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Judgment
P.R. Shivakumar, J.—The Petitioner, who was detained by an order of detention passed u/s 3(1)(i) of the Conservation of Foreign Energy
and Prevention of Smuggling Activities, 1974 (COFEPOSA Act) by the impugned order of the first Respondent made in G.O. No. SR.I/535-
4/2009 dated 08.10.2009, has come forward with the present Habeas Corpus Petition challenging the said order of detention and seeking an
order for his release.
The facts leading to the detention of the Petitioner Stephen Stanislaus Rosario, in brief, are as follows:
i) The Petitioner Stephen Stanislaus Rosario was running a business in the name and style of M/s. Zandra Trading Company as a sole
Proprietorship concern. He had also got an Import and Export Code number and the said business concern was also registered with DGFT.
Pursuant to an intelligence information that fertilizer grade Potassium Chloride (Muriate of Potash) was being smuggled out of the country in the
guise of Industrial Salt, the Assistant Commissioner of Customs, Docks Intelligence Unit, Customs House, Chennai issued instructions to all the
Container Freight Stations directing them to detain all export consignments bearing the description Industrial Salt. Pursuant to same same, on
28.07.2009, representative samples were drawn from the goods meant for export by M/s. Zandra Trading Company covered by Shipping Bill
Nos. 3439419, 3439432, 3439395, 3439421 and 3439424 dated23.07.2009, under a mahazar at the export godown of M/s.A.S. Shipping
Container Freight Station, Numbal Village, Maduravoyal, Chennai. The samples thus drawn, were sent to M/s. Coramandel Fertilizers Limited,
Ennore, Chennai. After analysis, it gave a Report dated 03.08.2009 to the effect that the samples contained not less than 60% of water soluble
potash showing the samples to be Potassium Chloride(Muriate of Potash). Pursuant to the receipt of the said Analysis Report, the Customs
officials attached to Docks Intelligence Unit, Customs House, Chennai seized the consignment of 2500 bags of Muriate of Potash, totally weighing
125 M Ts covered by Shipping Bill Nos. 3439419, 3439432, 3439395, 3439421 and 3439424 dated23.07.2009 from M/s.A.S. Shipping
Container Freight Station, Chennai, belonging to M/s. Zandra Trading Company of the Petitioner, which had been consigned to Malaysia.
ii) Similarly, on 05.08.2009 samples were drawn from the goods available at the export godown of M/s. Viking Warehousing Container Freight
Station, No. 5, GNT Road, Moolakkadai, Chennai covered under the Shipping Bill No. 3429962 dated14.07.2009, which consignment also had
been declared as Industrial Salt # Technical Grade ''Drilling Chemical'', since the same was suspected to be Potassium Chloride (Muriate of
Potash). The said consignment for export had also been declared as Industrial Salt # Technical Grade #Drilling Chemical#. As per the certificate of
analysis produced by the Export Manager of the detenu to the customs officials, the same also conformed to the specifications of Potassium
Chloride (Muriate of Potash)mentioned in the Fertilizer (Control) Order, 1985. Therefore, the export consignment of 50 M Ts, which had been
declared by the exporter as Industrial Salt was seized from the M/s. Viking Warehousing Container Freight Station under amahazar on
06.08.2009.
iii) Subsequently, a search was conducted at the premises of M/s. Zandra Trading Company at D-43, 2nd Main Road, Vel Murugan Nagar,
Kosapalayam, Puducherry-605 013 (formerly Pondicherry) on 28.07.2009 and certain incriminating documents found therein were seized.
Petitioner Stephen Stanislaus Rosario also gave a voluntary confession statement on 12.08.2009 and the same was recorded u/s 108 of the
Customs Act, 1962, which disclosed that M/s. Zandra Trading Company was run by him as a sole Proprietorship concern from the year 2007
with its IE Code No. 2506000879. The samples drawn from the consignments were also sent to Customs House laboratory for analysis. The Joint
Director of Customs House laboratory after analyzing the samples gave a report that the samples contained composition of Potassium Chloride
and small amounts of compounds of Sodium, Calcium, Magnesium and Iron. In the said report, the Joint Director of Customs house laboratory
also stated that an expert opinion from the Dy. Director, Regional Fertilizer Control Laboratory at Madhavaram Milk Colony, Chennai should be
obtained. Accordingly samples were sent to the Regional Fertilizer Control Laboratory, Madhavaram, Chennai. But the Deputy Director ,Fertilizer
Control Laboratory, Madhavaram Chennai returned the sample without any opinion stating that the samples could not be tested in the said
laboratory since they were not drawn in accordance with the Fertilizer Control Order, 1985.
