21 September 2004
Supreme Court
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MADHU GARG Vs UNION OF INDIA

Bench: N. SANTOSH HEGDE,S.B. SINHA
Case number: Crl.A. No.-000821-000821 / 2004
Diary number: 7985 / 2004
Advocates: Vs NARESH BAKSHI


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CASE NO.: Appeal (crl.)  821 of 2004

PETITIONER: Madhu Garg

RESPONDENT: Union of India & Anr.

DATE OF JUDGMENT: 21/09/2004

BENCH: N. Santosh Hegde & S.B. Sinha

JUDGMENT: J U D G M E N T  

With  CRL. APPEAL No. 822 of 2004

S.B. SINHA, J :

These appeals arising out of the judgments and orders dated   04.04.2004 passed by the High Court of Punjab and Haryana at Chandigarh  in Criminal Writ Petition Nos.1397 and 1432 of 2003 involving similar  questions of law and fact were taken up for hearing together and are being  disposed of by this common judgment.  However, the factual matrix of the  matter is being noticed from Criminal Appeal No.821 of  2004.

       The Appellant is the wife of the detenu Vinod Kumar Garg who was  detained by an order dated 20th October, 2003 passed by the Joint Secretary  to the Government of India, Ministry of Revenue, New Delhi purported to  be under Section 3(1) of the Conservation of Foreign Exchange and  Prevention of Smuggling Activities Act, 1974 (for short ’the COFEPOSA  Act’).

       The grounds of detention indicate that the said order of detention was  passed primarily on two allegations, viz.,:

(a)     the export consignment was misdeclared stating it to be alloy steel  forging (machined) although actually the same was a metal scrap;  and (b)     the goods were over invoiced as the value thereof was declared by  the exporter to be Rs. 170-175 per kg instead and place of its actual  value being only Rs. 4-5 per kg.

       The allegations in support of the said grounds of detention were  primarily based on the self-inculpatory statement of the detenu recorded by  the Directorate of Revenue Intelligence purported to be in terms of Section  108 of the Customs Act.  The said statements, however, were retracted by  the detenu before the learned ACMM on or about 26th August, 2003.

       The learned ACMM in his order dated 20th August, 2003 also  recorded the statement that the detenu had made his statement involuntarily  and had also been tortured.  It was directed: "At the request of accused it is directed to the I.O.  Sh. Mukesh Gaur to allow the accused person to  talk to their family members on STD/Telephone.   Accused have also stated that at this moment their

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advocates are not present hence they may be  remanded to J.C. till morning so that they can take  the services of their advocates.

"I have gone through the file, produced before me  by the I.O. S.S.P. made a request for 14 days J.C.  of both the accused.  However after considering all  the statements made before me by the accused  persons, they have been remanded till 2 p.m. on  26/8/2003 in J.C. with the directions to produce  both the accused in the court bw 2 p.m. to 4 p.m."

       Along with the said Vinod Kumar Garg, orders of detention were also  passed against his brother Narsi Dass Garg and their manager, Mudit Kumar  Tiwari.  However, when the matter was placed before the Central Advisory  Board in terms of Sub-section (3) of Section 8 of the COFEPOSA Act, the  Board although approved the order of detention of Vinod Kumar Garg and  Narsi Dass Garg, the detention of Mudit Kumar Tiwari was not approved.

       Questioning the said order of detention, the Appellant herein as also  the aforementioned Narsi Dass Garg filed two writ petitions before the  Punjab and Haryana High Court.  Both the petitions were dismissed by  reason of the impugned order.  Hence this appeal.

       Mr. Gopal Subramaniam, learned senior counsel appearing on behalf  of the Appellant had raised a number of contentions in support of this  appeal.  The learned counsel would firstly submit that from the averments  made in the show-cause notice dated 20th August, 2004 issued by the  Authorities upon the detenue it would be evident that the goods of the  exporter were made up of alloy steel and in that view of the matter the order  of detention cannot be sustained only on the basis of his purported self- inculpatory statement recorded by the official of Directorate of Revenue  Intelligence under Section 108 of the Customs Act.

       The learned counsel would further submit that keeping in view of the  fact that the self-inculpatory statement has been retracted, the same could  not have been the basis for issuing the order of detention.

