N.K. BAPNAversusUNION OF INDIA AND ORS.

                                     N.K. BAPNA                                             ·A
      ~                                   v.
                               UNION OF INDIA AND ORS.

                                         MAY 14, 1992

                 [S. RANGANATHAN, V. RAMASWAMI, YOGESHWAR                                   B
...
 /
                                 DAYAL, JJ.]

      ~         Constitution of India, 1950:

                 Articles 21, 22 and 32--l'reventive Detention-Detention order-
            Whether could be challenged even before service of the order on the
                                                                                            c
            detenu-Clai,;,s of the State and fundamental right of the citizen to be
           'balanced.

                 Conservation of Foreign Exchange & Prevention of Smuggling Activities
           Act, 1974:                                                                  D
                 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-R.emoval or abetting
           removal by Managing Director, without pennission ofproper officer-Whether
           constituted smuggling-Detention ordeH..egality of.                               E
                 Customs Act, 1962:

                   Sections 2(39), 2(43), 23, 49, 59, 72 and lll(j) and 125(2)--lmport of
           goods-Goods assessed to duty and kept in warehouse under lock and key of
           customs authorities-Clandestine removal of goods without paying of as-            F
           sessed duty-Whether constituted 'smuggling'-Whether goods liable to be
      ~    confiscated-Import of goods when concluded-Whether open to authorities
           to· either confiscate go'!ds or collect duties payable by them.

                 The Petitioner was the Managing Director of a company engaged in
           the business of manufacture and production of plastic goods. The Com- G
           pany imported certain materials and the goods were cleared for bonded
           warehouseing after assessment to duty. The Company cleared part of the
      -I
           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
                                               U,7
    268                   SUPREME COURT REPORTS                    [1992] 3 S.C.R.

A   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 ~(1) of the Conservation of Foreign Exchange & Prevention
    of Smuggling Activities Act, 1974, with a view to preventing him from
B   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
c   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 f acie fell within the scope of
                                                                                           -
    the expression 'smuggling' as defined in the Act.

D          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
E   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
F 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
G 'smuggling' or the abetment thereof; that the scope of s.ltl(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 assess·
  ment 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
H thereafter, that where goods were removed from a warehouse in which they
                                       BAPNA v. U.O.I.                          269

           were lodged under section 59 without permission of the concerned A
           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; B
           once the goods were cleared by the customs authorities, they were not liable
           to confiscation, unless the order granting clearance was reversed in ap-
           propriate proceedings.

                 Dismissing the Special Leave Petition, this Court,

                  HELD : 1. It is now well settled that, even in a case of preventive
                                                                                      c
           detention, it is not necessary for the proposed detenu to wait till a deten-
           tion 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 ~tt~n
           a prescribed period after the detention order is served on the c~renu, it D
           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 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 E
           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-GJ

                 The Additional Secretary to the Government of India & Ors. v. Smt.   F
           Atka 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 G
           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 ofthe Conservation of Foreign Exchange (Prevention of Smug- H
       270                    SUPREME COURT REPORTS                  [1992) 3 S.C.R.

   A gling Activities) Act. (280 G·H, 281 A]
               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
· B without the permission of the proper officer, a simple reading of the
      relevant sections is sufficient to say prima f acie that, in the present case,
      there has been sanuggling by the Company, and an abetment of smuggling
      by the petitioner. On the broad conspectus of facts and the special defini·
      tion clauses in· the relevant statutes it cannot be said that the proposed
  C 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
 0 "'-~~one     not made under the provisions of the statute under which it has
          'It purportedly issued. (277 A-DJ
                                                                                         +
   r         3.1. There is no justification to restrict "dutiable goods" to "dutiable
       ~oods 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-EJ

            Deputy Commisioner of Commercial Taxes v. Mis. Caltex India) Ltd.,
       AIR 1962 Mad 298 and Union of India v.Jain Sudh Vanaspathi Ltd., 1992                 -
  F    1Scale34 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 prohibited;
    and two, the bringing into country's trade stream, of goods the import of
  G 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 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
  H been evaded altogether. But even in a case where the goods are assessed
                                  BAPNA v. U.0.1.                              271

     to duty and allowed to be warehoused under s.59, a clandestine removal A
·~   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 B
     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 C

-    permitted to be removed under s.59 is a permises under the lock and key
     of the customs authorities and is, in a sense, an extension of the customs
     area. Goods can be cleared therefrom for home consumption or exporta-
     tion 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 D
     recognises this position. (279 B-D]

          Deputy Commissioner of Commercial Taxes v. Mis Ca/tex (India) Ltd.
     AIR 1962 Mad 298, referred to.

