PETITIONER:
N.K. BAPNA
Vs.
RESPONDENT:
UNION OF INDIA AND ORS.
DATE OF JUDGMENT14/05/1992
BENCH:
RANGNATHAN, S.
BENCH:
RANGNATHAN, S.
RAMASWAMI, V. (J) II
YOGESHWAR DAYAL (J)
CITATION:
1992 SCR (3) 267 1992 SCC (3) 512
JT 1992 (4) 49 1992 SCALE (1)1135
ACT:
Constitution of India, 1950:
Articles 21, 22 and 32-Preventive Detention-Detention
order-Whether could be challenged even before service of the
order on the detenu-Claims of the State and fundamental
right of the citizen to be balanced.
Conservation of Foreign Exchange & Prevention of
Smuggling Activities Act, 1974:
Section 3(1)-Goods imported by company and declared to
customs authorities-After assessment to duty and clearance
kept in bonded warehouses under lock and key of customs
officials-Removal or abetting removal by Managing Director,
without permission of proper officer-Whether constituted
smuggling-Detention order-Legality of.
Customs Act, 1962:
Sections 2(39), 2(43), 23, 49, 59, 72 and 111(j) and
125(2)-Import of goods-Goods assessed to duty and kept in
warehouse under lock and key of customs authorities-
Clandestine removal of goods without paying of assessed
duty-Whether constituted 'smuggling'-Whether goods liable to
be confiscated-Import of goods when concluded-Whether open
to authorities to either confiscate goods or collect duties
payable by them.
HEADNOTE:
The Petitioner was the Managing Director of a company
engaged in the business of manufacture and production of
plastic goods. The Company imported certain materials and
the good were cleared for bonded warehouseing after
assessment to duty. The Company cleared part of the
material, after payment of duty, under the supervision of
the Customs Officials on different dates, and the balance
was kept in the warehouses, which were kept under lock and
key and the key was in the custody of
268
Customs officials. Sometime later, the Customs officials
discovered shortage of material kept in the warehouses.
Certain enquiries and proceedings ensued and in the course
of these enquiries, the petitioner came to know that an
order of detention had been passed against him under Section
3(1) of the Conservation of Foreign Exchange & Prevention of
Smuggling Activities Act, 1974, with a view to preventing
him from abetting the smuggling of goods. Without waiting
for the order and the grounds of detention being served on
him, the petitioner filed a writ petition before the High
Court challenging the order of detention. The authorities
did not file any counter affidavit affirming or denying the
facts mentioned in the writ petition nor did they come
forward to disclose or even indicate the grounds of the
proposed detention, if any. A Single Judge of the High
Court dismissed the writ petition on the ground that, on the
facts disclosed in the petition, the case, prima facie fell
within the scope of the expression 'smuggling' as defined in
the Act.
On appeal, the Division Bench held that the
circumstances referred to in the petition were not
sufficient to constitute 'smuggling'. However, it dismissed
the appeal on the view that without the grounds of detention
it would not be proper for the courts to go into the
validity or otherwise of the order of detention or make any
pronouncement that the order in question had not been passed
under the Act under which it was proposed to have been
passed or that it was passed with a wrong purpose or was
passed on vague, extraneous or irrelevant grounds.
In the Special Leave Petition before this Court on
behalf of the Petitioner it was contended that the Division
Bench of the High Court having held that activities did not
constitute 'smuggling' ought to have straightaway quashed
the detention order; that the goods in question had been
assessed to customs duty by the authorities and an order for
their clearance from the customs area had been made on the
execution of a bond for the due payment of the duty; that
the petitioner was not guilty of 'smuggling' or the abetment
thereof; that the scope of s.111(j) should be restricted to
goods which were dutiable and no duty had been assessed and
their removal from a warehouse where they were lodged,
pending assessment of duty, that the operation of 'import'
was concluded once the goods were assessed to customs duty
and cleared from the customs area and the concept of
'smuggling' could have no meaning in respect of such goods
thereafter, that where goods were removed from a warehouse
in which they
269
were lodged under section 59 without permission of the
concerned authorities, the only consequence that could
follow was action under section 72; and there could be no
levy of penalty under Section 125, and such goods were not
liable to confiscation, and the provision for the
contravention of which there could be no penalty or
confiscation should not be so read as justifying the
draconian remedy of preventive detention; once the goods
were cleared by the customs authorities, they were not
liable to confiscation, unless the order granting clearance
was reversed in appropriate proceedings.
