001, then immediately thereafter, it becomes a violation of the conditions of the Customs Notification and the goods become liable for confiscation. In the counter affidavit filed by the detaining authority, in paragraph 2, he has stated as follows :- "Therefore, the averment of the detenu that he has time for complying with the requirement of the export to a particular value is still available is not correct. Further, the detenu has stated that he applied for the extension of time, which so far has not been granted by the DGFT. Therefore, such applications did not have any implication for the detention proceedings." The detaining authority proceeding on the basis that the extension application has no consequence and that the moment the period of 18 months is over, the goods become liable for confiscation cannot legally be sustained and correct. In any event, it is not in dispute that the detenu had made an application for extension and that the said application has not been rejected so far. Inasmuch as all the records of the detenu have been seized from his office and taken away by the Department, he is not in a position to produce the copy of the said application. The Department is holding the copy of the extension application and at one stage, it was produced before this Court, but later on, not furnished. However, from the order dated 12.3.2002 and the counter affidavit, it is clear that the extension to comply with the export obligation under Paragraph 4.22.1 of the Handbook is automatic and a second extension is also permissible.
14. The argument of the learned senior counsel for the petitioner is that if the export obligation in respect of even a portion of the goods - in this case, about 22 - is not complied with, if the available 75% of the goods are exported and the value realised, then no question of failure to comply with the export obligation would arise. On this argument, there is no reply from the side of the respondents. However, the fact remains that the extension application would have a bearing on the alleged violation committed by the detenu. The detaining authority has proceeded as though once the period of 18 months is over, there is automatic confiscation. He has also proceeded on the footing that the question of application of extension of time will have no consequence. We are unable to agree with this. If the D.G.F.T., who is the competent authority to grant extension of time in order to comply with the export obligation, had considered and granted the extension as sought for by the detenu, the question of proceeding against him for his alleged failure to comply with the export obligation would not have arisen at all.
15. In U-Foam Pvt. Ltd. Vs. Commissioner of Customs, Chennai [2003 (154) E.L.T. 633], the C.E.G.A.T. Southern Zone Bench, Chennai has taken the view that export obligation, although not fulfilled during the period initially allowed, yet fulfilled within the period extended, duty and penalty are not leviable under Sections 28 and 112 of the Customs Act. In I.F.G. Limited vs. Commissioner of Customs and Central Excise, Goa [2002 (145) E.L.T. 348], the C.E.G.A.T. Western Zone Bench, Mumbai has taken the view that the obligation of payment of duty would arise only if the export obligation is not fulfilled at the end of the extended period.
16. The detenu, in his bail application, has clearly stated that the statement obtained from him on 19.3.2002 was a statement obtained by force and at the dictates of the officers. He has further stated that he was threatened that if he did not give the statement as per the dictation, he would be arrested and that therefore, he gave the said statement. This is a clear retraction of the detenu from his statement dated 19.3.2002. The detaining authority has proceeded to rely on the said statement for the purpose of detention, as could be clearly seen from paragraphs 40, 50 and 73.1 of the grounds of detention. Relying upon the alleged statement, the detaining authority came to the conclusion that the detenu had violated the provisions of the Customs Act and the Import and Export Policy. In the counter affidavit filed by the first respondent/detaining authority, in paragraph 9, after referring to the statements of the detenu dated 4.3.2002 and 19.3 .2002, has stated as follows :-
"It is submitted that the detenu has not made any retraction to the above statement so far. The aforesaid statement clearly establish that the detenu had sold the goods, which were imported against DEEC Licence No.0410006376 dated 30.5.2000, and the goods available in the factory were indigenous."
The authority who had passed the order of detention has filed the counter affidavit. He had categorically stated that no retraction has been made to the statements of the detenu made on 4.3.2002 and 19.3.20 02. In other words, the detaining authority is not actually apprised of the retraction made by the detenu in his bail application. However, it is seen that in paragraph 33 of the grounds of detention, the same authority has stated that he has taken into consideration the allegations and the retractions made by the detenu in his bail petition and that he was satisfied that the allegations and retractions were baseless and devoid of any merit and hence he rejected the same.
