USHA AGARWAL Vs. UNION OF INDIA

JUDGEMENT

(1.) Leave granted in SLP (Crl.) No.3012/2006.

(2.) The facts, in brief, leading to the preventive detention of the detenu, as gathered from the grounds of detention, are as follows - Sandip Agarwal, the detenu, was the Director in-charge of the management of M/s Sandip Exports Ltd., the other Directors being his family members. On receipt of information about irregularities committed by the detenu, a search of the premises of Sandip Exports Ltd. was conducted by the Directorate of Revenue Intelligence on 7.11.2003. The search and the investigations disclosed that M/s. Sandip Exports Ltd. had obtained two Annual Advance Licences dated 28.3.2001 and 22.3.2002 on actual user conditions from the Director General of Foreign Trade, Kolkata, as manufacturer-exporter. The said Annual Advance Licences issued under the Duty Exemption Entitlement Certificate Scheme ('DEEC Scheme' for short) enabled the Licensee to import goods free of duty subject to the condition that the Licensee shall manufacture and export products (by utilizing the imported goods) within 18 months, the quantity and value being as specified in the licences in terms of Customs Notification No. 48/99 dated 29.4.1999 as amended from time to time. The detenu imported different types of polyester and silk yarn/fabric, duty free, under the scheme by using the said licences of Sandip Exports Ltd. The duty foregone on importations made under the said two Advance Licences was Rs.14 crores. Instead of utilizing such imported materials in the manufacture of products for exports, he diverted and disposed of the imported goods in the domestic market, and did not fulfil the export obligation. He falsely claimed that the goods for export were manufactured from out of the imported goods through a non-existing manufacturing unit, and through alleged job-workers; and he also falsely claimed that the products so manufactured out of goods imported by Sandip Exports Ltd. were exported through M/s Karan Exports (India) Ltd., another company owned and controlled by detenu's family. In this manner, the detenu indulged in a systematic and organized import-export fraud by importing goods duty-free, under the 'DEEC Scheme' and diverting them to domestic market.

(3.) At the instance of the Directorate of Revenue Intelligence (the Sponsoring Authority), the Detaining Authority (Government of India, Ministry of Finance, Department of Revenue, represented by its Joint Secretary) passed an order of detention dated 19.8.2004 under Section 3(1) of the COFEPOSA Act. In the grounds in support of the detention order, the detaining authority stated that the action of the detenu in diverting duty free imported goods into the domestic market in violation of the DEEC Scheme Licences, amounted to "smuggling" of goods. The detaining authority also stated that the nature and gravity of the offence and the dubious and fraudulent modus operandi employed by the detenu showed his propensity and potentiality to indulge in such illegal activities in future, necessitating detention to prevent him from continuing such activities.