Dismissing the Special Leave Petition, this Court,
HELD : 1. It is now well settled that, even in a case
of preventive detention, it is not necessary for the
proposed detenu to wait till a detention order is served
upon him before challenging the detention order. Though the
Constitution of India, which permits preventive detention,
requires the detaining authorities to serve the grounds of
detention within a prescribed period after the detention
order is served on the detenu, it does not envisage any
disclosure of the grounds of detention prior to the service
of the detention order on the detenu. To apprise the detenu
in advance of the grounds on which he is proposed to be
detained may well frustrate the very purpose of the law. On
the other hand, to insist that no order of detention can be
challenged until actual detention in pursuance thereof takes
place might irretrievably prejudice the rights of proposed
detenus in certain situations. Thus, the conflicting claims
of the State and the fundamental right of a citizen need to
be reconciled and the limitations, if any precisely
enunciated. [273 E-G]
The Additional Secretary to the Government of India &
Ors. v. Smt. Alka Subhash Gadia & Ors., (1991) 1 J.T.S.C.
549, relied on.
2.1. The activity of the company would amount to
smuggling and that of the petitioner to abetment of
smuggling if they had removed or caused or abetted the
removed of the goods from the bonded warehouse without the
permission of the concerned authorities. The order of
detention proposed cannot be said to proceed on a basis
totally extraneous to the provisions of the Act and cannot
be described as an order not made under the Act under which
it is purportedly made nor can it be said that the grounds
of detention are vague, irrelevant or extraneous to the
purpose or provision of the Conservation of Foreign Exchange
(prevention of Smug-
270
gling Activities) Act. [280 G-H, 281A]
2.2. There can be no smuggling if the goods had been
removed from the warehouse not by the petitioner but by the
customs authorities or somebody else. But that will be a
question of fact. Assuming that the goods have been removed
by the petitioner or the company for the warehouse without
the permission of the proper officer, a simple reading of
the relevant sections is sufficient to say prima facie that,
in the present case, there has been smuggling by the
Company, and an abetment of smuggling by the petitioner. On
the broad conspectus of facts and the special definition
clauses in the relevant statutes it cannot be said that the
proposed detention in this case is totally outside the
provisions of the statute. If there is prima facie,
smuggling or abetment of smuggling, it is open to the
competent authorities to issue a detention order, which may
be challenged later on the merits on any grounds that may be
available but it cannot be said that the action is
flagrantly in violation of the statute or that the order is
one not made under the provisions of the statute under which
it has been purportedly issued. [277 A-D]
3.1. There is no justification to restrict "dutiable
goods" to "dutiable goods not yet assessed to duty". The
suggestion that "warehouse" referred to in the clause (j) of
Section 111 should be understood to mean a warehouse to
which goods are removed under s.49 but not one to which
goods are taken in pursuance of s.59, ignores the wide
definition of that expression set out in s.2(43) of the
Customs Act. [278 D-E]
Deputy Commissioner of Commercial Taxes v. M/s. Caltex
India) Ltd., AIR 1962 Mad 298 and Union of India v. Jain
Sudh Vanasapthi Ltd., 1992 1 Scale 34 10 E.L.T. 43 (Del.),
referred to.
3.2. Even the general concept of smuggling contains two
elements: one, the bringing into India of goods, the import
of which is prohibied; and two, the bringing into country's
trade stream, of goods the import of which is permitted
without paying the customs duties with which they are
chargeable. The second eventually can occur not only where
there is a clandestine import evading the assessment of duty
but also where there is a clandestine removal without
payment of the assessed duty. In a case where the goods are
warehoused under s.49 and they are clandestinely removed,
there would be smuggling as the duties payable thereon have
been evaded altogether. But even in a case where the goods
are assessed
271
to duty and allowed to be warehoused under s.59, a
clandestine removal can result in loss of duty. No doubt,
there is a provision in s.72 for collection of the duty and
forfeiture of the bond furnished to secure due payment of
duty but these may not always be adequate cover to the
Revenue if the goods are spirited away without permission.