       Mr. Subramaniam would contend that having regard to the fact that  the grounds of detention both in relation to the detenu as also his brother  Narsi Dass Garg being the verbatim copy of each other, non-application of  mind on the part of the detaining authority is apparent.  In any event, as the  relevant documents relating to the duty drawback cash incentive scheme and  particularly the reply of the detenu forming part of adjudication proceedings  were not placed before the detaining authority, the impugned order of  detention is vitiated in law.

       Mudit Kumar Tiwari who had also been detained on the ground of  hatching a conspiracy with the detenu and his brother but the order of  detention against him having been revoked, there is absolutely no reason,  Mr. Subramaniam would contend, as to why the detaining authority had not  revoked the order of detention passed against the detenu.

       It was also contended that no purported illegal activity at the hands of  the detenu in future is possible as he had already surrendered his ’exporter  importer code’ before the authorities incapacitating himself from doing  export import business.   

       Mr. T.S. Doabia, learned senior counsel appearing on behalf of the  Respondents, however, supported the order of detention.

       In view of the fact that we find force in the first contention of Mr.  Subramaniam, it may not be necessary for us to advert to the other

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submissions advanced by the learned counsel.

       It is not in dispute that one of the allegations made against the detenu  in the grounds of detention was that he had exported consignment upon  misdeclaration to the effect that alloy steel forging (machined) was being  exported whereas actually the same was metal scrap.

       However, it is not denied that the detenu had been served with a  show-cause notice dated 20th August, 2004 by the Directorate of Revenue  Intelligence, New Delhi; the paragraph 48 whereof reads as under:

"48. Two samples drawn from the seized export  consignment of M/s National Steel Products Co.  were sent to CRCL, New Delhi for chemical  analysis.  CRCL, vide its test report No. 35- Chem/Cus/2002/CL/197-198 DRI dated  23.10.2003, informed that the samples were made  up of alloy steel.  The test report, however, could  not throw any light as to whether the goods were  forgings (machined), as declared by the exporter."

       In the said notice, the detenu had been asked to show cause inter alia  on the following terms:

"58(i) M/s National Steel Products Co, New Delhi  exported the goods by willfully mis- stating/misdeclaring the FOB value as Rs.  7,60,88,864/- (the details of which are given in  Annexure-A annexed to this Show Cause Notice)  and by suppressing the actual value with a  malafide intention to defraud the Government by  fraudulently claiming/ availing undue DEPB  credits to the tune of Rs. 1,70,01,015/-.   Misdeclaration in value has, therefore, rendered  the exported goods liable to confiscation under  section 113(d) and 113(i) of the Customs Act,  1962 read with section 50(1) of the Customs Act,  1962 as well as Rules 11 and 14 of the Foreign  Trade (Regulation) Rules, 1993."

       A bare perusal of the aforementioned averments in the said notice do  not leave any manner of doubt whatsoever that upon chemical analysis of  materials, it was found that the samples were made up of alloy steel.  It has  not been disputed before us that that the alleged goods which are subject  matter of the export were seized in presence of the detenu and were sent for  chemical analysis before CRCL.  Upon obtaining a report dated 23.10.2003,  it appears, that the samples were made up of alloy steel although the test  report could not throw any light as to whether the goods were alloy steel  forging (machined), as declared by the exporter.  The subject matter of the  consignment, therefore, was not scrap metal.  Had the detaining authority  waited for the results of the said chemical analysis before issuing the  impugned order of detention, the first ground stated therein could not have  been made a basis therefor.                  The order of detention, therefore, in our considered opinion, was  passed in haste without there being adequate materials.

       Mr. Doabia, however, contended that the allegation against the detenu  as regard over invoicing of the goods is the subject matter of the  adjudication proceedings.  That may be so but it is now well-settled that  when one of the grounds of detention is found to be based on irrelevant  materials not germane for passing the order of detention, the entire order of  detention shall stand vitiated in law.

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       For the aforementioned reasons, we are of the opinion that the  impugned orders of detention cannot be sustained which are set aside  accordingly.  These appeals are allowed with aforementioned observations.   No costs.