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PETITIONER: N.K. BAPNA

       Vs.

RESPONDENT: UNION OF INDIA AND ORS.

DATE OF JUDGMENT14/05/1992

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. RAMASWAMI, V. (J) II YOGESHWAR DAYAL (J)

CITATION:  1992 SCR  (3) 267        1992 SCC  (3) 512  JT 1992 (4)    49        1992 SCALE  (1)1135

ACT:      Constitution of India, 1950:      Articles 21, 22 and 32-Preventive   Detention-Detention order-Whether could be challenged even before service of the order  on  the detenu-Claims of the  State  and  fundamental right of the citizen to be balanced.      Conservation  of  Foreign  Exchange  &  Prevention   of Smuggling Activities Act, 1974:      Section 3(1)-Goods imported by company and declared  to customs  authorities-After assessment to duty and  clearance kept  in  bonded warehouses under lock and  key  of  customs officials-Removal or abetting removal by Managing  Director, without  permission  of proper  officer-Whether  constituted smuggling-Detention order-Legality of.      Customs Act, 1962:      Sections  2(39), 2(43), 23, 49, 59, 72 and  111(j)  and 125(2)-Import  of goods-Goods assessed to duty and  kept  in warehouse  under  lock  and  key  of  customs   authorities- Clandestine  removal  of goods without  paying  of  assessed duty-Whether constituted ’smuggling’-Whether goods liable to be  confiscated-Import of goods when concluded-Whether  open to authorities to either confiscate goods or collect  duties payable by them.

HEADNOTE:      The  Petitioner was the Managing Director of a  company engaged  in  the business of manufacture and  production  of plastic  goods.  The Company imported certain materials  and the   good  were  cleared  for  bonded  warehouseing   after assessment  to  duty.   The  Company  cleared  part  of  the material,  after payment of duty, under the  supervision  of the  Customs Officials on different dates, and  the  balance was  kept in the warehouses, which were kept under lock  and key and the key was in the custody of                                                        268 Customs  officials.  Sometime later, the  Customs  officials discovered  shortage  of material kept  in  the  warehouses. Certain  enquiries and proceedings ensued and in the  course of  these  enquiries, the petitioner came to  know  that  an order of detention had been passed against him under Section 3(1) of the Conservation of Foreign Exchange & Prevention of

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Smuggling  Activities Act, 1974, with a view  to  preventing him  from abetting the smuggling of goods.  Without  waiting for  the order and the grounds of detention being served  on him,  the petitioner filed a writ petition before  the  High Court  challenging the order of detention.  The  authorities did not file any counter affidavit affirming or denying  the facts  mentioned  in  the writ petition nor  did  they  come forward  to  disclose or even indicate the  grounds  of  the proposed  detention,  if any.  A Single Judge  of  the  High Court dismissed the writ petition on the ground that, on the facts disclosed in the petition, the case, prima facie  fell within the scope of the expression ’smuggling’ as defined in the Act.      On   appeal,   the  Division  Bench   held   that   the circumstances   referred  to  in  the  petition   were   not sufficient to constitute ’smuggling’.  However, it dismissed the appeal on the view that without the grounds of detention it  would  not  be  proper for the courts  to  go  into  the validity or otherwise of the order of detention or make  any pronouncement that the order in question had not been passed under  the  Act  under which it was proposed  to  have  been passed  or  that it was passed with a wrong purpose  or  was passed on vague, extraneous or irrelevant grounds.      In  the  Special Leave Petition before  this  Court  on behalf of the Petitioner it was contended that the  Division Bench of the High Court having held that activities did  not constitute  ’smuggling’ ought to have  straightaway  quashed the  detention  order; that the goods in question  had  been assessed to customs duty by the authorities and an order for their  clearance from the customs area had been made on  the execution  of a bond for the due payment of the  duty;  that the petitioner was not guilty of ’smuggling’ or the abetment thereof; that the scope of s.111(j) should be restricted  to goods which were dutiable and no duty had been assessed  and their  removal  from  a warehouse where  they  were  lodged, pending  assessment of duty, that the operation of  ’import’ was  concluded once the goods were assessed to customs  duty and  cleared  from  the  customs area  and  the  concept  of ’smuggling’  could have no meaning in respect of such  goods thereafter,  that where goods were removed from a  warehouse in which they                                                        269 were  lodged  under  section 59 without  permission  of  the concerned  authorities,  the  only  consequence  that  could follow  was action under section 72; and there could  be  no levy  of penalty under Section 125, and such goods were  not liable   to   confiscation,  and  the  provision   for   the contravention  of  which  there  could  be  no  penalty   or confiscation  should  not  be  so  read  as  justifying  the draconian  remedy  of preventive detention; once  the  goods were  cleared  by  the customs authorities,  they  were  not liable to confiscation, unless the order granting  clearance was reversed in appropriate proceedings.      Dismissing the Special Leave Petition, this Court,      HELD  : 1. It is now well settled that, even in a  case of  preventive  detention,  it  is  not  necessary  for  the proposed  detenu  to wait till a detention order  is  served upon him before challenging the detention order.  Though the Constitution  of India, which permits preventive  detention, requires  the detaining authorities to serve the grounds  of detention  within a prescribed  period after  the  detention order  is  served on the detenu, it does  not  envisage  any disclosure of the grounds of detention prior to the  service of the detention order on the detenu.  To apprise the detenu in  advance  of the grounds on which he is  proposed  to  be

