1989 (10) TMI 56 - SC - Customs

Orders of detention passed with a view to preventing the detenu from abetting the smuggling of goods and dealing in smuggled goods otherwise than by engaging in transporting or concealing or keeping smuggled goods Held that - Taking into consideration the allegations made in the grounds of detention and in the counter-affidavit and it appears that in the names of the (said) two firms huge amount of export duty has been evaded and the imported goods which have been allowed to be cleared have been sold in the market. We are unable to accept the contention made on behalf of the detenu that the goods were cleared and sold under the orders of the High Court. It has been rightly observed in the impugned order of the High Court that surely the High Court did not permit the detenu to sell the goods in the market. It may be that a part of the imported goods has not been allowed to be cleared and stands forfeited to the Government but that is no ground in favour of the detenu. The Government may realise a part of the duty by selling those goods but that is neither here nor there. The fact remains that the detenu got the goods cleared and sold the same in the market. We find no reason not to accept the contention of the respondents that the licences were procured by the detenu with a view to importing the goods duty free and selling the same in the market and thereby making a huge profit to the loss and detriment of national economy.

Issues Involved:
1. Validity of the detention orders under Section 3(1) of the COFEPOSA Act.
2. Allegations of smuggling and abetment of smuggling.
3. Non-fulfillment of export obligations under the DEEC Scheme.
4. Existence and operation of benami firms.
5. Non-supply of relevant documents to the detenu.
6. Delay in considering the detenu's representation.
7. Potential for future involvement in smuggling activities.

Detailed Analysis:

1. Validity of the Detention Orders under Section 3(1) of the COFEPOSA Act:
The appeal challenges the judgment of the High Court of Punjab & Haryana, which dismissed the writ petition filed by three detenus, including the husband of the appellant. The detention orders were issued under Section 3(1) of the COFEPOSA Act to prevent the detenu from abetting smuggling activities. The Supreme Court upheld the validity of these orders, noting that they were issued with the intention of preventing the detenu from engaging in activities detrimental to the national economy.

2. Allegations of Smuggling and Abetment of Smuggling:
The detenu was accused of abetting the smuggling of goods and dealing in smuggled goods. The grounds of detention detailed how polyester filament yarn and polyester fibre were imported under the DEEC Scheme and disposed of in the local market without fulfilling export obligations. The Court noted that the definition of "smuggling" under Section 2(e) of the COFEPOSA Act, read with Section 2(39) of the Customs Act, was applicable as the goods were liable to confiscation under Section 111(o) of the Customs Act.

3. Non-Fulfillment of Export Obligations under the DEEC Scheme:
The firms M/s. Jasmine and M/s. Expo International obtained advance licences for importing polyester filament yarn without paying customs duty, under the condition that they would manufacture and export ready-made garments within six months. Investigations revealed that these firms did not fulfill their export obligations and sold the imported yarn in the local market, violating the conditions of the licences and the relevant customs notification.

4. Existence and Operation of Benami Firms:
The detaining authority alleged that the firms M/s. Jasmine and M/s. Expo International were benami concerns of the detenus, including Madan Lal Anand. The firms had no real existence or manufacturing facilities, indicating that the licences were procured solely for importing goods duty-free and selling them in the local market. The Court found sufficient grounds to support the detaining authority's allegations.

5. Non-Supply of Relevant Documents to the Detenu:
The detenu argued that certain documents, including abeyance orders and show cause notices, were not placed before the detaining authority, potentially influencing the subjective satisfaction of the authority. The Court rejected this contention, noting that the documents were either referred to in the grounds of detention or annexed to related civil revision petitions. The Court held that the non-supply of these documents did not affect the validity of the detention order.

6. Delay in Considering the Detenu's Representation:
The detenu's representation dated January 17, 1989, was received by the Ministry of Finance on January 18, 1989, and rejected on February 20, 1989. The Court examined the timeline and found that the delay was due to intervening holidays and the time taken for obtaining comments from the Collector of Central Excise & Customs. The Court concluded that there was no negligence or laches on the part of the authorities in dealing with the representation.

7. Potential for Future Involvement in Smuggling Activities:
The detenu argued that the expiry of the advance licences meant there was no chance of future involvement in smuggling activities. The Court rejected this argument, noting that the detenu could still set up fictitious firms and procure new licences. The Court emphasized that the detention was preventive, not punitive, and aimed at preventing future economic offences.

Conclusion:
The Supreme Court upheld the judgment of the High Court, dismissing the appeal and the writ petition. The Court found that the detention orders were justified based on the evidence and the need to prevent the detenu from engaging in activities harmful to the national economy.

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