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S.P. Goyal Versus Union of India

Criminal Writ Petition No. 1187 of 2000 - Dated:- 22-1-2002 - V.M. Jain, J. For the Appellant: Vikram Chaudhari and Mohan Sharma, Advocates For the Respondent: D.D. Sharma, Advocate JUDGMENT V.M. Jain, J. 1. This is a petition under Article 226 of the Constitution of India, seeking quashment of the detention order dated 21.7.2000, copy Annexure P-33, passed under the provisions of Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter r .....

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e and general items in imports and exports. It was further alleged that the petitioner was also a partner in M/s Merchant Exports (India), which was a 100% export oriented unit. Besides that, the petitioner is also a partner of M/s Sanjeev Woollen Mill, which is also engaged in the manufacturing of worsted woollen yarn. It was alleged that the petitioner was an income tax as well as wealth tax assessee since long. It was alleged that in the year 1997, the Government of India introduced an export .....

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t comprehensive guide-lines were issued for determining the PMV in case of manufacturers, exporters as well as merchant exporters. It was further alleged that as per the various circulars issued by the Government, in-built mechanism had been provided with regard to the verification of PMV, declared by an exporter and it also provides opportunity to the exporter to justify the correctness of PMV. The PMV claimed by the exporter may also be reduced after adopting the due process. It was alleged th .....

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ed as "writing instruments D.F. Ball Pens 13 inches" to M/s Pilot Trading Company, Dubai. The total CIF value of the goods was shown US $ 1,95,000/-. The exporter declared PMV of goods at ₹ 10/- per piece in retail and ₹ 6/- in bulk. The entire export proceeds were released on 31.8.1999 and 2.9.1999 respectively, while the export was made on 13.8.1999. It was alleged that the son of the petitioner who was a director in M/s Cannon Steel Private limited, received a summon und .....

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elaborate representation to the Joint Secretary, Ministry of Finance and Director General of Revenue Intelligence at New Delhi on September 18, 1999 and September 24, 1999, highlighting that there was no illegality in the export of pens and that the entire process adopted by the DRI was unjustified and uncalled for and that the son of the petitioner had nothing to do with the Merchant Exports. It was further alleged that subsequently, a reminder dated 29.1.2000 was also issued and another repres .....

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fore the Assistant Director DRI at Bombay. It was alleged that the petitioner again made representation dated 5.10.1999 to respondent No. 3, highlighting that the verification of PMV was vested with the SIB of the Custom Department. It was further alleged various other summons were issued to the petitioner and even though the DRI was not competent to look into the matter, yet the petitioner cooperated with them and the statement of the petitioner was also recorded by the officials of DRI at Bomb .....

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ourt issued notice to respondents and stayed the proceedings before the Additional Chief Judicial Magistrate, Ernakulam. It was alleged that on 2.5.2000, the petitioner was arrested by DRI and a remand application was moved in the Court of Addl. Chief Metropolitan Magistrate, Bombay, alleging therein that the declaration given by the petitioner about the purchase and price of 13 inches DF Ball Point pens exported by him was false and had been made only to mislead them. It was further alleged tha .....

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ade by the DRI, the petitioner was ordered to be produced before the competent court at Cochin, whereupon the petitioner moved bail application before the Chief Judicial Magistrate, Cochin, which was rejected vide order dated 8.5.2000 and petitioner was granted bail by the Sessions Court on 15.5.2000. 2. It was alleged that the entire exercise of issuing summons by DRI under Section 108 of the Customs Act as well as arrest of the petitioner was absolutely mala fide, illegal and the result of ven .....

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ich the petitioner was arrested, detention order has been passed by the respondent No. 2 under Section 3(1) of the COFEPOSA. It was alleged that the said order purported to have been passed with a view to prevent the petitioner from smuggling the goods in future. Copy of the said order dated 21.7.2000 has been annexed as Annexure P-33. It has been alleged that the said detention order was illegal and void, on various grounds mentioned in para 33 of the petition. It was alleged that the bill of l .....

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the PMV under the said scheme and it provides for opportunity to the exporter to justify the correctness of the PMV declared by him. The PMV could even be reduced or rejected by adopting the process given therein. It was alleged that no show cause notice, as contemplated under the DEPB scheme, had even been issued to the petitioner and the DRI officials could not investigate into this matter. It was alleged that the provision of Sections 113 and 114 of the Customs Act were not attracted to the .....

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e of the 13 inches pen was assessed to be ₹ 6.25 by respondent No. 4 and in the present case the petitioner had exported consignment of 13 inches pen by declaring PMV to be ₹ 6 in bulk quantity. It was further alleged that the export in question was made on 13.8.1999, while the order of detention was passed on 21.7.1999 and there was absolutely no explanation for the delay in passing of the detention order. It was alleged that the order in question was passed at the behest of the ele .....

