1992 (5) TMI 20 - SC - Customs

Whether the 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? Held 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 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. Uphold the order of learned Single Judge in the High Court dismissing 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. Appeal dismissed.

Issues Involved:
1. Validity of the detention order under Section 3(1) of the Conservation of Foreign Exchange & Prevention of Smuggling Activities Act, 1974.
2. Whether the activities of the petitioner constituted "smuggling" under the Act.
3. Whether the courts have the power to interfere with detention orders at the pre-execution stage.
4. Interpretation of "smuggling" and its applicability to the case.

Detailed Analysis:

1. Validity of the Detention Order under Section 3(1) of the Act:
The petitioner, Managing Director of M/s. E.A.P. Industries Ltd., challenged the detention order issued under Section 3(1) of the Conservation of Foreign Exchange & Prevention of Smuggling Activities Act, 1974. The petitioner argued that the detention order was issued in consequence of proceedings against him by customs officials related to the import and warehousing of Ethyle Hexanol (EHA) and P.V.C. Resin. The petitioner sought an injunction from the Calcutta High Court, which was dismissed, leading to the present Special Leave Petition.

2. Whether the Activities of the Petitioner Constituted "Smuggling" under the Act:
The petitioner contended that the goods in question had been assessed to customs duty and cleared for bonded warehousing, and therefore, his activities did not constitute "smuggling." The Court noted that the term "smuggling" under Section 2(39) of the Customs Act includes any act or omission rendering goods liable to confiscation under Section 111 or Section 113. The authorities discovered shortages in the warehoused goods, suggesting unauthorized removal. The Court held that the unauthorized removal of goods from a bonded warehouse without the permission of the proper officer could prima facie amount to smuggling or abetment thereof.

3. Whether the Courts Have the Power to Interfere with Detention Orders at the Pre-execution Stage:
The Court referred to the precedent set in The Additional Secretary to the Government of India & Ors. v. Smt. Alka Subhash Gadia & Ors., which established that courts have the power to interfere with detention orders at the pre-execution stage, but such power is exercised sparingly and in exceptional cases. The Court outlined limited grounds for such interference, including situations where the detention order is not passed under the relevant Act, is executed against a wrong person, is for a wrong purpose, is based on vague or irrelevant grounds, or is passed by an unauthorized authority.

4. Interpretation of "Smuggling" and Its Applicability to the Case:
The Court examined the statutory definitions and provisions related to smuggling. It rejected the petitioner's argument that smuggling could not apply to goods cleared for bonded warehousing after duty assessment. The Court clarified that the statutory definition of "smuggling" includes unauthorized removal from a warehouse, irrespective of whether the goods were assessed to duty. The Court found that the petitioner's activities, as alleged, fell within the scope of smuggling under the relevant statutes.

Conclusion:
The Supreme Court upheld the orders of the High Court dismissing the writ petition. The Court concluded that the detention order was not outside the provisions of the Act and that the grounds of detention were not vague, irrelevant, or extraneous. The special leave petition was dismissed with no order regarding costs.

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