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detained may well frustrate the very purpose of the law.  On the other hand, to insist that no order of detention can  be challenged until actual detention in pursuance thereof takes place  might irretrievably prejudice the rights of  proposed detenus in certain situations. Thus, the conflicting  claims of the State and the fundamental right of a citizen need  to be   reconciled  and  the  limitations,  if  any   precisely enunciated. [273 E-G]      The  Additional Secretary to the Government of India  & Ors.  v. Smt. Alka Subhash Gadia & Ors., (1991)  1  J.T.S.C. 549, relied on.      2.1.  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 removed  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 provision of the Conservation of Foreign Exchange (prevention of Smug-                                                        270 gling Activities) Act. [280 G-H, 281A]      2.2.  There can be no smuggling if the goods  had  been removed from the warehouse not by the petitioner but by  the customs  authorities or somebody else.  But that will  be  a question of fact.  Assuming that the goods have been removed by  the petitioner or the company for the warehouse  without the  permission of the proper officer, a simple  reading  of the relevant sections is sufficient to say prima facie that, in  the  present  case,  there has  been  smuggling  by  the Company, and an abetment of smuggling by the petitioner.  On the  broad  conspectus of facts and the  special  definition clauses in the relevant statutes it cannot be said that  the proposed  detention  in this case  is  totally  outside  the provisions  of  the  statute.   If  there  is  prima  facie, smuggling  or  abetment  of smuggling, it  is  open  to  the competent authorities to issue a detention order, which  may be challenged later on the merits on any grounds that may be available  but  it  cannot  be  said  that  the  action   is flagrantly in violation of the statute or that the order  is one not made under the provisions of the statute under which it has been purportedly issued. [277 A-D]      3.1.  There is no justification to  restrict  "dutiable goods"  to "dutiable goods not yet assessed to  duty".   The suggestion that "warehouse" referred to in the clause (j) of Section  111  should be understood to mean  a  warehouse  to which  goods  are removed under s.49 but not  one  to  which goods  are  taken  in pursuance of s.59,  ignores  the  wide definition  of  that expression set out in  s.2(43)  of  the Customs Act. [278 D-E]      Deputy Commissioner of Commercial Taxes v. M/s.  Caltex India)  Ltd.,  AIR 1962 Mad 298 and Union of India  v.  Jain Sudh  Vanasapthi Ltd., 1992 1 Scale 34 10 E.L.T. 43  (Del.), referred to.      3.2. Even the general concept of smuggling contains two elements: one, the bringing into India of goods, the  import of which is prohibied; and two, the bringing into  country’s trade  stream,  of goods the import of  which  is  permitted without  paying  the  customs duties  with  which  they  are chargeable.  The second eventually can occur not only  where there is a clandestine import evading the assessment of duty but  also  where  there is  a  clandestine  removal  without