[278 F-H, 279 A]
3.3. The mere fact that the goods have been ostensibly
cleared, after assessment of duty, to a warehouse does not
preclude the applicability of the concept of smuggling even
in such a case. In a sense, import may be said to be
complete for certain purposes, say, sales tax purposes on
their clearance after assessment of duties at the customs
barrier but it is not complete in a real sense. Even the
warehouse, to which the goods are permitted to be removed
under s.59 is a premises under the lock and key of the
customs authorities and is, in a sense, an extension of the
customs area. Good's can be cleared therefrom for home
consumption or exportation only after payment of duties.
Till that is done, there is always the risk of the loss to
the State of the duties payable. So import cannot be said
to be complete till then. There is no reason to read down
s.111 (j) which only recognises this position. [279 B-D]
Deputy Commissioner of Commercial Taxes v. M/S Caltex
(India) Ltd. AIR 1962 Mad 298, referred to.
3.4. The consequences which follow on a particular act
or omission will depend on the statutory provisions in
question. It may be that the petitioner's act in the present
case may not have attracted s.125 as it stood earlier but
will now attract a penalty in view of s.125(2) inserted
w.e.f. 27.12.1985. It may also attract s.72 but this
cannot, however, be decisive of the interpretation of
s.111(j). [279 G]
Shewpujanrai Indrasanrai Ltd. v. The Collector of
Customs & Ors., [1959] S.C.R. 821, referred to.
3.5. Even if it is assumed that s.72 will not be
applicable where the goods are confiscated, the authorities
have to choose, having regard to all the circumstances,
between confiscating the goods on the one hand or collecting
the duties payable thereon on the other. Having regard to
the language of s.111(j), it cannot held that in such a
case, the goods are not liable to confiscation, merely
because an alternative recourse to Section 72 is available.
In view of the language of Section 111(j), the goods are
liable
272
to confiscation. This conclusion does not go behind or
ignore the effect of the order clearance. It accepts the
fact of clearance and proceeds on the footing that the
goods, rightly cleared under s.59, have been clandestinely
removed from the warehouse within the meaning of s.59. [280
B,F]
Union of India v. Jain Shudh Vanaspathi, (1992) Scale
34 and Jain Shudh Vanaspathi Ltd. & Anr. v. Union of India &
Ors., (1982) 10 E.L.T. 43 (Del.), referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Special Leave Petition
(C) No. 5781 of 1992.
From the Judgment and Order dated 6.4.1992 of the
Calcutta High Court in F.M.A.T. No. 914 of 1992.
A.K. Sen, Pradeep Tarafdar, B.N. Singhvi (for M/s.
Swarup John & Co.) for the Petitioner.
A Subba Rao and Parmeswaran for the Respondent.
The Judgement of the Court was delivered by
S. RANGANATHAN, J. The petitioner is the Managing
Director of M/s E.A.P. Industries Ltd., engaged in the
business of manufacture and production of plastic compounds,
plastic films and sheets and plastic chemicals. The
petitioner says that it came to his knowledge that an order
has been passed on 1st January, 1992 directing his detention
under section 3(1) of the Conservation of Foreign Exchange &
Prevention of Smuggling Activities Act, 1974 (hereinafter
referred to as ‘the Act’) – with a view to preventing him
from abetting the smuggling of goods. A copy, purporting to
be a copy of the said order, has been placed on record,
though it is not quite clear how the petitioner came by it.
Thereupon he filed a writ petition in the Calcutta High
Court for an injuction restraining the concerned authorities
from detaining him in pursuance of the above order. This
writ petition as an appeal therefrom have been dismissed;
hence the present Special Leave Petition.
According to the Petitioner, the detention order has
been issued in consequence of certain proceedings which had
been initiated against him by the customs officials. He
says that the company imported 267.782 metric tons of Ethyle
Hexanol (EHA). This Consignment was unloaded at
273
Kandla port and 24 tankers thereof were transported to
bonded warehouses after assessment to duty in October-
November 1989. Out of the chemical thus kept in the bonded
warehouse the company cleared 175 metric tons between
December, 89 and October, 90 on payment of duty. The
company also imported 204 M.T. of P.V.C. Resin from France
on 2.5.90. This consignment was unloaded at Calcutta Port
and was cleared for bonded warehousing. Out of this 75
Metric tons of P.V.C. resin were cleared by the company
after payment of duty on 17.9.1990 and 8.11.1990 under the
supervision of the Customs officials. According to the
petitioner the warehouse were kept under lock and key and
the key was in the custody of customs officials.