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of the exceptions. It was further alleged that since 1989, the petitioner was a permanent resident of Mumbai. It was further alleged that the offence was committed at Calicut (Kerala) and as such this court should not entertain the writ petition filed by the petitioner on the ground of jurisdiction alone. 4. Subsequently, the petitioner also placed on record the grounds of detention, copy P-36 dated 21.7.2000. 5. I have heard the learned counsel for the parties and have gone through the record c .....

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hould not interfere with the detention order at pre-execution stage except the exceptions given therein. The second preliminary objection raised by the learned counsel for the respondents is with regard to the questions regarding the territorial jurisdiction of this court to entertain this writ petition filed by the petitioner. In Alka Subhash Gadia's case (supra) it was held by their Lordships of the Supreme Court that it is not correct to say that the courts have no power to entertain grie .....

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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. 7. It was further held in the said authority that the refusal by the courts to use their extraordinary powers of judicial review to interfere with the detention order prior to their execution on any other ground would not amount to the abandonment of the said power or .....

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the question as to whether the case of the petitioner falls in any of the 5 conditions enumerated above, the facts of the case have to be considered. In this view of the matter, the preliminary objection regarding pre-execution stage would be kept in view while discussing the merits of the case. 9. As regards territorial jurisdiction, it has been submitted before me by the learned counsel for Union of India that the cause of action arose at Cochin and that no part of it had taken place within th .....

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the petitioner was a permanent resident of Ludhiana and that in the detention order dated 21.7.2000, copy Annexure P-33, it has been specifically mentioned that the petitioner was the proprietor of M/s Chirag Exports and Imports, Industrial Area A, Ludhiana and was a partner of M/s Merchants Exports (India) A-64, Industrial Area, Ludhiana. It was further submitted that even in the grounds of detention similar allegations were made about the petitioner being the proprietor of M/s Chirag Exports a .....

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unts of purchase and payment at Ludhiana and that the goods were purchased at Ludhiana and that the scrutiny of various vouchers indicated that the consignment had been purchased from various persons at Ludhiana and Khanna. It was submitted that from all these allegations, it was clear that a substantial part of the cause of action had arisen within the territorial jurisdiction of this court and as such this court has jurisdiction to interfere and decide the present petition. Reliance was placed .....

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ised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such powers, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. In the present case, in the detention order dated 21.7.2000, copy Annexure P-33, it is mentioned that the petitioner was the proprietor of M/s Chirag Exports and Imports, Industrial Area-A, Ludhiana and .....

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etention that from a persual of the various documents, the invoice which was issued by M/s Chirag Exports and Imports, 864, Industrial Area, Ludhiana, was consigned to self for export to Dubai. It is also mentioned in the said grounds of detention that scrutiny of various vouchers indicated that the consignment had been purchased from various persons from Ludhiana and Khanna. It is the consignment of these pens which were exported which are the bone of contention in this case. That being so, in .....

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ion. After considering the rival contentions of both the sides, it was held that this court had the jurisdiction to entertain the said petition. It was held that mere residence of a person at a particular place perhaps may not furnish a cause of action but if the alleged detenu or his close relations have the apprehension that the order of detention is likely to be served upon him for the purpose of execution, certainly, the court in whose jurisdiction this order is to be executed will have the .....

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addresses were given in the order of detention passed by the Government of India, one at Delhi and the other of Ambala and it was held by this Court that this court had the jurisdiction to entertain the writ petition. Reliance was also placed on the law laid down by this court, in the case reported as Trilok Nath Mittal v. Union of India and others, 1994(1) RCR(Crl.) 247. In the said authority when the order under Section 3 of COFEPOSA was passed, the summons were sent at Ludhiana address and th .....

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authorities had given his address at Ludhiana as also Mumbai and his passport, copy Annexure P-35, also gives his address at Ludhiana. The premises of the petitioner were searched at Ludhiana. The goods which were exported were purchased from Ludhiana/Khanna, within the territorial jurisdiction of this court. The petitioner is also apprehending his arrest at the place of his residence i.e. Ludhiana, within the territorial jurisdiction of this court. Under these circumstances, in my opinion, it .....

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i/Ludhiana and proprietor of M/s Chirag Exports and Imports, Ludhiana/Mumbai. The allegations against the petitioner were that the consignment of goods declared as "writing instruments of ball point 13-inch long" being exported by M/s Merchant Exports (India), Mumbai, through Cochin Port, under claim for availing benefits under Duty Entitlement Passbook Scheme had been heavily over-valued to fraudulently avail the benefits under the said Scheme. Accordingly, the samples were drawn on 1 .....

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nd that the goods were purchased from open market. It was also noticed that in the declaration given by the exporter, M/s Merchant Exports (India), Mumbai, it was stated that the present market value of the goods being exported was ₹ 10/- per piece in retail and ₹ 6/- in the bulk quantity and the benefit under Duty Entitlement Passbook Scheme shall not exceed 50% of the present market value. The cash purchase vouchers were in respect of 50,400 pens purchased @ ₹ 6 per piece. It .....