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payment of the assessed duty.  In a case where the goods are warehoused  under s.49 and they are  clandestinely  removed, there would be smuggling as the duties payable thereon  have been evaded altogether.  But even in a case where the  goods are assessed                                                        271 to  duty  and  allowed  to  be  warehoused  under  s.59,   a clandestine  removal can result in loss of duty.  No  doubt, there is a provision in s.72 for collection of the duty  and forfeiture  of the bond furnished to secure due  payment  of duty  but  these  may not always be adequate  cover  to  the Revenue  if the goods are spirited away without  permission. [278 F-H, 279 A]      3.3. The mere fact that the goods have been  ostensibly cleared,  after assessment of duty, to a warehouse does  not preclude the applicability of the concept of smuggling  even in  such  a  case.  In a sense, import may  be  said  to  be complete  for certain purposes, say, sales tax  purposes  on their  clearance after assessment of duties at  the  customs barrier  but it is not complete in a real sense.   Even  the warehouse,  to which the goods are permitted to  be  removed under  s.59  is  a premises under the lock and  key  of  the customs authorities and is, in a sense, an extension of  the customs  area.  Good’s  can be cleared  therefrom  for  home consumption  or  exportation only after payment  of  duties. Till  that is done, there is always the risk of the loss  to the  State of the duties payable.  So import cannot be  said to  be complete till then.  There is no reason to read  down s.111 (j) which only recognises this position. [279 B-D]      Deputy  Commissioner of Commercial Taxes v. M/S  Caltex (India) Ltd. AIR 1962 Mad 298, referred to.      3.4. The consequences which follow on a particular  act or  omission  will  depend on the  statutory  provisions  in question. It may be that the petitioner’s act in the present case  may not have attracted s.125 as it stood  earlier  but will  now  attract a penalty in view  of  s.125(2)  inserted w.e.f.  27.12.1985.   It  may also  attract  s.72  but  this cannot,  however,  be  decisive  of  the  interpretation  of s.111(j). [279 G]      Shewpujanrai  Indrasanrai  Ltd.  v.  The  Collector  of Customs & Ors., [1959] S.C.R. 821, referred to.      3.5.  Even  if  it is assumed that  s.72  will  not  be applicable where the goods are confiscated, the  authorities have  to  choose, having regard to  all  the  circumstances, between confiscating the goods on the one hand or collecting the  duties payable thereon on the other.  Having regard  to the  language  of s.111(j), it cannot held that  in  such  a case,  the  goods  are not liable  to  confiscation,  merely because an alternative recourse to Section 72 is  available. In  view  of the language of Section 111(j), the  goods  are liable                                                        272 to  confiscation.   This conclusion does not  go  behind  or ignore  the effect of the order clearance.  It  accepts  the fact  of  clearance  and proceeds on the  footing  that  the goods,  rightly cleared under s.59, have been  clandestinely removed  from the warehouse within the meaning of s.59. [280 B,F]      Union  of India v. Jain Shudh Vanaspathi, (1992)  Scale 34 and Jain Shudh Vanaspathi Ltd. & Anr. v. Union of India & Ors., (1982) 10 E.L.T. 43 (Del.), referred to.

