TAPAS CHOWDHURY Vs. UNION OF INDIA

JUDGEMENT

(1.) This is an application under Article 226 of the Constitution of India challenging the order of detention of one Shri Mukti Prasad Dutta passed in exercise of the power conferred by Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA Act, for short). The petitioner who is the son-in-law of the said Shri Mukti Prasad Dutta has filed this writ petition on behalf of the detenu. The order of detention was passed by the Joint Secretary to Govt. of India, Ministry of Finance, Department of Revenue on 5th January, 1995. Pursuant to that order the detenu Shri Mukti Prasad Dutta was arrested on 11th January, 1995. The detention, as the order purportingly announces, was considered necessary with a view to preventing the detenu from abetting the smuggling of goods in future. The detenue is a partner of M/s. N. Dutta Agency holding customs house clearing agency license and he worked as the clearing agent of the importers, M/s. R.N.J. Exports Pvt. Ltd. and M/s. R.S.I. Eng. (P) Ltd.

(2.) The case of the respondents, Union of India and others, in short, is described below. The importers M/s. R.N.J. Exports Pvt. Ltd., being a 'Buty-Exemption Entitlement Certificate' Holder, had been violating the conditions of VABAL (Value Based' Advance Licence) Scheme. R.N.J. Exports obtained Value Based Advance Licence No. P/K/3389877/C dated 8-7-1993 and DEEC Book Serial No. 087496/Cal. dated 8-7-1993 for the import of Polystyrene/Polyetnylene/Polyprepylene Moulding powder, ball pen tips and writing ink valued at Rs. 45,31,215.00 free of customs duty with the condition that the importers shall export 15 lakhs pcs. ball point pens and parts thereof including refills for FOB value of U.S. 2,32,000 within twelve months from the date of the issue of the license and that the goods imported against the Advance License shall be utilised in accordance with the provisions of the customs notification No. 203/92 dated 19-5-1992. The said licence was issued with Actual, Users' Conditions upon declaration by the importers that M/s. Line Writing Aids Pvt. Ltd., M/s. Chemplast India Pvt. Ltd. and M/s. Bandana Pen Industries were supporting manufacturers of the resultant export products of the importers which names were endorsed on the DEEC Books of the importers. One of the conditions of the scheme is that the imported exempt material shall not be disposed of in any manner before the export obligation is fulfilled in full, the export proceeds realised and the bank guarantee/L.U.T. is redeemed and that the merchant exporter shall export the products manufactured by the supporting manufacturers as endorsed in the DEEC Book, towards fulfillment of the prescribed obligation. Enquiries revealed that 255 Mts. Polysterene raw materials collectively valued at Rs. 45,97,425 (CIF) were imported by the importers under five bills of entry Nos. IF-371 dated 30-12-1993, IF-232 dated 24-1-1994, IF-266 and 267 dated 27-1-1994 and IF-268 dated 7-2-1994 free of customs duty claiming benefit of customs notification No. 203/92 dated 19-5-1992 against the said advance licence and the DEEC book. The said goods were cleared from the dock on 1-1-1994, 29-1-1994, 8-2-1994 and two consignments on 14-2-1994 and the goods were handed over to one Shri Narendra Surana who, in turn, admitted to have received 75 Mts. of goods relating to the aforesaid bills of entry on different dates and times from the dock and sold them to different parties directly from the docks at the request of the importers and the payment for such sale was made directly to the importers by the respective buyers. The importers admitted to have received only 153 Mts. of the materials imported by them and denied having knowledge about the balance quantity of 102 Mts. The importers categorically stated that they did not have any stock of the raw materials imported by them and they produced sale bills of 85 Mts. and for the balance 68 Mts., though sold by them as admitted; they could not produce any stock/disposal particulars. The importers could not offer any explanation in respect of the 102 Mts. of the imported materials which were cleared out of custom control by the clearing agent. At the material time of causing the enquiry with the importers on 14th/15th February, 1994, the importers failed to show any stock of the exempt materials with them or with their supporting manufacturers. Shri L. K. Jhunjhunwalla one of the Directors of M/s. R.N.J. Exports made statement under Section 108 of the Customs Act, 1962 on 14-2-1994 to the effect that out of the total export obligation of 15 lakhs pcs. of plastic ball pen, his company had already exported till that date 8.55 lakhs pcs. of ball pen. S. K. Jhunjhunwalla, another Director of M/s. R.N.J. Exports made statement under Section 108 of the Customs Act, 1962 that their company had imported 153 Mts. of plastic raw materials as on 16-2-1994 and