A. Sundaram vs State of Tamil Nadu

C. Nagappan, J.—The father of the detenu has challenged the order of detention in G.O. No. SR.1/641-3/2009 Public (S.C.) Department,

dated 13-11-2009, made by the first Respondent detaining Thiru. S. Yuvaraj u/s 3(1)(i) of the Conservation of Foreign Exchange and Prevention

of Smuggling Activities Act, 1974.

The facts which led to detention, in brief, are as follows:

Thiru. S. Yuvaraj, with a view to start Import and Export Business, applied for IEC Number and Import Export Code was allotted to him on 10-

7-2009. He found Malaysian buyer interested in Industrial Salt and he procured 75 MTS of Industrial Salt from Thiru. M. Rajesh and he filed the

Shipping Bills on 20-7-2009 for three containers and Customs checked, verified the consignment and Let Export Order was given.

On 28-7-2009, based on Intelligence that Potassium Chloride (Muriate of Potash) is exported out of India under the guise of Industrial Salt,

representative samples from the goods available in the three containers were drawn under mahazar for the purpose of chemical examination and on

29-7-2009, the samples were sent to the office of M/s. Coromandel Fertilisers Limited, Ennore, Chennai and to the Custom House Laboratory,

Chennai for testing and analysis of composition.

The Analysis Report dated 3-8-2009 received from M/s. Coromandel Fertilisers Limited, giving specifications confirmed that the samples are

Potassium Chloride (Muriate of Potash). On 4-8-2009, the Customs Officials seized the export consignment of 75 MTS under mahazar and

issued summons to Thiru. S. Yuvaraj, and apprehending arrest, he obtained an order of anticipatory bail dated 25-8-2009 from this Court with a

condition to report before the Investigating Agency for four weeks and he complied with the same. The impugned detention order came to be

clamped on him on 13-11-2009 and that is being challenged.

Though several grounds have been raised in the petition, assailing the order of detention, Mr. Habibulla Badsha, learned Senior Counsel

appearing for the Petitioner, mainly relied on the following contentions:

(i) There is total misreading of Analysis Report dated 3-8-2009 of M/s. Coromandel Fertilisers Limited, since from the report, it does not follow

that the samples drawn from the consignment are of Potassium Chloride (Muriate of Potash) and the Detaining Authority has also alleged violation

of the provisions of Fertiliser (Control) Order, 1985, which describes Potassium Chloride only in terms of K2O. The said allegation cannot be

sustained on the basis of report of M/s. Coromandel Fertilisers Limited, which is not a notified Laboratory for analysis of sample under Order 29

and there is no finding that the consignment is Potassium Chloride/Muriate of Potash and the conclusion of the Detaining Authority is based on no

evidence and the order of detention is vitiated.

(ii) There are two valuations pertaining to the consignment, mentioned in the documents supplied to the detenu and there is a wide difference

between them and the Sponsoring Authority should have clarified the same or on scrutiny, the Detaining Authority should have called for

clarification, but they have not done so and this clearly shows non-application of mind on the part of the Detaining Authority, which would vitiate

the order of detention.

(iii) The detention order was passed against the detenu on the basis of a single, solitary and isolatory act and the grounds of detention do not

disclose any past activities of smuggling and there is no material to disclose that the detenu is a habitual smuggler or having bad antecedent and

therefore the detention order is bad in law and liable to be set aside.

We also heard Mr. M. Babu Muthu Meeran, learned Additional Public Prosecutor for Respondents 1 and 3 and Mr. A.P. Peter Gunasekaran,

learned Senior Central Government Standing Counsel, for second Respondent on the above said submissions.

The detenu Thiru. S. Yuvaraj has declared the Consignment of 75 MTS as ''Industrial Salt'' in the Shipping Bills and the Customs checked the

same and gave ''Let Export'' Order also. Thereafter, the samples were taken by the Customs and sent to two Laboratories, namely, M/s.

Coromandel Fertilisers Limited and Custom House Laboratory, Chennai. The result of the analysis of M/s. Coromandel Fertilisers Limited, is

found in page No. 23 of the paper book and the percentage of Water Soluble Potash as K2O is mentioned as not less than 60 percentage in all

the samples. No opinion that the samples are classified as Potassium Chloride (Muriate of Potash) is stated in it.