JUDGMENT:

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    CIVIL  APPELLATE JURISDICTION : Special Leave  Petition (C) No. 5781 of 1992.      From  the  Judgment  and Order dated  6.4.1992  of  the Calcutta High Court in F.M.A.T. No. 914 of 1992.      A.K.  Sen,  Pradeep Tarafdar, B.N.  Singhvi  (for  M/s. Swarup John & Co.) for the Petitioner.      A Subba Rao and Parmeswaran for the Respondent.      The Judgement of the Court was delivered by      S.  RANGANATHAN,  J.  The petitioner  is  the  Managing Director  of  M/s  E.A.P. Industries Ltd.,  engaged  in  the business of manufacture and production of plastic compounds, plastic  films  and  sheets  and  plastic  chemicals.    The petitioner says that it came to his knowledge that an  order has been passed on 1st January, 1992 directing his detention under section 3(1) of the Conservation of Foreign Exchange & Prevention  of Smuggling Activities Act,  1974  (hereinafter referred  to as ’the Act’) - with a view to  preventing  him from abetting the smuggling of goods. A copy, purporting  to be  a  copy of the said order, has been  placed  on  record, though it is not quite clear how the petitioner came by  it. Thereupon  he  filed a writ petition in  the  Calcutta  High Court for an injuction restraining the concerned authorities from  detaining him in pursuance of the above  order.   This writ  petition as an appeal therefrom have  been  dismissed; hence the present Special Leave Petition.      According  to the Petitioner, the detention  order  has been issued in consequence of certain proceedings which  had been  initiated  against him by the customs  officials.   He says that the company imported 267.782 metric tons of Ethyle Hexanol (EHA). This Consignment was unloaded at                                                        273 Kandla  port  and  24 tankers thereof  were  transported  to bonded  warehouses  after  assessment to  duty  in  October- November 1989. Out of the chemical thus kept in the   bonded warehouse  the  company  cleared  175  metric  tons  between December,  89  and  October, 90 on  payment  of  duty.   The company  also imported 204 M.T. of P.V.C. Resin from  France on  2.5.90. This consignment was unloaded at  Calcutta  Port and  was  cleared for bonded warehousing.  Out  of  this  75 Metric  tons  of P.V.C. resin were cleared  by  the  company after payment of duty on 17.9.1990 and 8.11.1990  under  the supervision  of  the Customs officials.   According  to  the petitioner  the warehouse were kept under lock and  key  and the key was in the custody of customs officials.      Sometime  in  September  1991,  the  Customs  officials discovered a shortage of 93.975 metric tons of P.V.C.  resin and a similar shortage also in the stock of EHA kept in  the warehouse.  Centain enquires and proceedings ensued and  the petitioner  says  that in the course of these  enquiries  he came  to  know that an order of detention  had  been  passed against  him under the Act.  Without waiting for  the  order and  the  grounds  of detention being  served  on  him,  the petitioner  filed a writ petition challenging the  order  of detention.      It  is  now  well  settled that,  even  in  a  case  of preventive  detention, it is not necessary for the  proposed detenu  to  wait till a detention order is served  from  him before challenging the detention order.  It is true that the Constitution  of India, which permits  preventive  detention requires  the detaining authorities to serve the grounds  of detention  within  a prescribed period after  the  detention order  is  served on the detenu.  It does not  envisage  any disclosure of the grounds of detention prior to the  service of the detention order on the detenu.  To apprise the detenu in  advance  of the grounds on which he is  proposed  to  be