Sometime in September 1991, the Customs officials
discovered a shortage of 93.975 metric tons of P.V.C. resin
and a similar shortage also in the stock of EHA kept in the
warehouse. Centain enquires and proceedings ensued and the
petitioner says that in the course of these enquiries he
came to know that an order of detention had been passed
against him under the Act. Without waiting for the order
and the grounds of detention being served on him, the
petitioner filed a writ petition challenging the order of
detention.
It is now well settled that, even in a case of
preventive detention, it is not necessary for the proposed
detenu to wait till a detention order is served from him
before challenging the detention order. It is true that the
Constitution of India, which permits preventive detention
requires the detaining authorities to serve the grounds of
detention within a prescribed period after the detention
order is served on the detenu. It does not envisage any
disclosure of the grounds of detention prior to the service
of the detention order on the detenu. To apprise the detenu
in advance of the grounds on which he is proposed to be
detained may well frustrate the very purpose of the law. On
the other hand, to insist that no order of detention can be
challenged until actual detention in pursuance thereof takes
place might irretrievably prejudice the rights of proposed
detenus in certain situations. Thus, the conflicting claims
of the State and the fundamental right of a citizen need to
be reconciled and the limitations, if any, precisely
enuciated. This has been done by the recent decision of
this Court in The Additional Secretary to the Government of
India & Ors. v. Smt. Alka Subhash Gadia & Ors., 1991 (1)
J.T. (S.C.) 549. The real question of law that fell for
consideration before the court in that case was whether the
274
detenu or anyone on his behalf is entitled to challenge the
detention order without the detenu submitting or
surrendering to it and if so in what type of cases. As a
corollary to this question, the incidental question that had
to be answered was whether the detenu or the petitioner on
his behalf, is entitled to the detention order and the
grounds on which the detention order is made before the
detenu submits to the order. The first question was
answered by saying that the courts have power to interfere
even before the detention order is served or the detention
is effected but that such power will be exercised sparingly
and in exceptional cases of the type enunciated therein.
The Court observed :
“It is not correct to say that the courts have no
power to entertain grievances against any detention
order prior to its execution. The courts have the
necessary power and they have used it in proper
cases as has been pointed out above, although such
cases have been few and the grounds on which the
courts have interfered with them at the pre-
execution stage are necessarily very limited in
scope and number, viz., where the courts are prima
facie satisfied (i) that the impugned order is not
passed under the Act under which it is purported to
have been passed, (ii) that it is sought to be
executed against a wrong person, (iii) that it is
passed for a wrong purpose, (iv) that it is passed
on vague, extraneous and irrelevant grounds or (v)
that the authority which passed it had no authority
to do so. The refusal by the courts to use their
extraordinary powers of judicial review to
interfere with the detention orders prior to their
execution on any other ground does not amount to
the abandonment of the said power or to their
denial to the proposed detenu, but prevents their
abuse and the perversion of the law in question.”
On the second question, the Court had this to say:
“In view of the discussion aforesaid, the answer
to this question has to be firmly in the negative
for various reasons. In the first instance, as
stated earlier, the Constitution and the valid law
made thereunder do not make any provision for the
same. On the other hand, they permit the arrest
and detention of a person without furnishing to the
detenu the order and the grounds
275
thereof in advance. Secondly, when the order and
the grounds are served and the detenu is in a
position to make out prima facie the limited
grounds on which they can be successfully
challenged, the courts, as pointed out earlier,
have power even to grant bail to the detenu pending
the final hearing of his petition. Alternatively,
as stated earlier, the Court can and does hear such
petition expeditiously to give the necessary relief
to the detenu. Thirdly, in the rare cases where
the detenu, before being served with them, learns
of the detention order and the grounds on which it
is made, and satisfies the Court of their existence
by proper affirmation, the Court does not decline
to entertain the writ petition even at the pre-
execution stage, of course, on the very limited
grounds stated above. The Court no doubt even in
such cases is not obliged to interfere with the
impugned order at that stage and may insist that
the detenu should first submit to it. It will,
however, depend on the facts of each case. The
decisions and the orders cited above show that in
some genuine cases, the Courts have exercised their
powers at the pre-execution stage, though such
cases have been rare. This only emphasises the
fact that the Courts have power to interfere with
the detention orders even at the pre-execution
stage but they are not obliged to do so nor will it
be proper for them to do so save in exceptional
cases. Much less can a detenu claim such exercise
of power as a matter of right. The descretion is
of the Court and it has to be exercised judicially
on will-settled principles.”