The Analysis Report of Custom House Laboratory, dated 14-8-2009, is found in page No. 54 of the Book let, wherein it is stated that the

sample is composed of Potassium Chloride together with small amounts of compounds of Sodium, Calcium and Magnesium and Iron and in order

to ascertain whether the sample is to be classifiable as Muriate of Potash (MOP), an expert opinion may be obtained from the Deputy Director,

Regional Fertilizer Control Laboratory, Madhavaram Milk Colony Post, Chennai. The report has further stated that there is no literature available

in the Custom House Laboratory regarding ''Industrial Salt''. The Custom House Laboratory did not give any definite opinion as to whether the

consignment is Muriate of Potash and it does not also state the percentage of Water Soluble Potash as K2O in the samples. In short, the report is

to be termed only as inconclusive. The detenu also, on his side, had given Test Report of M/s. SGS India Private Limited, dated 6-8-2009, which

is found in page No. 93 of the Book-let, wherein Potassium as K2O is mentioned as 59.54%, which is less than the specified minimum of 60%

stipulated for Muriate of Potash in the Fertiliser (Control) Order, 1985.

The Detaining Authority, in paragraph No. (viii) of grounds of detention, has referred to the report received from Custom House Laboratory

and has stated thus:

(viii) The analysis report dated 14-8-2009 was received from Custom House Lab, wherein it is stated that the sample is composed of ""potassium

chloride"" together with small amounts of compounds of iron, calcium, magnesium and sodium. Hence it is confirmed that the item attempted to be

exported is none other than ''Muriate of Potash''.

As per the specifications of the Fertiliser (Control) Order, 1985, Potassium Chloride (Muriate of Potash) must contain minimum 60% by weight

of Water Soluble Potash content. As already seen, the Analysis Report of the Custom House Laboratory does not give the percentage of Water

Soluble Potash content in the samples and no decision can be arrived by relying on it that the consignment is Potassium Chloride. Moreover, that

report itself suggests to get expert opinion from Regional Fertilizer Control Laboratory to find out as to whether the sample is classifiable as

Muriate of Potash. The reliance placed by the Detaining Authority on the said report to conclude that the sample is Muriate of Potash, is erroneous

and reflects non-application of mind.

The Detaining Authority has also observed in the grounds of detention that the report, dated 3-8-2009, received from M/s. Coromandel

Fertilisers Limited, giving specifications confirms that the samples are of Potassium Chloride (Muriate of Potash). Though the said report mentions

the percentage of Water Soluble Potash as K2O in the samples, no opinion is expressed in it stating that the samples are of Potassium Chloride

(Muriate of Potash). Further, the authority of M/s. Coromandel Fertilisers Limited to analyse the sample is challenged. Order 29 of Fertiliser

(Control) Order, 1985 stipulates that the sample drawn shall be analysed in the Central Fertiliser Quality Control and Training Institute or Regional

Fertilisers Control Laboratories or in any other laboratory notified for this purpose by the State Government.

It is not in dispute that M/s. Coromandel Fertilisers Limited Laboratory is not notified for the purpose of analysis under Order 29 by the State

Government. The Detaining Authority, in the grounds of detention, having alleged violation of the provisions of Fertiliser (Control) Order, cannot

rely on the Analysis Report of a Laboratory, which is not notified under Order 29.

As rightly contended by the learned Senior Counsel appearing for the Petitioner, the conclusion of the Detaining Authority that the consignment

is Potassium Chloride (Muriate of Potash), is based on erroneous interpretation of the report of the Custom House Laboratory and based on the

report of a laboratory not notified as per Fertilizer Control Rules and the order of detention is vitiated by total non-application of mind.