M/s. N. Dutta Agency were their clearing agents and further that the balance quantity of the consignments 34 Mts. and 68 Mts. were yet to be cleared. He further stated that till 16-2-1994 their company had exported four consignments of ball point pens for a total quantity of 8.55 lakhs pcs. He stated that the aforesaid exported goods were purchased from the four firms of Calcutta to whom they did not supply any raw materials imported under their advance license and the goods exported were purchased from the local traders. He also stated about sale of imported materials to different parties and that the goods were delivered to the different parties against their delivery challans, directly from the docks after clearance by their clearing agent M/s. N. Dutta Agency. He also admitted to have signed all the five bills of entry covering the total import quantity of 255 Mts. of Polysterene raw materials. His further statement is that though all the goods were cleared in the name of R.N.J. Exports Pvt. Ltd. they however had received only 153 Mts. of the goods and the balance quantity of 102 Mts. of goods were not received by them from their clearing agents M/s. N. Dutta Agency. He stated that out of ignorance and in anticipation that they had exported 8.55 lakhs of their export obligation they disposed of the materials and that the goods exported were not manufactured by their supporting manufacturers excepting two lakhs pcs. of ball pen manufactured and supplied by M/s. Linc Writing Aids Pvt. Ltd. Shri Pradip Kr. Poddar, President (Marketing and Sales) of M/s. R. N. J. Exports made statement under Section 108 of the Customs Act to the effect inter alia that he along with the Director L. K. Jhunjhunwalla had gone to the residence of the detenu on 18-2-1994 asking for the license of the DEEC book but the detenu refused to hand over the same unless the importers gave him the receipt of the balance quantity of 102 Mts. of raw materials. The detenu made statement under Section 108 of the Customs Act on 17-2-1994 to the effect that his firm had cleared 255 Mts. polysterene on A/c of M/s. R.N.J. Exports under duty free advance license and DEEC book from the dock on 1-1-1994, 14-2-1994 and two consignments on 8-2-1994 and that after clearance the goods were given to one Shri Narendra Surana and all the documents for the clearance of the goods were given to the detenu by the said Shri Surana and Shri Surana made the arrangement of placing the vehicles near CWC godown for loading the vehicles from the containers and took delivery of the goods and the detenu did not insist on the delivery/receipt challans and/or letter of authority from the importers. The detenu further stated that the documents for clearance were given to him by Shri Surana to whom the goods were delivered. The detenu also described his act as mistake. Follow up actions were initiated to find out the whereabouts of the parties to whom the raw materials were stated to have sold by Shri (sic) and Narendra Surana disclosed by him in his voluntary statement dated 17-2-1994 in course of which it revealed that the said parties were either fictitious or non-existing excepting M/s. Shree Plastics but the proprietor of Shree Plastics categorically stated that he never dealt with R.N.J. Exports or Narendra Surana and that he did not know them nor did he receive any raw materials from them. It was also found that the importers violated the stipulations of the customs notification No. 203/92 as amended as well as the advance license and had willfully submitted false declaration on the export shipping bills before the customs. The submission on the part of the importers pertaining to their receipt of 153 Mts. of imported materials was not supported by any documentary evidence such as delivery challans or receipt challans and it was also not explained as to how no communication was received by the importers from the detenu with regard to the clearance of the balance 102 Mts. of the imported goods which were actually cleared out of the customs control by the detenu's clearing firm. The imported exempt materials were disposed of in full in the home/local market by the importers instead of utilising the said materials for discharge of the export obligation and such disposal on the part of the importers was carried out before the export obligation to be fulfilled by the importers under the subject licence was discharged in full, export proceeds realised for the L.U.T. redeemed. It was distinctly clear that the importers connived with Narendra Surana and the detenu for unlawful gain by way of diverting the exempt materials imported duty free against the advance license to the home market in contravention of the provisions of the Policy and the customs notification thus resulting in the evation of customs duty to the extent of Rs. 49.62 lakhs app. on the part of the importers M/s. R.N.J. Exports. As regards the matter relating to M/s. R.S.I. Eng. (P) Ltd. it is the case of the respondents that the said importers had been violating the condition of Value Based Advance License Scheme by disposing of the exempt materials without fulfilling the export obligation. A truck loaded with 170 bags of plastic granules of 25 kgs. each, made in Korea, was intercepted near the godown of a transport company, namely, M/s. Raipur Calcutta Road Carriers at 14A, Gangadhar Babu Lane on 14-2-1994 by the officers of the concerned department. 