In the present case, the authorities did not file any
counter affidavit affirming or denying the facts mentioned
in the writ petition nor did they come forward to disclose
or even indicate the grounds of the proposed detention, if
any. The learned Single Judge in the High Court dismissed
the writ petition on the short ground that, on the facts
disclosed in the petition, the present case prima facie fell
within the scope of the expression ‘smuggling’ as defined in
the Act. The Division Bench came to the conclusion that the
circumstances referred to in the petition were not
sufficient to constitute ‘smuggling’. Nevertheless, the
Court took the view that without the grounds of detention it
will not be proper for courts the to go into the validity or
otherwise of the order of detention or make any
pronouncement that the impugned order has not been passed
under the Act under which
276
it is proposed to have been passed or that it was passed
with a wrong purpose or was passed on vague, extraneous or
irrelevant grounds.
We have heard Sri Asoke Sen, learned counsel for the
petitioner and Sri Subba Rao, learned counsel for the
respondent at considerable length. Sri Asoke Sen contends
that the Division Bench of the High Court having accepted
the petitioner’s contention that his acivities do not
constitute ‘smuggling’ ought to have straightaway quashed
the detention order. He points out that the goods in
question had been assessed to customs duty by the
authorities and an order for their clearance from the
customs area had been made on the execution of a bond for
the due payment of the duty. Referring to the definitions
of ‘smuggling’ in various dictionaries and decisions, he
contends that it is ridiculous to suggest that the
petitioner is guilty of ‘smuggling’ or the abetment thereof.
Prima facie, one would ageer that there is considerable
force in this contention of the learned counsel for the
petitioner that there cannot be any smuggling of goods which
have been openly imported, declared to the customs
authorities and cleared by them after being assessed to
duty. However, we cannot go by the dictionary meaning of
the word as the Act has a definition clause which adopts,
for the word, the same meaning which it has in section 2(39)
of the Customs Act. Section 2(39) of the Customs Act,
defines ‘smuggling’ thus:
“Smuggling”, in relation to any goods, means any
act or omission which will render such goods liable
to confiscation under section 111 or section 113″.
Section 111 declares, inter alia, that the following
goods will be liable to confiscation:
(j) any dutiable goods removed or attempted to be
removed from a warehouse without the permission of
the proper officer or contrary to the terms of such
permission.
and section 2(43) of the said Act contains a definition of
‘warehouse’, which reads:
‘Warehouse’ means a public warehouse appointed
under section 57 or a private warehouse licensed
under section 58.”
It is clear even from the facts disclosed in the
petition that the case of the authorities may be that the
petitioner has abetted the removal of the
277
imported goods from the bonded warehouse without the
permission of the proper officer. Of course, there can be
no smuggling if the goods had been removed for the warehouse
not by the petitioner but by the customs authorities or
somebody else as suggested by the petitioner. But that will
be a question of fact and one has to assume, for the
purposes of the present argument, that the goods are alleged
to have been removed by the petitioner or the company from
the warehouse without the permission of the proper officer.
In such a situation, a simple reading of the relevant
sections is sufficient to say prima facie that, in the
present case, there has been smuggling by the company, and
an abetment of smuggling by the petitioner. It is difficult
to say on the broad conspectus of facts and the special
definition clauses in the relevant statutes that the
proposed detention in this case is totally outside the
provisions of the statute. If there is prima facie,
smuggling or abetment of smuggling, it is open to the
competent authorities to issue a detention order which may
be challenged later on the merits on any grounds that may be
available but it cannot be said that the action is
flagrantly in violation of the statute or that the order is
one not made under the provisions of the statute under which
it has been purportedly issued.