iv) Meanwhile, the detenu was arrested on 12.08.2009 and produced before the learned Additional Chief Metropolitan Magistrate, E.O.I,
Egmore, Chennai and was remanded to judicial custody. On a petition filed for his release on bail, the learned Additional Chief Metropolitan
Magistrate, E.O.I, Egmore, Chennai, passed an order on 18.08.2009 directing his release on bail and he was released on bail with a condition to
stay at Chennai and sign before the Superintendent of Customs daily. Subsequently, the said condition was also relaxed and modified by an order
dated01.09.2009 replacing the said condition with a new condition that the detenu should appear before the Superintendent of Customs, Chennai,
whenever required and should extend co-operation for further investigation of the case. Thereafter, relying on the test report of the Coromandel
Fertilizers Limited and also the report of the Customs House laboratory, a proposal was made to the first Respondent for detaining the detenu
under COFEPOSA Act in order to prevent him from smuggling of goods in future. Based on such proposal the first Respondent passed the
impugned order of detention in G.O. No. SR.I/535-4/2009 dated 08.10.2009. However, the detention order
The said order of detention clamped on the Petitioner/detenu is impugned by the Petitioner in this Habeas Corpus Petition and he has prayed
that the impugned order of detention be set aside and the Petitioner be set at liberty.
Though the order of detention is assailed on various grounds set out in the affidavit filed in support of the Habeas Corpus Petition, the learned
Senior Counsel appearing for the Petitioner mainly relied on the following contentions:
i) Though three test reports were placed before the Detaining Authority, one of the them, namely the report of the Dy. Director, Regional Fertilizer
Control Laboratory is inconclusive, since he declined the analysis of the samples, as they were not drawn by the Fertilizer Inspectors in accordance
with the statutory rules. If the report of the Dy. Director, Regional Fertilizer Control Laboratory, Madhavaram, Chennai is excluded, as it does not
give any clear cut opinion as to whether the contraband was Potassium Chloride (Muriate of Potash), the other two reports, one from the
Coromandel Fertilizers Limited and the other from the Customs House laboratory, could not be relied on, as none of the laboratories was a
notified laboratory on the relevant date. Even among the test reports of the said institutions, the report of Coromandel Fertilizer Limited simply
states the percentage of elements and the same does not give a concrete opinion as to whether the representative samples are Potassium Chloride
(Muriate of Potash) or Industrial Salt. The report of the Customs House laboratory is also inconclusive in so far asit directs further reference to the
Dy. Director, Regional Fertilizer Control laboratory for an expert opinion as to whether the contraband is Muriate of Potash. In this regard, the first
Respondent has acted based on inconclusive reports that have been given by the laboratories not notified as per rules and on that ground alone the
order of detention is liable to be vitiated.
ii) The total quantity of the contraband seized by the customs authorities, namely 175 M Ts, was valued at Rs. 62,72,000/-, whereas the value
declared in the hipping bills by the exporter was only Rs. 30,72,197.50P. The valuation was not done in accordance with the Customs Valuation
(Determination of Value of Imported Goods) Rules, 2007. The Detaining Authority failed to note that none of the three types of valuation provided
under Rule 4 to 6 of the said rules had been followed and consequently ,failed to seek clarification from the sponsoring authority regarding the
same. The grounds of detention also reveals the absence of awareness of the detaining authority as to the declared value of the goods. As such
there is non-application of mind on the part of the Detaining Authority which will vitiate the order of detention.
iii) There was a delay in passing the order of detention and also a huge delay in executing the order of detention.
iv) The order of detention was clamped on the detenu based on a solitary instance.
We have also heard the submissions made by Mr. A.D. Jagadish Chandira, learned Additional Public Prosecutor, representing the Respondents
1 and 3 and by Mr. T.R. Senthilkumar, Sr. Standing Counsel for Customs, Central Excise and Service Tax Department representing the third
Respondent, on the above said points.
The impugned order of detention was clamped on the Petitioner with the declared object of preventing him from smuggling goods in future.