30 bags of the same brand were also found in the godown of the said transport company and on demand neither the driver of the truck nor the representative of the transport company could produce any licit documents in support of legal importation/possession and/or acquisition of the goods of foreign origin so recovered from the said truck and the said godown of the transport company excepting a road challan dated 14-2-94 of M/s. B. D. Mal addressed to M/s. S. K. Agrawal covering 200 bags plastic granules. On enquiry at the respective given addresses appearing in the road challan both M/s. B. D. Mal and M/s. S. K. Agrawal were found fictitious. The goods covering the 200 bags recovered from the truck and the godown collectively valued at Rs. 1,30,000 were seized on the reason to believe that these were smuggled into India and were liable to confiscation under Customs Act. The driver of the vehicle stated that 200 bags of plastic granules were loaded by him from a godown at Hide Road at the request of a person whose name and address were not known to him and the said person gave the road challan and accompanied him to the godown at 14A. Gangadhar Babu Lane but disappeared before the customs intercepted the truck. He also stated that 30 bags out of 200 bags were offloaded in the godown at Gangadhar Babu Lane when the customs officers did arrive. It revealed that the importers M/s. R. S. I. Engl. (P) Ltd. obtained Value Based Advance Licenses dated 14-9-1992, 24-3-1993, 24-3-1993 and 19-4-1993 with corresponding DEEC Books for import of certain materials free of customs duty with the conditions that the importers shall export certain specific manufactured goods within 12 months from the date of issue of license and that the goods imported against the advance license shall be utilised in accordance with the provisions of the Export and Import Policy, Hand book of Procedures and related customs notifications as amended from time to time. The licenses were issued with Actual Users Condition. The DEEC Books of the importers were endorsed with the names of certain firms as supporting manufacturers of the resultant export products of the importers. G. D. Bhiya, one of the Directors of M/s. R.S.I. stated inter alia that the company had been possessing several advance licenses with the condition that the company would export goods of certain value but till 18-2-1994 they had not made any shipment to that effect and he expressed his inability to produce the stock register with the plea that the same were not updated. He also gave particulars of imports made and stated that the stock position of the goods lying with them including the quantity of the goods already delivered to their supporting manufacturers out of the imported quantity was not available with them and that a letter dated 11-4-1994 was issued, as per the instruction of Shri Anand Damani of 18 R. N. Mukherjee Road and was addressed to M/s. Jaipur Calcutta Road Carrier with a request to deliver 200 bags of polypropylene 1088-B from the godown of the Central Warehousing Corporation to M/s. S. K. Plastic Industries (P) Ltd. of Raipur and that the letter was issued without verifying authenticity of the said M/s. B. D. Mal and they did not have any stock of the raw materials imported except in the Central Warehousing Corporation and the materials were stored by them in no other godown. He failed to furnish the details pertaining to stock, delivery to supporting manufacturers and their shipment particulars till 1-3-1994 out of the raw materials imported against four duty free advance licenses issued to R.S.I. Eng. (P) Ltd. He failed to give satisfactory reply regarding the inclusion of the additional supporting manufacturers, namely, M/s. Padmini Polymers Ltd. and M/s. Utkal Polyweave (P) Ltd. and the quantity of the duty free raw materials supplied to the said two firms. Subsequent to the undertaking of the investigation in the instant case, that is, after 18-2-1994 M/s. R.S.I. effected seven shipment under seven shipping bills in respect of which the supporting manufacturers were declared to be M/s. Padmini Polymers Ltd., New Delhi and M/s. Moleplast Polymers Ltd. Calcutta. The name of the supporting manufacturers M/s. Padmini Polymers Ltd. was endorsed in the DEEC Book only after the enquiries had been initiated by the Department and the name of Moleplast Polymers Ltd. was not