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detained may well frustrate the very purpose of the law.  On the other hand, to insist that no order of detention can  be challenged until actual detention in pursuance thereof takes place  might irretrievably prejudice the rights of  proposed detenus in certain situations.  Thus, the conflicting claims of the State and the fundamental right of a citizen need  to be  reconciled  and  the  limitations,  if  any,   precisely enuciated.   This  has been done by the recent  decision  of this Court in The Additional Secretary to the Government  of India  &  Ors. v. Smt. Alka Subhash Gadia & Ors.,  1991  (1) J.T.  (S.C.)  549.  The real question of law that  fell  for consideration before the court in that case was whether the                                                        274 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.  As  a corollary to this question, the incidental question that had to  be answered was whether the detenu or the petitioner  on his  behalf,  is entitled to  the detention  order  and  the grounds  on  which the detention order is  made  before  the detenu  submits  to  the  order.   The  first  question  was answered  by saying that the courts have power to  interfere even  before the detention order is served or the  detention is effected but that such power will be exercised  sparingly and  in  exceptional cases of the type  enunciated  therein. The Court observed :           "It is not correct to say that the courts have  no          power to entertain grievances against any detention          order prior to its execution.  The courts have  the          necessary  power  and they have used it  in  proper          cases as has been pointed out above, although  such          cases  have been few and the grounds on  which  the          courts  have  interfered  with  them  at  the  pre-          execution  stage  are necessarily very  limited  in          scope and number, viz., where the courts are  prima          facie satisfied (i) that the impugned order is  not          passed under the Act under which it is purported to          have  been  passed, (ii) that it 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.  The refusal by the courts to use  their          extraordinary   powers   of  judicial   review   to          interfere with the detention orders prior to  their          execution  on any other ground does not  amount  to          the  abandonment  of  the said power  or  to  their          denial  to the proposed detenu, but prevents  their          abuse and the perversion of the law in question."      On the second question, the Court had this to say:           "In  view of the discussion aforesaid, the  answer          to  this question has to be firmly in the  negative          for  various  reasons.  In the first  instance,  as          stated earlier, the Constitution and the valid  law          made  thereunder do not make any provision for  the          same.   On the other hand, they permit  the  arrest          and detention of a person without furnishing to the          detenu the order and the grounds                                                        275          thereof  in advance.  Secondly, when the order  and          the  grounds  are  served and the detenu  is  in  a          position  to  make  out  prima  facie  the  limited          grounds   on   which  they  can   be   successfully          challenged,  the  courts, as pointed  out  earlier,          have power even to grant bail to the detenu pending

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        the final hearing of his petition.   Alternatively,          as stated earlier, the Court can and does hear such          petition expeditiously to give the necessary relief          to  the detenu.  Thirdly, in the rare  cases  where          the  detenu, before being served with them,  learns          of the detention order and the grounds on which  it          is made, and satisfies the Court of their existence          by  proper affirmation, the Court does not  decline          to  entertain  the writ petition even at  the  pre-          execution  stage,  of course, on the  very  limited          grounds  stated above.  The Court no doubt even  in          such  cases  is not obliged to interfere  with  the          impugned  order at that stage and may  insist  that          the  detenu  should first submit to it.   It  will,          however,  depend  on the facts of each  case.   The          decisions  and the orders cited above show that  in          some genuine cases, the Courts have exercised their          powers  at  the pre-execution  stage,  though  such          cases  have  been rare.  This only  emphasises  the          fact  that the Courts have power to interfere  with          the  detention  orders even  at  the  pre-execution          stage but they are not obliged to do so nor will it          be  proper  for them to do so save  in  exceptional          cases.  Much less can a detenu claim such  exercise          of  power as a matter of right.  The descretion  is          of the Court and it has to be exercised  judicially          on will-settled principles."      In  the present case, the authorities did not file  any counter  affidavit affirming or denying the facts  mentioned in  the writ petition nor did they come forward to  disclose or  even indicate the grounds of the proposed detention,  if any.   The learned Single Judge in the High Court  dismissed 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.  The Division Bench came to the conclusion that the circumstances   referred  to  in  the  petition   were   not sufficient  to  constitute ’smuggling’.   Nevertheless,  the Court took the view that without the grounds of detention it will not be proper for courts the to go into the validity or otherwise   of   the  order  of  detention   or   make   any pronouncement  that the impugned order has not  been  passed under the Act under which                                                        276 it  is  proposed to have been passed or that it  was  passed with  a wrong purpose or was passed on vague, extraneous  or irrelevant grounds.      We  have heard Sri Asoke Sen, learned counsel  for  the petitioner  and  Sri  Subba Rao,  learned  counsel  for  the respondent at considerable length.  Sri Asoke  Sen  contends that  the Division Bench of the High Court  having  accepted the  petitioner’s  contention  that  his  acivities  do  not constitute  ’smuggling’ ought to have  straightaway  quashed the  detention  order.   He points out  that  the  goods  in question   had  been  assessed  to  customs  duty   by   the authorities  and  an  order for  their  clearance  from  the customs  area had been made on the execution of a  bond  for the  due payment of the duty.  Referring to the  definitions of  ’smuggling’  in various dictionaries and  decisions,  he contends   that  it  is  ridiculous  to  suggest  that   the petitioner is guilty of ’smuggling’ or the abetment thereof. Prima  facie,  one would ageer that  there  is  considerable force  in  this contention of the learned  counsel  for  the petitioner that there cannot be any smuggling of goods which have   been  openly  imported,  declared  to   the   customs