Totally 175 M Ts of the commodity declared as Industrial Salt # #Drilling Chemical# was sought to be exported by the Petitioner through the
Shipping Bill Nos. 3439419, 3439432, 3439395,3439421 and 3439424 dated 23.07.2009 and 3429962 dated 14.07.2009. Out of the said
175 M Ts, 125 M Ts of the export commodity was detained at M/s.A.S. Shipping Container Freight Station, Numbal Village, Maduravoyal,
Chennai and balance 50 M Ts of the commodity was detained at M/s. Viking Warehousing Freight Container Station, Moolakkadai, Chennai. The
125 M Ts of export goods declared as Industrial Salt found at M/s.A.S. Shipping Container Freight Station, Maduravoyal, Chennai, was covered
by shipping Bill Nos. 3439419, 3439432, 3439395, 3439421 and 3439424 dated23.07.2009. The 50 M Ts of export goods declared as
Industrial Salt found at M/s. Viking Warehousing Container Freight Station, Chennai, was covered by bill No .3429962 dated 14.07.2009. The
samples drawn from 50 M Ts seized from M/s. Viking Ware housing Container Freight Station, Chennai, were not sent to Coramandel Fertilizer
Limited laboratory. On the other hand, the sponsoring authority took it to be Muriate of Potash based on the alleged test report produced by the
Export Manager of the detenu. The test report allegedly produced by the Export Manager is undated. A copy of the said certificate allegedly
produced by Gopinath, the Export Manager of M/s.Zandra Trading Company, is found at page No.128 of the booklet. The same is found
prepared in the letter head of M/s.Zandra Trading Company and was signed by Gopinath as Export Manager. Of course the said certificate has
described the consignment as Industrial Salt (Drilling Chemcial). The following chart is also provided.
Parameters
Observation (% bt wt.)
Moisture Content
Insolubles
Ca as CaCl2
Mg as MgCl2
Na as NaCl
K Cl
27.52
K2O
61.60
K
51.14
Cl
46.37
It does not contain the name of the laboratory in which the product was analysed. Hence, one cannot come to a definite conclusion that the said
product is Muriate of Potash on the basis of the said certificate.
The samples drawn from the consignment detained at M/s .A.S. Shipping Container Freight Station, Maduravoyal, Chennai covered by shipping
Bill Nos. 3439419, 3439432, 3439395, 3439421 and 3439424 dated 23.07.2009 were first sent to Coromandel Fertilizers Limited. The copy of
the Test Report of the Coromandel Fertilizer Limited dated 03.08.2009 is found in page 6 of the booklet. Out of the26 samples sent for analysis,
items branded as samples 11 to 15 pertain to the goods covered by export bill Nos. 3439419, 3439432, 3439395, 3439421 and 3439424dated
23.07.2009, which were sought to be exported by the Petitioner/detenu. Of course it is true that if the water soluble potash present in Potassium
Chloride is not less than 60%, then it shall be called the Muriate of Potash, as per the Fertilizer Control Order, 1985. The test report relating to
samples 11 to 15 found in page 6 of the booklet reveals that the samples contained 60.5% to 60.9% water soluble potash. But, as rightly
contended by the learned Senior Counsel for the Petitioner, Coromandel Fertilizers Limited, which tested the samples, did not give a conclusive
opinion as to whether the product was Muriate of Potash or Industrial Salt. Since it is specified in the Fertilizer (Control) Order, 1985 that if the
product contains not less than 60% of water soluble potash, then it will be fertilizer grade Muriate of Potash, the test report found in page 6 may be
sufficient to arrive at a conclusion that the contraband seized from M/s .A.S. Shipping Container Freight Station terminal was Muriate of Potash,
provided the said laboratory is a named one under Clause 29 of the Fertiliser (Control)Order, 1985 or a laboratory notified under the said clause.
Admittedly, the laboratory at Coromandel Fertilizers Limited is not one of the laboratories name din the said order nor was it a notified laboratory
notified by the State Government under Clause 29 of the said order.
It is pertinent to note that though the samples were drawn from the consignments found at M/s. Viking Warehousing Container Freight Station,
there is nothing on record to show that the samples were tested in any laboratory and there are communications to the effect that the customs
authorities simply relied on the alleged certificate of analysis produced by the Export Manager, a copy of which is found in page No. 128 of the
booklet. Samples drawn from the consignments found at M/s. A.S. Shipping Container Freight Station terminal alone were tested in the laboratory
attached to Coromandel Fertilizers Limited and also in the Customs House laboratory, Chennai. But, curiously, the Customs House laboratory,
Chennai gave are port containing the following particulars.