            3.4. The consequences which follow on a particular act or omission
                                                                                      E
     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.lll(j). [279 G]                                          F
          Shewpujanrai lndrasanrai 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      G
     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.lll(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 lll(j), the goods are liable    H
    272                    SUPREME COURT REPORTS                (1992] 3 S.C.R.

A 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
    removeJ from the warehouse with;n the meaning of s.59. (280 B, F]

       Union of India v. Jain Shudh Vanaspath~ (1992) S~le 34 and Jain
B Shudh Vanaspathi Ltd. & Anr. v. Union of India & Ors., (1982) 10 E.L.T. 43
    (Del.), referred to.

         CIVIL APPELLATE JURISDICTION: Special Leave Petitfon (C)
    No. 5781 of 1992.

C        From the Judgment and Order dated 6.4.1992 of the Calcutta High
    Court in F.MA.T. No. 914of1992.

          A.K Sen, Pradeep Tarafdar, B.N. Singhvi (for M/s. Swarup John &
    Co.) for the Petitioner.
D         A. Subba Rao and Parmeswaran for the Respondent.

          The Judgment of the Court was delivered by

          S.RANGANATHAN, J. The petitioner is the Managing Director of
E Mis 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
F   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 ~e 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
G   petition as well as an appeal therefrom have been dismissed; ltence 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
H   metric tons of Ethyle Hexanol (EHA). This-Consignment was unloaded at
-(



                      BAPNAv. U.0.1. [RANGANATIIAN, J.)                        273

     Kandla port and 24 tankers thereof were transported to bonded A
     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
                                                                                 B
     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.
                                                                                       c
            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 proceed-
     ings 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               D
     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        E
     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       F
      the detention order on the detenu. To apprise the detenu in advance of
     the grounds on which he is proposed to be 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 fun-       G
      damental 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        H
    274                  SUPREME COURT REPORTS                  [1992] 3 S.C.R.

A   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 vnswered 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
B   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:

c               "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 neces-
D
              . sarily very limit.ed in scope and number, viz., where the courts
                are prim a f acie 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
E               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
F
                proposed detenu, but prevents their abuse and the perversion
                of the law in question."

          On the second question, the Court had this to say:

G              "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
H              without furnishing to the detenu the order and the grounds
                          BAPNA v. U.0.1. (RANGANATHAN, J.)                        275

                      thereof in advance. Secondly, when the order and the grounds         A
                      are served and the detenu is in a position to: make out prima
      \              f acie 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 the final hearing of his
                      petition. Alternatively, as stated earlier, the Court can and does
                                                                                           B
                      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      C
                      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          D
                      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     E
                       claim such exercise of power as a matter of right. The descre-
                       tion is of the Court and it has to be exercised judicially on
                       well-settled principles."

                In the present case, the authorities did not file any counter affidavit    F
          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 Singie Judge in the High Court dismissed
          the writ petition on the short ground that, on the facts disclosed in the
          petition, the present case primaf acie fell within the scope of the expression G
          'smuggling' as defined in the Act. The Division Bench came to the con-
          clusion 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 othe~se of the order of detention or make any pronouncement
          that the impugned order has not been passed under the Act under which H
     276                  SUPREME COURT REPORTS                    (1992) 3 S.C.R.

·A   it is proposed to have been passed or that it was passed with a wrong
     purpose or was passed on vague, extranec-us 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
B accepted the petitioner's contention that his activities 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.
C 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 authorities and cleared by
D 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:

E                "Smuggling", in relation to any goods, means any act or omission
                 which will render such goods liable to confiscation under sec-
                 tion 111 or section 113".