17. By going through the statement made by the detenu in the various statements, especially the statements made by him on 4.3.2002 and 19 .3.2002, the portion which were found to be put against him has been clearly retracted by him in his bail application. He has categorically stated that those statements were obtained by force and at the dictates of the officers and at the threat that he would otherwise be arrested. The failure to take into account as to the substance of the retraction and the mechanical statement that the allegations and retractions made by the detenu were taken into account and found baseless is a clear sign of non-application of mind. The detaining authority has clearly contradicted the alleged grounds of detention in his counter affidavit and has stated that there was no retraction made by the detenu so far, i.e. till the dae of filing of the counter affidavit on 19.9.2003, whereas the retraction was made on 27.3.2002 itself.
18. The Supreme Court, in Mohd. Toufeek Mohd. Mulaffar vs. Additional Secretary to the Government of Tamil Nadu [Writ Petition No.(Crl.) 602 of 1989] held that the failure to take into account the retraction contained in a bail application is a clear case of non-application of mind. In that case, their lordships found that the grounds of detention did not take note of the retraction statement. The mere reference to the bail application in the grounds of detention is not sufficient. The reason for making a reference to the bail application is on the question whether or not to make a detention order against a detenu in jail. Their lordships held that nowhere in the grounds of detention they found application of mind to the fact that the vital confession statement considered to be voluntary one by the detaining authority had, in fact, been retracted by the detenu at the earliest possible opportunity, when he preferred the bail application. It was further held that the detaining authority ought to have been alive to the factum of retraction and after being alive to that fact, it is open to the detaining authority to reach the conclusion that it was voluntary, in which case it would be a different matter, with which the court would not have interfered.
19. Following the above judgment, a Division Bench of this Court, in Arun Kumar Soni vs. Union of India [1992 L.W. (Crl.) 170], has held thatonce the confession is sought to be used, the detaining authority must be aware if the confession is retracted. Inspite of the retraction, it may not still be possible for the detaining authority to arrive at a subjective satisfaction to preventively detain the detenu after being alive to the said fact. The mere expression of retraction is different from awareness of fact. The effect of retractions must have been taken note of by the detaining authority while arriving at the subjective satisfaction. In this case, t he mere reference to the alleged retraction in the grounds of detention is not awareness of the substance of retraction, as could be evident from the counter affidavit filed by the detaining authority.
20. A Division Bench of the Karnataka High Court, in Asha Kini vs. Joint Secretary, Government of India [1996 M.L.J. (Crl.) 271], has taken the view that a reference to the bail application or even the memo as one of the documents enclosed to the grounds of detention does not ipso facto mean that the detaining authority had properly applied its mind to the said document, particularly to the fact that the confession statement had been retracted by the detenu. A mere reference to the bail application is not a substantial compliance with the requirement of law that the detaining authority must disclose the awareness of the fact relevant to the question whether or not to make an order of detention.
21. In A. Sowkath Ali vs. Union of India [2000 S.C.C. (Cri.) 1304], the Supreme Court has held that all documents which are relevant which have bearing on the issue, which are likely to affect the mind of the detaining authority should be placed before it. The Supreme Court held that the confession statement and the retraction, both constituting a composite relevant fact, should have been placed. If one of the two documents alone is placed without the other, it would affect the subjective satisfaction of the detaining authority. The principle laid down in this case applies to both the points, viz. failure to place the extension application filed by the detenu or consideration of the same by the detaining authority and the failure to consider the substance of the retraction made by the detenu and this vitiates the order of detention.
22. The judgment in Prakash Chandra Mehta vs. Commissioner and Secretary, Government of Kerala [1985 (Supp.) S.C.C. 144], it was held by the Supreme Court that there is no question of non-application of mind to the retraction of a confession statement if subjective satisfaction is arrived at on the basis of other independent and objective factors enumerated in the grounds. As pointed out earlier, the detaining authority relied substantially on the statement of the detenu and on the facts of the case, it is not made out that there are other independent objective facts available in the grounds of detention so as to sustain the grounds.
23. The learned Additional Solicitor General mainly relied on this judgment for the proposition that the grievance of the detenu that he was not furnished with the copy of the extension application is a fancied grievance of the detenu, as found by the Supreme Court in that case. We are unable to countenance such an argument. The detaining authority has proceeded on the basis that on the failure of the detenu to comply with the export commitment within a period of 18 months, the imported goods take the form of smuggled goods coming within the meaning of the Customs Act, 1962 since they are liable for confiscation for non-payment of duty, forgetting for a moment that the Handbook of Procedure enables the detenu to get an automatic extension of time, followed by a further extension subject to certain conditions. As pointed out earlier, the detenu had complied with the substantial requirement of making the finished products ready from about 75 of the raw material and if he had been able to export those goods and realise the export value, the question of duty and penalty may not have arisen at all. Therefore, the extension application ought to have been taken note of by the detaining authority and the detenu should have been furnished with a copy of the said application in order to pursue his submissions before the Central Government. In these circumstances, the grievance of the detenu is a real one and the failure on the part of the detaining authority to take into account the extension application and the failure to furnish the copy of the same to the detenu has resulted in the non-application of mind on the part of the detaining authority and the consequent failure to afford a fair opportunity to the detenu as guaranteed under Article 22(5) of the Constitution of India.