Realising the direct impact of the relevant statutory
provisions on the sparse facts stated by the petitioner,
Shri Ashoke Sen has elaborated contentions before us which
have found favour with the Division Bench of the High Court
to demonstrate that the facts alleged do not bring the
present case within the statutory provisions. According to
him, section 111 (j) comes into operation only in a case
where no duty has been assessed on goods and the goods are
allowed to be deposited in a warehouse under the provisions
of section 49 of the Customs Act pending clearance from
customs. He submits that in such a case the removal of
goods without the permission of the statutory authorities
would amount of smuggling because in such a case the process
of import is not complete. Also in such a case the goods
would clearly have escaped duty because the provisions of
section 72 are not made applicable to a case where the goods
are warehoused under section 49. In such a case Shri Ashoka
Sen says, the statutory concept of smuggling would squarely
apply but, he says, it cannot have any application to a case
where the goods are cleared from the customs area with the
permission of the customs authorities. In this type of
case, the process of import is complete : vide, Deputy
Commissioner of Commercial Taxes v. M/s. Caltex (India)
Ltd., AIR 1962 Mad 298 and, there
278
can be no smuggling thereafter. Even if the goods are
clandestinely removed from the bonded warehouse there is no
escapement of duty since the duty is adequately safeguarded
by a bond for double the amount of duty with which the goods
are chargeable. The only remedy of the Department in such
cases is the recovery of the duties etc. under s.72 and no
confiscation of the goods is permissible in such cases.
Indeed, there can be no confiscation of goods once they are
cleared from the customs area under s.47, vide Union of
India v. Jain Sudh Vanaspathi Ltd., 1992-1 Scale 34
affirming 10 E.L.T. 43 (Del.). In the light of these
concepts he urges that the scope of s.111 (j) should be
restricted to goods which are dutiable and in respect of
which no duty has been assessed and their removal from a
warehouse where they are lodged pending assessment of duty.
We are of the opinion that, interesting as these
arguments are, they cannot be accepted. The interpretation
sought to be placed by counsel on the provision contained in
s.111(j) is unduly narrow and imports, into the clear
language thereof, words that are not there. There is no
justification to restrict “dutiable goods” to “dutiable
goods not yet assessed to duty”. The suggestion that
“warehouse” referred to in the clause should be understood
to mean a warehouse to which goods are removed under s.49
but not one to which goods are taken in pursuance of s.59 is
without basis and ignores the wide definition of that
expression set out in s.2(43) of the Customs Act.
Sri Sen has urged three considerations in support of
his plea to limit the scope of s.111(j) as urged by him. The
first is that the operation of ‘import’ is concluded once
the goods are assessed to customs duty and cleared from the
customs area and the concept of ‘smuggling’ can have no
meaning in respect of such goods thereafter. This is not
quite correct. Even the general concept of smuggling
contains two elements: one, the bringing into India of goods
the import of which is prohibited; and two, the bringing,
into the country’s trade stream, of goods the import of
which is permitted without paying the customs duties with
which they are chargeable. In our view, the second
eventuality can occur not only where there is a clandestine
import evading the assessment of duty but also where there
is a clandestine removal without payment of the assessed
duty. In a case where the goods are warehoused under s.49
and they are clandestinely removed, there would be
‘smuggling’ as the duties payable thereon have been evaded
altogether. But even in a case where the goods are assessed
to duty and allowed to be warehoused under s.59, a
clandestine removal can result in
279
loss of duty. No doubt, there is a provision in s.72 for
collection of the duty and forfeiture of the bond furnished
to secure due payment of duty but these may not always be
adequate cover to the Revenue if the goods are spirited away
without permission. The mere fact that the goods have been
ostensibly cleared, after asessment of duty, to a warehouse
does not preclude the applicability of the concept of
smuggling even in such a case. In a sense, import may be
said to be complete for certain purposes say, sales tax
purposes as in Dy. C.C.T. v. Caltex (India) Ltd., AIR 1962
Mad 298 on their clearance after assessment of duties at the
customs barrier but it is not complete in a real sense. Even
the warehouse, to which the goods are permitted to be
removed under s.59 is a premises under the lock and key of
the customs authorities and is, in a sense, an extention of
the customs area. Goods can be cleared therefrom for home
consumption or exportation only after payment of duties.