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authorities  and  cleared by them after  being  assessed  to duty.   However, we cannot go by the dictionary  meaning  of the  word as the Act has a definition clause  which  adopts, for the word, the same meaning which it has in section 2(39) of  the  Customs  Act. Section 2(39)  of  the  Customs  Act, defines ’smuggling’ thus:           "Smuggling",  in relation to any goods, means  any          act or omission which will render such goods liable          to confiscation under section 111 or section 113".      Section  111 declares, inter alia, that  the  following goods will be liable to confiscation:           (j)  any dutiable goods removed or attempted to be          removed from a warehouse without the permission  of          the proper officer or contrary to the terms of such          permission. and  section 2(43) of the said Act contains a definition  of ’warehouse’, which reads:           ’Warehouse’  means  a public  warehouse  appointed          under  section 57 or a private  warehouse  licensed          under section 58."      It  is  clear  even from the  facts  disclosed  in  the petition  that the case of the authorities may be  that  the petitioner has abetted the removal of the                                                        277 imported  goods  from  the  bonded  warehouse  without   the permission  of the proper officer.  Of course, there can  be no smuggling if the goods had been removed for the warehouse not  by  the petitioner but by the  customs  authorities  or somebody else as suggested by the petitioner.  But that will be  a  question  of  fact and one has  to  assume,  for  the purposes of the present argument, that the goods are alleged to  have been removed by the petitioner or the company  from the warehouse without the permission of the proper  officer. In  such  a  situation, a simple  reading  of  the  relevant sections  is  sufficient  to say prima facie  that,  in  the present  case, there has been smuggling by the company,  and an abetment of smuggling by the petitioner.  It is difficult to  say  on the broad conspectus of facts  and  the  special definition  clauses  in  the  relevant  statutes  that   the proposed  detention  in  this case is  totally  outside  the provisions  of  the  statute.   If  there  is  prima  facie, smuggling  or  abetment  of smuggling, it  is  open  to  the competent  authorities to issue a detention order which  may be challenged later on the merits on any grounds that may be available  but  it  cannot  be  said  that  the  action   is flagrantly in violation of the statute or that the order  is one not made under the provisions of the statute under which it has been purportedly issued.      Realising  the direct impact of the relevant  statutory provisions  on  the sparse facts stated by  the  petitioner, Shri  Ashoke Sen has elaborated contentions before us  which have found favour with the Division Bench of the High  Court to  demonstrate  that  the facts alleged do  not  bring  the present case within the statutory provisions.  According  to him,  section  111 (j) comes into operation only in  a  case where  no duty has been assessed on goods and the goods  are allowed to be deposited in a warehouse under the  provisions of  section  49 of the Customs Act  pending  clearance  from customs.   He  submits that in such a case  the  removal  of goods  without the permission of the  statutory  authorities would amount of smuggling because in such a case the process of  import is not complete.  Also in such a case  the  goods would  clearly have escaped duty because the  provisions  of section 72 are not made applicable to a case where the goods are warehoused under section 49.  In such a case Shri Ashoka