24. In John Martin vs. State of West Bengal [A.I.R. 1975 S.C. 775], while dealing with the representation of a detenu, it was held that the Government cannot reject the representation in a casual or mechanical manner. There should be real and proper consideration by the Government even though it may not be a reasoned order. In this case, the Central Government has stated that the extension application will not be supplied since the document isn ot a relied upon document. We find that the said document has got an important bearing on the subject and hence, the said document ought to have been taken into account and in any event, the Central Government cannot withhold an application made for an extension.
25. One of the main pleas of the detenu is that extraneous matters were taken into account and that his case got mixed up with the other exporters and a generalised conclusion has been arrived at by the detaining authority. A reference was made to the conclusion of the detaining authority in paragraph 71 of the grounds of detention to the effect that goods imported under the name of M/s. Softworrld and various fictitious firms, have been diverted to the local market. Again, in paragraph 73, the name of the detenu and other names were referred stating that they have jointly and severally floated fictitious firms and obtained D.E.E.C. licences in the names of the fictitious firms, imported goods and cleared the same by producing fake Bank Guarantees and thereby evaded customs duty. It is also stated that the detenu has admitted to have sold the goods in violation of the provisions of the Customs Act and the Import and Export Policy. After going through the facts of the case and the records, we find that in respect of the allegation as far as against the detenu and his firm, M/s. Softworrld is concerned, it is not a fictitious firm, their Bank Guarantee is a genuine one and they have not sold the goods in violation of the Customs Act and the Import and Export Policy.
26. As repeatedly pointed out by the detenu in his representation, his statement as well as in this petition, the detenu has started this firm eight years back and he has so far dealt with three such Licences, of which he has complied with the terms in respect of two Licences. Only in reference to the third licence, he had made 75 of the finished product ready for export and he still had sufficient time left for complying with the export obligation and his application for extension of time is pending. However, the detaining authority has proceeded to hold that the moment the period of 18 months is over, there is violation of the conditions of the Customs Notification and that the sale of a portion of the material would make the confiscation of the whole goods imported. We are not inclined to go into the allegations made against Ateeq Rahman of M/s. Vijay Impex, the imports made by M/s. Millennium Impex owned by Akhtar Ahmed/Ali Ahmed and managed by Ateeq Rahman, Global Exports, Galaxy and Accent Exports owned by Syed Raffi Ahmed and Altaff Enterprises owned by Altaff Ahmed. They are all different firms dealing in, or may be, indulging in violating the conditions of the D.E.E.C. Licences. Their bank guarantees were said to be forged, for which the detenu is in no way concerned with. It is rather surprising to note that bank guarantees of such voluminous extents were obtained without even verifying the genuineness of those guarantees for years together.
27. However, insofar as case on hand is concerned, the violations by those firms, in our view, have no relevancy or proximity to the firm of the detenu. As pointed out earlier, the bank guarantee furnished by the detenu was found to be genuine and it has also been encashed. He was further asked to pay an additional sum of Rs.4,00,000/- and he has also paid the same, even though he had 75 of finished product in hand. Therefore, we are unable to find as to how subjective satisfaction could be arrived at based on extraneous materials relating to different firms and concerns and a generalised conclusion was arrived at that there is a criminal conspiracy involving the detenu and that there is floating of fictitious firms and furnishing of fake bank guarantees. Though we know the constraint that we cannot go into the realm of subjective satisfaction on the material aspect of the allegations which is said to be based on the materials available with the detaining authority, on a scrutiny of the allegations contained in the grounds of detention, we find that the order of detention proceeds on the basis of clearly extraneous materials and jumps to the conclusion in respect of the detenu that his is also one of the fictitious firms and that his bank guarantee also is a fake one and that there is a criminal conspiracy involving the detenu. We are unable to find any material for the detaining authority to have come to such a generalised conclusion.
