Paschal Anthony D'Souza vs The Union Of India (Uoi) And Ors.
2006 Latest Caselaw 750 Bom

JUDGMENT

S.A. Bobde, J.

Page 2599

1. Rule, returnable forthwith. Mrs. Pai appears and waives service of rule on behalf of the respondents. Heard by consent.

2. The petitioner is the brother-in-law of one Charles Patrick S/o. Casey Patrick, who has been detained under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, hereinafter referred to as the "COFEPOSA Act". The petitioner has challenged that order of detention dated 5.5.2006.

3. The detenu has been detained on the grounds accompanying the detention order which include certain statements wherein he is said to have admitted to having effected fraudulent exports through M/s.Petrosolv India Company. The detenu was earlier detained under the COFEPOSA Act in the year 1994 and is being prosecuted by the Enforcement Directorate for involvement in a havala racket. The detenu having been released on bail by the Court of the Addl. Chief Metropolitan Magistrate, Third Court, on 30.12.2005 and the detaining authority having been fully satisfied that there is a need to prevent him from indulging in such prejudicial activities in future, the impugned detention order has been passed. The grounds of detention along with the documents relied upon, were served on the detenu.

4. Before the detention order was passed, on 26.4.2006 the detenu applied for settlement of his case before the Settlement Commission under Section 32E of the Central Excise Act, 1944 and Section 127B of the Customs Act, 1962.

5. On 28.4.2006 the detenu sent a letter, to the Joint Secretary (COFEPOSA), Central Economic Intelligence Bureau and the Principal Secretary (Appeals and Security), Home Department, Government of Maharashtra, referring to the threats of preventive detention by officers of the Directorate of Revenue Intelligence and informing that he has moved an application for settlement of his case. He requested that any proposal for his detention may be dropped. Even though mentioned in the letter, the detenu did not enclose a copy of the application for settlement for perusal of the detaining authority.

6. The detaining authority proceeded to pass the order of detention on 5.5.2006 which is impugned herein.

7. The only ground of challenge to the detention order is as follows:

The detention order dated 5.5.2006 is vitiated on the ground that the detenu's application for settlement made before the Settlement Commission under Section 32E of the Central Excise Act, 1962 and under Section 127B of the Customs Act, 1962, which is a vital document, is not considered by the detaining authority while deciding to detain the detenu.

8. There is no merit in this submission. It appears that the petitioner did nothing more than informing the detaining authority by letter dated 28.4.2006 that he has filed an application dated 26.4.2006 before the Settlement Commission. There was no way for the detaining authority to Page 2600 have come to know the contents of the settlement application, or whether the application filed by the detenu is validly filed or untenable. It is not possible for us to accept the submission of the learned Counsel for the petitioner that having informed of the fact of the settlement application, it was the duty of the detaining authority to make efforts for procuring the settlement application from the Settlement Commission. If we were to hold that it was the duty of the detaining authority to go around procuring the copy of any proceedings referred to by the detenu, it would make it possible for the detenu to paralyse the detention process by simply resorting to proceedings before various fora and informing the detaining authority of the same. In this case, the detenu applied on 26.4.2006 for settlement and wrote within two days on 28.4.2006 to the detaining authority without submitting a copy of the application. It is clear that if a detenu wants the detaining authority to consider some documents which he considers vital, he must submit that document to the detaining authority for perusal. This has not been done in the present case. In fact, it appears that the intention of the detenu was to stall the detention order.

9. The learned Counsel for the petitioner relied on a decision of the Supreme Court in Union of India v. Manoharlal Narang wherein Their Lordships held that it was the duty of the detaining authority to collect all material about Court proceedings from the Ministries. In that case, an interim order passed by the Supreme Court regarding the detenu had not been taken into account and was found to be relevant. In fact, the order of the Supreme Court which was not taken into account allowed certain freedom of movement to the respondent's brother. Their Lordships observed that (para 11) if the order were taken into account, it could have persuaded the detaining authority from desisting to pass the detention order. And that in any case, the sponsoring and detaining authorities knew by the existence of such an order (para 10). Their Lordships observed in para 10 as follows:

If the sponsoring authority and the detaining authority are to adopt such cavalier attitude towards orders of courts and of this Court in particular, their orders will meet with the same fate as the one under review.

In our view, the aforesaid observations in Narang's case do not apply to the present case. No order of a Court permitting freedom of movement is involved. What is involved is the detenu's application before the Settlement Commission which, according to the detaining authority was not even tenable and which was admittedly not submitted by the detenu to the detaining authority.