The second ground pertains to the valuation of consignment, as determined by the Authorities. The declared valuation of the consignment as

per the Shipping Bill is Rs. 13,93,450/-. The Sponsoring Authority, namely, the Customs Department, in the counter affidavit filed before this

Court in the anticipatory bail petition of the detenu, a copy of which is found in page No. 36 of the Book let, has stated that the value of the seized

cargo is Rs. 17,92,000/- as against the declared value of Rs. 13,93,450/-. In the grounds of detention, the Detaining Authority has stated that the

value of seized quantity of 75 MTS of Muriate of Potash/Potassium Chloride is Rs. 26,88,000/-. The Detaining Authority has relied upon an

unsigned valuation report submitted by the Sponsoring Authority. Page No. 100 of the Book let contains the copy of valuation. There is no

signature, no date and no seal found in it. Mere endorsement of ''True copy'' alone is found. The value of the landed cost of MOP per Metric

Tonne in US Dollars, with exchange rate, is mentioned and the landed value of Muriate of Potash per kilogram is assessed and value of the

consignment has been determined in it as Rs. 26,88,000/-.

The learned Senior Counsel submitted that the valuation was arrived at based on Import value and the seized goods are not imported goods

and the said valuation is erroneous and he further contended that the valuation ought to have been made as per Customs Valuation (Determination

of Value of Export of Goods) Rules, 2007 and it has not been done and the subjective satisfaction of the Detaining Authority regarding the

valuation of the goods, is not based on relevant material and it vitiates the order of detention. The said contention is well-founded.

Customs Valuation (Determination of Value of Export of Goods) Rules, 2007 provides for the methods of determination of valuation of export

goods. Three types of valuation are provided under Rules 4 to 6 and they have not been followed in the present case and the Detaining Authority

did not seek for clarification from the Sponsoring Authority and has simply relied on the unsigned document. As already seen, there is wide

difference between the two valuations reflected in the documents referred to supra and neither the Sponsoring Authority has clarified the same nor

the Detaining Authority has called for clarification and this shows the non-application of mind on the part of the Detaining Authority, which vitiates

the order of detention.

Lastly, the learned Senior Counsel submitted that the detenu had obtained I.E. Code on 10-7-2009 and filed shipping bill on 20-7-2009 and it

is his first export and the consignment has been detained and the Detaining Authority has not relied on any other incident and the subjective

satisfaction of the Detaining Authority that there is compelling necessity to prevent the detenu from indulging in smuggling of goods in future, is

without any factual basis and the order of detention is vitiated due to non application of mind. In support of his submission, he mainly relied on the

following Supreme Court decisions:

Chowdarapu Raghunandan Vs. State of Tamil Nadu and Others,

Pooja Batra Vs. Union of India (UOI) and Others,

Gimik Piotr Vs. State of Tamil Nadu and Others,

Per contra, the learned Additional Public Prosecutor submitted that a single act can be the basis for preventive detention and it is the impact

and effect of the act which is the determinative and in support of his submission, he relied on the following decisions of the Supreme Court:

Attorney General For India and Ors. v. Amratlal Prajivandas and Ors. (1994) SCC 1325 (Constitution Bench)

Joint Commnissioner, Hindu Religious and Charitable Endowments, Administration Department Vs. Jayaraman and Others, .

The law is well settled and there is no dispute that even for a solitary instance, if sufficient materials are available and if the Detaining Authority

is subjectively satisfied that the detenu is indulging in smuggling activities which are deterimental to the national economy, the detention order can be

clamped. What is required to be seen as to whether on the materials placed on record it could reasonably be said to indicate any organized act or

manifestation of organized activity or give room for an inference that the detenu would continue to indulge in similar prejudicial activity warranting

or necessitating the detention of the person to ensure that he does not repeat his activity in future.

In the present case, it is the first export of the detenu and there is no prior transaction and there was no other past activities as could lead to a

reasonable conclusion that the detenu possesses the propensity or the potentiality to indulge in smuggling activities in future to prevent which

detention is necessary. Consequently, the impugned order suffers from total non-application of mind to a relevant and vital material touching the

necessity to order the detention and it cannot be sustained. For all the reasons stated above, we are of the considered view that the order of

detention is liable to be set aside.

Accordingly, the Habeas Corpus Petition is allowed and the impugned order of detention dated 13-11-2009 is set aside and the detenu Thiru.

S. Yuvaraj is ordered to be set at liberty forthwith, unless his continued custody is required in connection with any other case.