included in the DEEC Book. None of those supporting manufacturers did receive any exempt materials from the importers. Three more shipments were effected through the port of Kundla by M/s. R.S.I. in the last week of July 1994 which had also distinctly indicated that the aforesaid shipments were effected by the importers after expiry of the requisite period of export obligation and also after the enquiry had been started by the Department pertaining to the diversion of the exempt import materials into the domestic market. M/s. R.S.I. did violate the stipulations of the customs notification 203/92 as amended as well as of the Advance License and had willfully submitted false declaration on the export shipping bill before the customs. Shri Aloke Kumar of M/s. R.S.I. limited stated that he was not instantly aware of any supply of any raw materials to M/s. Padmini Polymers and M/s. Utkal Polyweave Industries Ltd. and that the import consignments were looked after by detenu's agency and he expressed inability to furnish any details regarding the quantity of imported materials lying in their godown as the importers were unable to maintain proper stock register. The detenu made statement to the effect that the customs clearance for M/s. R.S.I. Eng. (P) Ltd. was looked after by him and an import of 6,200 bags (155 Mts.) of polypropylene film grade 1088-B was made by M/s. R.S.I. and that the goods being cleared were stored in the godown of the Central Warehousing Corporation as per the instruction of the importers (though the said instruction copy could not be produced) and that the instruction for the delivery of the goods from the godown were received by the detenu from the importers from time to time and accordingly the goods were cleared from the godown of the Central Warehousing Corporation and that delivery of 1440 bags on 14-2-1994 and also the bags prior to 14-2-1994 was taken on behalf of the detenu's firm by Shri Chandan Ghosh and the goods were delivered to one Shri Kishor Damani, one of the Directors of M/s. Utkal Polyweave (P) Ltd. at 18, R. N. Mukherjee Road as per the instructions from R.S.I. Eng. Ltd. The detenu further stated that he knew that the imported materials were not put to use as intended in DEEC Scheme and those were fraudulently diverted to M/s. Utkal Polypack (P) Ltd. with clear knowledge and instruction to his Jetty Sircar taking delivery from Central Warehousing Corporation and it was pointed out by the detenu that though Chandan Ghosh was deputed by him for making delivery to Shri Anand Damani said Shri Chandan Ghosh was not in the pay roll of the detenu's firm. The detenu further stated that no receipts or delivery challans were prepared for those unauthorised disposal/diversion of the duty free goods and that Shri Chandan Ghosh did not have any authorisation from the detenu's agency but he used to take delivery of the goods on behalf of the detenu' s firm from Central Warehousing Corporation and used to deliver goods to different parties at the instructions of Anand Damani and that the delivery of the goods was effected through Chandan Ghosh with the intention that the diversion of the duty free goods would not be made known to the detenu's other staff. The statement of the detenu made it clear that the exempted materials cleared by the detenu under the bill of entry dated 18-1-1994 were delivered to Shri Damani as per the instruction of the importers and that knowing it fully well that the goods cleared by the detenu on behalf of the importers were duty free, the detenu took all initiatives in delivering them to different parties and allowed Sri Ghosh, though not an employee of the detenu's agency to sign and take delivery of the duty free goods from the godown of Central Warehousing Corporation coupled with the fact that the delivery challans/orders were signed by Shri Ghosh on the rubber stamp of the detenu' s agency. Scrutiny of the facts and verification of the statements of documents revealed that the detenu along with his other concerned accomplices, were deeply engaged in the act of smuggling goods of foreign origin into India and it came to light that syndicate was formed and a conspiracy was hatched up to sell and/or dispose of the goods imported under DEEC and Value Based Advance Licence Scheme, to other parties in contravention of the terms and conditions and of the exemption notification.

(3.) I have described above only some portions of the averments contained in the grounds on the basis of which the detention order has been passed. I must however mention that the grounds stated therein are far mere elaborate with more detailed particulars on various other factual aspects and I have only collected some portions to describe what I have noted above leaving aside many other relevant facts not mentioned in my description of the respondents' case as appearing in the grounds in support of the order of detention.