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ce to ₹ 2.00 per piece in bulk. After making enquiries/investigation, it was also found that most of those pens were in fact purchased from the market @ ₹ 1.00 per piece etc and that false declaration was given about the valuation and about the source of purchase and also about the present market value of the goods exported and false purchase voucher were also submitted to the customs, giving the purchase price in the range of ₹ 5.70 to ₹ 6.00 per piece. In this manner, t .....

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g in relation to any goods to mean any act or omission, which will render such goods liable to confiscation under Section 111 or Section 113 of the Act. Reliance was also placed on Section 113(d) of the Customs Act, 1962 which provides that any goods attempted to be exported or brought within the limits of any customs area for the purposes of being exported contrary to any prohibition imposed by or under the said Act or any other law for the time being in force, shall be liable to confiscation. .....

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n 113(d) of the Customs Act and that the activities of the petitioner, therefore, amounted to smuggling of goods. Resultantly, the petitioner was ordered to be detained under the COFEPOSA Act, 1974. 15. From a persual of the grounds of detention referred to above, it would be clear that the detention order had been passed keeping in view that the declaration given by the petitioner in respect of the present market value was not correct as he had got higher value of the pens sought to be exported .....

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ment, specially empowered for the purposes of this section by that Government, may, if satisfied, with respect to any person (including a foreigner), that, with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from:- i) smuggling goods, or ii) abetting the smuggling of goods, or iii) engaging in transporting or concealing or keeping smuggled goods, or iv) dealing in smuggled goods otherwise tha .....

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under section 3 of the Jammu and Kashmir Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Ordinance, 1988 (J&K Ordinance, 1 of 1988). 16. From a persual of the above, it would be clear that the detention order under Section 3(1) of the COFEPOSA Act could be passed where a person indulges in any activity which is prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from smuggling of goods, etc. In the present case, th .....

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iscation under Section 111 or 113 of the Customs Act. 18. In the present case, in the grounds of detention, reliance has been placed upon the provisions of Section 113(d) of the Customs act, 1962, as also Rule 14(2) of the Foreign Trade (Regulation) Rules, 1993. A persual of Section 113(d) of the Customs Act would show that only those export goods shall be liable to confiscate which were attempted to be exported or brought within the limits of any custom area for the purposes of being exported c .....

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tion 2(33) of the Customs Act defines the prohibited goods as the goods which have been prohibited by any law in force. As referred to above, there is nothing on the record to show that the export of 13-inch long ball point pen was prohibited either under the Customs Act or under any law for the time being in force. Thus, any irregularity in the declaration while exporting the above said pens would not bring the present case within the mischief of Section 113(d) of the Customs Act, especially wh .....

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under Section 111 or 113 of the Customs Act. 19. Once it is found that there is nothing on the record to show that the full CIF value, in foreign exchange, had not been repatriated by the exporter and further the pens which were exported were not liable to confiscation under Section 113(d) of the Customs Act, the present case would not be covered under the definition of smuggling as given under Section 2(39) of the Customs Act. Under Section 3 of the COFEPOSA Act, the order of detention can be .....

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reign exchange. Similarly, there is nothing on the record to show that in the present case, the petitioner has indulged in smuggling. 20. So far as Rule 14(2) of the Foreign Trade (Regulation) Rules, 1993, is concerned, it only prohibits any person from employing corrupt or fraudulent practice for the purposes of obtaining any license of importing or exporting any goods. In the present case, there is nothing on the record to show that the petitioner had employed any corrupt or fraudulent practic .....

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y action may be taken against the petitioner for having furnished false declarations etc, as alleged. However, that would not bring the case of the petitioner within the provisions of COFEPOSA Act, so as to order detention of the petitioner under these provisions, inasmuch as neither the petitioner has indulged in any activity which is prejudicial to the conservation or augmention of foreign exchange nor he has indulged in the smuggling of goods. 21. As referred to above, in the present case, th .....

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ook Scheme. That matter has to be gone into by the authorities under the said scheme. However, for claiming higher present market value of the pens, it could not be said that the petitioner had indulged in any activity which is prejudicial to the conservation or augmentation of foreign exchange nor could it be said that he had indulged in the smuggling of goods, to bring the case of the petitioner within the purview of Section 3(1) of COFEPOSA Act. 22. From a persual of the above, it would be cl .....

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ay of preventive detention was largely based on suspicion and the Court was not an appropriate form to investigate the question whether the circumstances of suspicion existed warranting the restraint on a person. It was further held that the language of Section 3 clearly indicated that the responsibility for making a detention order rested upon the detaining authority who alone was entrusted with the duty in that regard and it will be a serious derogation from the responsibility if the Court sub .....

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sed on relevant grounds, could not be stated to be invalid. In the present case, as referred to above, even if the allegations made in the grounds of detention are taken as correct, yet the order of detention could not have been passed, under the provisions of Section 3 of the COFEPOSA Act, as the present case would not be covered under the provisions of COFEPOSA Act. That being so, the order of detention, passed by the competent authority, is liable to be quashed. 24. At the time of considering .....

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