10. Mrs. Pai, the learned Counsel for the respondents, submitted that the application for settlement made by the detenu before the Settlement Commission was not even tenable. According to the learned Counsel, they did not satisfy the statutory conditions of Section 127B of the Customs Act, 1962 and Section 32E of the Central Excise Act, 1944. Section 127B of the Customs Act, 1962 reads as under:

Application for settlement of cases.--(1) Any importer, exporter or any other person (hereinafter in this Chapter referred to as the applicant) Page 2601 may, at any stage of a case relating to him, make an application in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification or otherwise of goods, to the Settlement Commission to have the case settled and such application shall be disposed of in the manner hereinafter provided: Provided that no such application shall be made unless--

(a) the applicant has filed a bill of entry, or a shipping bill, in respect of import or export of goods, as the case may be, and in relation to such bill or entry or shipping bill or a show cause notice has been issued to him by the proper officer;

(b) the additional amount of duty accepted by the applicant in his application exceeds two lakh rupees: Provided further that no application shall be entertained by the Settlement Commission under this sub-section in cases which are pending in the Appellate Tribunal or any court:

Provided also that no application under this sub-section shall be made in relation to goods to which Section 123 applies or to goods in relation to which any offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), has been committed:

Provided also that no application under this sub-section shall be made for the interpretation of the classification of the goods under the Customs Tariff Act, 1975 (51 of 1975).

(2) Where any dutiable goods, books of account, other documents or any sale proceeds of the goods have been seized under Section 110, the applicant shall not be entitled to make an application under Sub-section (1) before the expiry of one hundred and eighty days from the date of the seizure.

(3) Every application made under Sub-section (1) shall be accompanied by such fees as may be specified by rules.

(4) An application made under Sub-section (1) shall not be allowed to be withdrawn by the applicant.

Section 32E of the Central Excise Act, 1944 reads as follows:

32E. Application for settlement of cases.--(1) An assessee may, at any stage of a case relating to him make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his duty or liability which has not been disclosed before the Central Excise Officer having jurisdiction, the manner in which such liability has been derived, the additional amount of excise duty accepted to be payable by him and such other particulars as may be prescribed including the particulars of such excisable goods in respect of which he admits short levy on account of misclassification or otherwise of such excisable goods, to the Settlement Commission to have the case settled Page 2602 and any such application shall be disposed of in the manner hereinafter provided:

Provided that no such application shall be made unless,--

(a) the applicant has filed returns showing production, clearance and central excise duty paid in the prescribed manner;

(b) a show cause notice for recovery of duty issued by the Central Excise Officer has been received by the applicant; and

(c) the additional amount of duty accepted by the applicant in this application exceeds two lakh rupees:

Provided further that application shall be entertained by the Settlement Commission under this sub-section in cases which are pending with the Appellate Tribunal or any court:

Provided also that no application under this sub-section shall be made for the interpretation of the classification of excisable goods under the Central Excise Tariff Act, 1985 (5 of 1986).

(2) Where any excisable goods, books of account, other documents have been seized under the provisions of this Act or rules made thereunder, the assessee shall not be entitled to make an application under Sub-section (1), before the expiry of one hundred and eighty days from the date of the seizure.

(3) Every application made under Sub-section (1) shall be accompanied by such fees as may be prescribed.

(4) An application made under Sub-section (1) shall not be allowed to be withdrawn by the applicant." There appears to be some substance in this contention, though we do not intend to finally adjudicate the tenability of the settlement application which may be done under the appropriate law. Section 32E(2) of the Central Excise Act, 1944 states that an application for settlement shall not be made before 180 days from the date of the seizure. In the present case, the seizure in respect of which the Settlement Application was made on 1.4.2006. The settlement application was made on 26.4.2006 i.e. before the expiry of 180 days. It was argued on behalf of the petitioner that an application for settlement can be made earlier but can be validly adjudicated upon or decided after the expiry of 180 days. We are of view that nonetheless, a valid application cannot be said to have been made before the expiry of 180 days after the seizure. Moreover, according to the learned Counsel for the respondents, the settlement application do not contain the true and full disclosure of the duty liability, the duty liability under the Central Excise Act being Rs. 1,38,62,178/-and the detenu having admitted only an amount of Rs. 41,92,651/- under Section 32E. Under the Customs Act, the detenu has not admitted any liability as required by Section 127B(1). This submission seems to be correct.

11. Mrs. Pai, the learned Counsel for the respondents, submitted that the detenu was not entitled to make any application for settlement since he had not received any show cause notice under the Customs Act or the Central Excise Act, such receipt being a requirement of Section 127B(1)(a) of the former Act and Section 32E(1)(a) of the Central Excise and Salt Act. The Settlement Commission has, in fact, passed an order on 13.7.2006 in Settlement Application No. 441-442/2006 holding that the settlement applications were not tenable. While doing so, the Settlement Commission has observed that the Page 2603 applicants are free to make fresh applications on receiving show cause notice issued by the Revenue indicating the amount of additional duty disclosure in terms of the Customs Act, 1962 as well as the Central Excise Act, 1944. In any case, if the notice annexed to the petition are notices for calling upon the detenu to submit proof of export or pay the duty, failing which action would be initiated against him. Prima facie, they are not show cause notices purported to have been issued under Section 11A of the Central Excise and Salt Act.