           Section 111 declares, inter alia, that the following goods will be liable
     to confiscation:
 F
                 G) 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
 G. reads:
                 'Warehouse' means a public warehouse appointed under sec-
                 tion 57 or a private warehouse licensed under section 58."

           It is clear even from the facts disclosed in th!'! petition that the case
 H of the authorities may be that the petitioner has abetted the removal of the
(




                       BAPNA v. U.0.1. [RANGANATIIAN, J.J                     277

      imported goods from the bonded warehouse without the permission of the A
      proper officer. Of course, there can be no smuggling if the goods had been
      removed for the warehouse not by ~~e petitione! but by the custorµs
      authorities or somebedy 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 B
      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 prim a f acie 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 deten- C
      tion in this case is totally outside the provisions of the statute. If there is
      prlma facie, smuggling or abetment of smuggling, it is open to the com-
      petent 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 D
      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 E
       the High Court to demonstrate that the facts alleged do not bring the
       present case within the statutory provisions. According to him, section lU
    .. G) 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 warehosue under
       the provisions of section 49 of the Customs Act pending clearance from p
       customs. He submits that in such a case the removal of goods without the
       permission of the statutory authorities would amount to 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 Asboka Sen says, the G
       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. Ca/tex (India) Ltd., AIR 1962 Mad 298 and, there H
                                                                                                  ,_
                                                                                              )
    278                   SUPREME COURT REPORTS                   (1992] 3 S.C.R.

A   can be no smuggling thereafter. Even if the goods are clandestinely
    removed from the bonded warehouse there is no escapement of duty ,i;ince
    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 Depart-
    ment 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
B   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 G) should be restricted to goods which are dutiable
    and in respect of which no duty has been assessed and their removal from
c   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
                                                                                              -   L
D
    the provision contained in s.lllG) 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.
E
        Sri Sen has urged three considerations in support of his plea to limit
  the scope of s.lllG) 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
F 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 -~landestine
G 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
                                                                                      r-
                                                                                      J
  altogether. But even in a case where the goods are assessed to duty and
H allowed to be warehoused under s.59, a clandestine removal can result in
                      B~NA v. U.0.1. [RANGANA1HAN, J.)                        279

     Joss of duty. No doubt, there is a provision in s.72 for collection of the duty A
    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. B
    In a sense, import may be said to be complete for certain purposes say,
    sales tax purposes as in Dy. C.CT. 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 ~d is, in a sense, an extention of the customs C
    area. Goods can be cleared therefrom for home consumption or exporta-
    tion 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.lllG) which only recognises D
    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    E
    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    F
    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    G
    also attract s.72 but this cannot, however, be decisive of the interpretation
    of s.lll{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    H
    280                   SUPREME COURT REPbR1'S                 -{1992] 3 S.C.R.

A   no statutory provision covering the facts of that case,enabling such levy.
    This decision is no authority for the proposition that s.lllG} 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 cir-
    cumstances, between confiscating the goods on the one hand or collecting
B   the duties payable thereon on the other. Having regard to the lang'1age of
    s.lllG}, it is not possible to agree with counsel that, in such a case, the
    goods are not laible to confiscation merely beqause an alternative recoi.irse
    to s.72 is available to them.

C         The third point made by Sri Sen is that once goods are cleared by
    t~e 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       -~
D   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 h~s confirmed the decision of the High Court
    on 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
E   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 confis-
    cation. We are here concerned with the question whether the goods are
    liable to confiscation under s.lllG} and this question has to be answered
    in the affirmative in view of the language of the section. The conclusion
F   here that the goods are liable to confiscation does not go b'!hind 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.
G
         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
H   goods from the bonded warehouse without the permission of the concerned
                      BAPNA v. U.0.1. [RANGANATHAN, J.)                     281

      authorities. The order of detention proposed cannot be said to proceed on A
      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 purpor-
      tedly 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   B
      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.




 +




-jk