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Sen says, the statutory concept of smuggling would  squarely apply but, he says, it cannot have any application to a case where  the goods are cleared from the customs area with  the permission  of  the customs authorities.  In  this  type  of case,  the  process of import is complete  :  vide,  Deputy Commissioner  of  Commercial Taxes v.  M/s.  Caltex  (India) Ltd., AIR 1962 Mad 298 and, there                                                        278 can  be  no  smuggling thereafter.  Even if  the  goods  are clandestinely removed from the bonded warehouse there is  no escapement of duty since the duty is adequately  safeguarded by a bond for double the amount of duty with which the goods are  chargeable.  The only remedy of the Department in  such cases  is the recovery of the duties etc. under s.72 and  no confiscation  of  the goods is permissible  in  such  cases. Indeed, there can be no confiscation of goods once they  are cleared  from  the customs area under s.47,  vide  Union  of India  v.  Jain  Sudh  Vanaspathi  Ltd.,  1992-1  Scale   34 affirming  10  E.L.T.  43 (Del.).  In  the  light  of  these concepts  he  urges that the scope of s.111  (j)  should  be restricted  to  goods which are dutiable and in  respect  of which  no  duty has been assessed and their removal  from  a warehouse where they are lodged pending assessment of duty.      We  are  of  the opinion  that,  interesting  as  these arguments are, they cannot be accepted.  The  interpretation sought to be placed by counsel on the provision contained in s.111(j)  is  unduly  narrow and  imports,  into  the  clear language  thereof,  words that are not there.  There  is  no justification  to  restrict "dutiable  goods"  to  "dutiable goods  not  yet  assessed to  duty".   The  suggestion  that "warehouse"  referred to in the clause should be  understood to  mean a warehouse to which goods are removed  under  s.49 but not one to which goods are taken in pursuance of s.59 is without  basis  and  ignores the  wide  definition  of  that expression set out in s.2(43) of the Customs Act.      Sri  Sen has urged three considerations in  support  of his plea to limit the scope of s.111(j) as urged by him. The first  is that the operation  of ’import’ is concluded  once the goods are assessed to customs duty and cleared from  the customs  area  and the concept of ’smuggling’  can  have  no meaning  in respect of such goods thereafter.  This  is  not quite  correct.   Even  the  general  concept  of  smuggling contains two elements: one, the bringing into India of goods the  import of which is prohibited; and two,  the  bringing, into  the  country’s trade stream, of goods  the  import  of which  is permitted without paying the customs  duties  with which  they  are  chargeable.   In  our  view,  the   second eventuality can occur not only where there is a  clandestine import  evading the assessment of duty but also where  there is  a  clandestine removal without payment of  the  assessed duty.   In a case where the goods are warehoused under  s.49 and   they  are  clandestinely  removed,  there   would   be ’smuggling’  as the duties payable thereon have been  evaded altogether.  But even in a case where the goods are assessed to  duty  and  allowed  to  be  warehoused  under  s.59,   a clandestine removal can result in                                                        279 loss  of duty.  No doubt, there is a provision in  s.72  for collection of the duty and forfeiture of the bond  furnished to  secure due payment of duty but these may not  always  be adequate cover to the Revenue if the goods are spirited away without permission.  The mere fact that the goods have  been ostensibly cleared, after asessment of duty, to a  warehouse does  not  preclude  the applicability  of  the  concept  of smuggling  even in such a case.  In a sense, import  may  be