28. In Mahboob Khan vs. The Commissioner of Police, Ahmedabad [A.I. R. 1989 S.C. 1803], the Supreme Court held that the detaining authority did not apply his mind properly confining his consideration only with reference to the incidents mentioned in the grounds of detention and has mechanically passed the order taking into consideration various extraneous matters, viz. incidents other than those shown in the grounds of detention in which the detenu had no direct or indirect connection or participation. In Union of India vs. Sampat Raj Dugar [199 2 (58) E.L.T. 163 (S.C.)], while considering Clause (o) of Section 11 1 of the Customs Act, 1962, following the decision in East India Commercial Co. Ltd. vs. The Collector of Customs, Calcutta [1963 (3) S.C.R. 338], it was held that Clause (o) contemplates confiscation of goods which are exempted from duty subject to a condition, which condition is not observed by the importer. Occasion for taking action under this clause arises only when the condition is not observed within the period prescribed, if any, or where the period is not so prescribed, within a reasonable period. Their lordships observed as follows :- "It, therefore, cannot be said that the said goods were liable to be confiscated on the date of their import under Clause (o)."
29. In Narendra vs. V.P. Gujral [A.I.R. 1979 S.C. 420], their lordships of the Supreme Court, while dealing with COFEPOSA Act, considering the definition of smuggling, held that the intention of the legislature was to treat the smuggling of goods and abetting of smuggling of goods as grounds separate and distinct and that both are separate grounds for detention. That is to be taken in all such activities which result in accomplishment of smuggling of contraband goods. Though the provisions that have been referred to in this case are Sections 1 11(d), 111(m) and 111(o), reliance was placed only on Section 111(o) stating that the conditions for the goods exempted have not been observed and that therefore, the goods are liable for confiscation.
30. As referred to and pointed out earlier, the detaining authority could not have come to the conclusion that the detenu has failed to observe the conditions prescribed since as on the date of the arrest of the detenu, the detenu had time upto May, 2002, taking into account the automatic extension of time for a period of six months from 30.1 1.2001. There is a further extension of time for six months allowable subject to certain conditions. Therefore, it is premature on the part of the detaining authority to have come to the conclusion that since the detenu has not been granted extension of time by the D.G.F.T. and that since the detenu had sold the imported materials in violation of the conditions, he had made the goods liable for confiscation. As rightly pointed out, the authority granting extension had to consider the extension application filed by the detenu and the detaining authority cannot say on his own that the said extension would not be granted. Factually, the detaining authority had committed an error in holding that the detenu had sold all the materials imported. As further pointed out, the detaining authority is clouded by the activities of persons other than the detenu holding fictitious firms, furnishing fake bank guarantees, selling imported goods in the local market and not exporting them after value is added. The detaining authority has failed to take into account that in respect of the third Licence, out of the total quantity imported, viz. 25430 meters of imported artificial fur lining, the detenu had admittedly diverted to the local market, only 5000 to 6000 meters of the same. This is only 22 of the total imported material and moreover, 60% of the total imported materials had already been value added and converted into exportable fur blankets. However, the detaining authority relied on the statement of the detenu dated 19.3.2002 wherein it is recorded that most of the goods lying at the factory are locally made goods. The detaining authority has failed to take into account the retraction made by the detenu in his bail application in reference to this point. As rightly pointed out, whether the imported material is still available is a jurisdictional fact and it cannot be assumed by the detaining authority that they are locally made goods. It has to be decided on an objective consideration by taking an expert's opinion on the nature of the goods available. Therefore, we are of the view that invoking the provision under Section 111(o) of the Customs Act is premature and cannot be sustained in the light of the facts and circumstances of the case.
31. We do not consider it necessary to go into the question of delay in passing the order of detention in the light of our conclusions.
32. For all the above reasons, we have no hesitation in holding that the order of detention is vitiated. The order of detention is, therefore, set aside. The Habeas Corpus Petition is accordingly allowed. The detenu is directed to be released forthwith unless his custody is required in connection with any other case.
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1. Joint Secretary,
Government of India,
Ministry of Finance,
Dept. of Revenue,
2. Secretary to Government,
Union of India,
Ministry of Finance,
Dept. of Revenue,
3. The Superintendent,
Chennai (in duplicate for communication to detenu). 4. The Joint Secretary to Government,
State of Tamil Nadu,
Public (Law and Order),
Fort St. George, Chennai-9.
5. The Public Prosecutor,
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