Till that is done, there is always the risk of the loss to
the State of the duties payable. So import cannot said to
be complete till then from the point of view with which we
are concerned. There is no reason why we should read down
s.111(j) which only recognises this position.
The second point made by Sri Sen is that where goods
are removed from a warehouse in which they are lodged under
s.59 without permission of the concerned authorities the
only consequence that can follow is action under s.72.
According to him, in such cases, there can be no levy of
penalty under s.125 and the goods removed without permission
are not liable to confiscation. He urges that a provision,
for the contravention of which there can be no penalty or
confiscation, should not be so read as justifying the
draconian remedy of preventive detention. In support of his
contentions on this part of the case, learned counsel
strongly relied on the decision of this Court in
Shewpujanrai Indrasanrai Ltd. v. The Collector of Customs &
Ors., [1959] S.C.R. 821. We are unable to see any force in
this contention. The consequences which follow on a
particular act or omission will depend on the statutory
provisions in question. It may be that the petitioner’s act
in the present case may not have attracted s.125 as it stood
earlier but will now attract a penalty in view of s.125(2)
inserted w.e.f. 27.12.1985. It may also attract s.72 but
this cannot, however, be decisive of the interpretation of
s.111 (j). In the decision referred to by counsel which
arose under the Sea Customs Act, 1878 smuggled goods were
confiscated and, in addition, the smuggler was called upon
to pay the duties on the goods. The Court held that the
question of a levy of import duties did not arise as there
was
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no statutory provision covering the facts of that case
enabling such levy. This decision is no authority for the
proposition that s.111(j) is inapplicable to a case to which
s.72 is applicable. Even if one assumes that s.72 will not
be applicable where the goods are confiscated the position
only comes to this, that the authorities have to choose,
having regard to all the circumstances, between confiscating
the goods on the one hand or collecting the duties payable
thereon on the other. Having regard to the language of
s.111(j), it is not possible to agree with counsel that, in
such a case, the goods are not liable to confiscation merely
because an alternative recourse to s.72 is available to
them.
The third point made by Sri Sen is that once goods are
cleared by the customs authorities, they are not liable to
confiscation unless the order granting clearance is reversed
in appropriate proceedings. He places reliance for this
proposition on Union of India v. Jain Shudh Vanaspathi,(1992
– 1 Scale 34) affirming the decision of the Delhi High Court
in Jain Shudh Vanaspati Ltd. & Anr. v. Union of India &
Ors., [1982] 10 E.L.T. 43 (Del.) (to which one of us was a
party). There was some discussion before us as to whether
this Court has confirmed the decision of the High Court on
the above point or left it open in para 4 of the judgment.
We do not think it is necessary for for us to enter into
this controversy. That was a case where the goods had been
completely cleared accepting the plea of the importer that
their import was not prohibited. The High Court held that
so long as this acceptance stood the goods were not liable
to confiscation. We are here concerned with the question
whether the goods are liable to confiscation under s.111(j)
and this question has to be answered in the affirmative in
view of the language of the section. The conclusion here
that the goods are liable to confiscation does not go behind
or ignore the effect of the order of clearance, as in that
case. It accepts the fact of clearance and proceeds on the
footing that the goods, rightly cleared under s.59, have
been clandestinely removed from the warehouse within the
meaning of s.59. The decision cited by learned counsel is,
therefore, of no assistance to him.
The upshot of the above discussion is that, on the
conspectus of facts placed before the Court and referred to
earlier, the activity of the company would amount to
smuggling and that of the petitioner to abetment of
smuggling, if they had removed, or caused or abetted the
removal of the goods from the bonded warehouse without the
permission of the concerned
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authorities. The order of detention proposed cannot be said
to proceed on a basis totally extraneous to the provisions
of the Act and cannot be described as an order not made
under the Act under which it is purportedly made nor can it
be said that the grounds of detention are vague, irrelevant
or extraneous to the purpose or provisions of the Act.
In the result, we uphold the orders of the High Court
dismissing the writ petition though we do not uphold the
reasoning of the Division Bench. The special leave petition
is, accodingly, dismissed but with no order regarding costs.
N.P.V. Petition dismissed.
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