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said  to  be complete for certain purposes  say,  sales  tax purposes  as in Dy. C.C.T. v. Caltex (India) Ltd., AIR  1962 Mad 298 on their clearance after assessment of duties at the customs barrier but it is not complete in a real sense. Even the  warehouse,  to  which the goods  are  permitted  to  be removed  under s.59 is a premises under the lock and key  of the customs authorities and is, in a sense, an extention  of the  customs area.  Goods can be cleared therefrom for  home consumption  or  exportation only after payment  of  duties. Till  that is done, there is always the risk of the loss  to the  State of the duties payable.  So import cannot said  to be  complete till then from the point of view with which  we are  concerned.  There is no reason why we should read  down s.111(j) which only recognises this position.      The  second point made by Sri Sen is that  where  goods are removed from a warehouse in which they are lodged  under s.59  without  permission of the concerned  authorities  the only  consequence  that  can follow is  action  under  s.72. According  to  him, in such cases, there can be no  levy  of penalty under s.125 and the goods removed without permission are not liable to confiscation.   He urges that a provision, for  the contravention of which there can be no  penalty  or confiscation,  should  not  be so  read  as  justifying  the draconian remedy of preventive detention.  In support of his contentions  on  this  part of  the  case,  learned  counsel strongly   relied   on  the  decision  of  this   Court   in Shewpujanrai Indrasanrai Ltd. v. The Collector of Customs  & Ors., [1959] S.C.R. 821.  We are unable to see any force  in this  contention.   The  consequences  which  follow  on   a particular  act  or omission will depend  on  the  statutory provisions in question.  It may be that the petitioner’s act in the present case may not have attracted s.125 as it stood earlier  but will now attract a penalty in view of  s.125(2) inserted  w.e.f. 27.12.1985.  It may also attract  s.72  but this cannot, however, be decisive  of the interpretation  of s.111  (j).   In the decision referred to by  counsel  which arose  under the Sea Customs Act, 1878 smuggled  goods  were confiscated  and, in addition, the smuggler was called  upon to  pay  the duties on the goods.  The Court held  that  the question  of a levy of import duties did not arise as  there was                                                        280 no  statutory  provision  covering the facts  of  that  case enabling  such levy.  This decision is no authority for  the proposition that s.111(j) is inapplicable to a case to which s.72 is applicable.  Even if one assumes that s.72 will  not be  applicable where the goods are confiscated the  position only  comes  to this, that the authorities have  to  choose, having regard to all the circumstances, between confiscating the  goods on the one hand or collecting the duties  payable thereon  on  the other.  Having regard to  the  language  of s.111(j), it is not possible to agree with counsel that,  in such a case, the goods are not liable to confiscation merely because  an  alternative recourse to s.72  is  available  to them.      The third point made by Sri Sen is that once goods  are cleared  by the customs authorities, they are not liable  to confiscation unless the order granting clearance is reversed in  appropriate  proceedings.  He places reliance  for  this proposition on Union of India v. Jain Shudh Vanaspathi,(1992 - 1 Scale 34) affirming the decision of the Delhi High Court in  Jain  Shudh Vanaspati Ltd. & Anr. v. Union  of  India  & Ors.,  [1982] 10 E.L.T. 43 (Del.) (to which one of us was  a party).   There was some discussion before us as to  whether this  Court has confirmed the decision of the High Court  on

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the  above point or left it open in para 4 of the  judgment. We  do  not think it is necessary for for us to  enter  into this controversy.  That was a case where the goods had  been completely  cleared accepting the plea of the importer  that their  import was not prohibited.  The High Court held  that so  long as this acceptance stood the goods were not  liable to  confiscation.  We are here concerned with  the  question whether the goods are liable to confiscation under  s.111(j) and  this question has to be answered in the affirmative  in view  of the language of the section.  The  conclusion  here that the goods are liable to confiscation does not go behind or  ignore the effect of the order of clearance, as in  that case.  It accepts the fact of clearance and proceeds on  the footing  that  the goods, rightly cleared under  s.59,  have been  clandestinely  removed from the warehouse  within  the meaning of s.59.  The decision cited by learned counsel  is, therefore, of no assistance to him.      The  upshot  of the above discussion is  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                                                        281 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.      In  the result, we uphold the orders of the High  Court dismissing  the  writ petition though we do not  uphold  the reasoning of the Division Bench.  The special leave petition is, accodingly, dismissed but with no order regarding costs. N.P.V.                                   Petition dismissed.                                                        282