Madhu Garg Vs. Union of
India & Anr  Insc 563 (21 September 2004)
N. Santosh Hegde & S.B.
Sinha 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
Accused have also stated that at this moment their 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
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
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
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.
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.