12. In view of the above discussion, it appears that the application made by the detenu for settlement was not tenable and cannot be said to have required consideration before the issue of the detention order. This is apart from the fact that the detenu had not even submitted the application to the detaining authority for consideration.

13. In our view, it would be unreasonable to uphold the contention of the petitioner and hold that the detaining authority is bound to stay its hand in issuing the detention order merely because the detenu informs it that he has initiated settlement proceedings without giving an opportunity to the detaining authority to examine the proceedings and its validity by submitting the application to the detaining authority. Such proceedings cannot even otherwise be said to be material particulars if found to be untenable in law.

14. Mr. Chaudhary, the learned Counsel for the petitioner, relied on a decision of this Court in Writ Petition No. 3172 of 2005 (Paresh Purshottam Gor v. State of Maharashtra) decided on 18.4.2006, to which one of us, D.G. Deshpande, J., was a party. On going through that case, we are of view that the decision is rendered in a different set of facts, although it proceeds on the basis that the application made to the Settlement Commission is a vital and material document and should be considered by the detaining authority. The detenu had received a show cause notice from the Revenue and had replied to it before applying for settlement. In that case, however, the sponsoring authority was aware of the detenu's application before the Settlement Commission. While forwarding the detenu's papers to the detaining authority, the sponsoring authority did not forward a copy of the application to the Settlement Commission to the detaining authority. This Court, therefore, took the view that the detention is vitiated due to the failure to take into account a material document, viz., the application to the Settlement Commission. While taking this view, this Court relied on the decision of the apex Court in V.C. Mohan v. Union of India and Ors. , wherein the Supreme Court held the detention to be vitiated because the sponsoring authority conveniently kept to itself very relevant material i.e. the detenu's application before the Settlement Commission directing the detenu to make payment of additional duty within 30 days.

15. In the case in hand, however, neither the sponsoring authority nor the detaining authority was aware of the application made by the detenu before the Settlement Commission. As stated earlier, the detenu had only written a letter dated 26.4.2006 to the Joint Secretary, Government of India, Page 2604 Ministry of Finance, stating that he had moved an application for settlement of the case without annexing that application itself for perusal of the detaining authority. That application was made two days before.

16. Mr. Chaudhary, the learned Counsel for the petitioner, relied on annexure 'B' to the application to the Settlement Commission in which the detenu denied having smuggled any goods or having been involved in any such activity. He submitted that this statement in the application had a direct bearing on the detenu. It is difficult to see how any part of the contents of the application before the Settlement Commission could have been taken into account if the detenu failed to submit a copy of the application for settlement to the detaining authority. We, therefore, do not make any comment on this aspect.

17. At this juncture, a reference may be made to some decisions of this Court cited by Mr. Chaudhary, the learned Counsel for the petitioner, for the proposition that if vital and material documents are not placed before the detaining authority, its subjective satisfaction must be taken to be vitiated, irrespective of what effect those documents would have had on the satisfaction of the detaining authority. Those decisions are in Smt. Elsy George v. Union of India and Ors. 2002 Cri.L.J. 540; Shahnaz Javed Abdul Aziz Shaikh v. State of Maharashtra and Ors. 2002 Cri.L.J. 2242; and in Smt. Zarina Nafees Hyder Rizvi v. State of Maharashtra and Ors. 1999 Cri.L.J. 434. Being in agreement with the ratio of those decisions, we do not propose to elaborately discuss or distinguish from the case before us. Suffice it to say that in those cases cited above, the sponsoring authority had failed to place the relevant material before the detaining authority and the result was that the authorities failed to consider what they were aware of. As observed earlier, in the present case, the detenu made an application on 26.4.2006 and wrote to the detaining authority on 28.4.2006 that he had made an application without annexing a copy. That application has been found to be untenable. It is clear that the detenu attempts to stall the detention. In fact, as rightly argued by the learned Counsel for the respondents, if the detenu had made an application for settlement to the adjudicating authority on 26.4.2006 and it was a vital document, then it was necessary and obligatory upon him to send a copy thereof to the detaining authority along with his letter dated 28.4.2006, but he did not do so. He merely remained contented by referring to that application for settlement dated 26.4.2006 without annexing a copy, and this speaks of mala fides on the part of the detenu. It is clear that he withheld the document which, according to him, was an important document from the detaining authority and is now making a capital of the fact that the detaining authority should have considered his application for settlement.

18. In the result, we find no merit in the petition which is hereby dismissed. The rule shall stand discharged.

19. In view of the dismissal of the Writ Petition, Criminal Application No. 176 of 2006 does not survive and the same stands disposed of. The rule is discharged.