#The sample is in the form of predominantly reddish coloured together with white coloured crystalline powder. It is composed of Potassium
Chloride with small amounts of compounds of Sodium, Calcium, Magnesium and Iron.
In order to ascertain whether the sample u/r is classifiable as #Muriate of Potash # (MOP)# an expert opinion may be obtained from the Dy.
Director, Regional Fertilizer Control Laboratory, Ministry of Agriculture, Government of India, Madhavaram Milk Colony Post, Chennai # 600
051, Ph. No:044-25552744/25558328.
Regarding Industrial salt, no literature is available in this Laboratory.#
A reading of the said report will make it clear that the Joint Director of Customs House laboratory has not given any definite opinion as to
whether the samples conformed to the definition of Muriate of Potash and on the other hand, he wanted the sponsoring authority to get an expert
opinion from the Dy. Director of Regional Fertilizer Control Laboratory, Madhavaram, Chennai. It seems, pursuant to the report of the Joint
Director of Customs House Laboratory, Chennai, the samples were referred to the Dy. Director of Regional Fertilizer Control Laboratory,
Madhavaram Milk Colony, Chennai-51 to find out whether the representative samples could be termed as fertilizer grade Muriate of Potash
(MOP). When the samples were thus sent to the Dy. Director of Regional Fertilizer Control Laboratory, Madhavaram Milk Colony, Chennai-600
051, they were returned without being analysed in the said laboratory stating that the samples declared as Industrial Salt were not drawn by the
Fertilizer Inspector of the said institute in accordance with the statutory Rules. The rule referred to in the said report of the Dy. Director of Regional
Fertilizer Control Laboratory, Madhavaram Milk Colony, Chennai is Clause 29 of the Fertilizer (Control) Order, 1985. For the sake of
convenience, the same is extracted hereunder:
Laboratory for analysis
A fertiliser samples, drawn by an inspector, shall be analyzed in accordance with the instructions contained in Schedule II in the -Central
Fertiliser Quality Control and Training Institute, Faridabad or Regional Fertiliser Control Laboratories at Bombay, Madras or Kalyani (Calcutta)
or in any other laboratory notified for this purpose by the State Government [with the prior approval of the Central Government.
(1A) Bio fertiliser samples, drawn by an inspector, shall be analyzed in accordance with the instructions contained in Schedule III in the #National
Centres of Organic Farming, Ghaziabad or Regional Centres of Organic Farming at Bangalore, Bhubaneshwar, Hissar, Imphal, Jabalpur and
Nagpur or in any other laboratory notified by the Central or State Government.
(1B) Organic fertiliser samples, drawn by an inspector, shall be analyzed in accordance with the instructions contained in Schedule IV in the
#National Centres of Organic Farming, Ghaziabad or Regional Centres of Organic Farming at Bangalore, Bhubaneshwar, Hissar, Imphal, Jabalpur
and Nagpur or in any other laboratory notified by the Central or State Government.
(2) Every laboratory referred to in Sub-clause (1) shall, in order to ensure accurate analysis, of fertiliser samples, possess minimum equipment and
other laboratory facilities, as may be specified from time to time by the Controller in this behalf.
Admittedly, neither Coramandel Fertilizers Limited nor the Customs House laboratory is one of the testing institutes named in Clause 29 of the
Fertilizer Control Order, 1985. None of the said laboratories come under the notified laboratories for the purpose of Fertilizer (Control) Order,
1985. In the list of the laboratories notified under Clause 29 of the Fertilizer (Control)Order, 1985 relating to Tamil Nadu, only 14 laboratories are
found and the name of the Coromandel Fertilizer Limited and Customs House laboratory are not found. Therefore, apart from the fact that the
reports are inconclusive, they are also of the report of laboratories neither named in Clause 29 of the Fertilizer (Control)Order, 1985 nor notified
under Clause 29 of the Fertilizer (Control) Order, 1985and hence they are unreliable. The Detaining Authority, namely the first Respondent has
failed to advert to the said fact that the Dy. Director of the authorised laboratory has declined analysis of the contraband and the reports produced
by the Sponsoring Authority were of the reports of laboratories, which are not mentioned in or notified under Clause 29 of the Fertilizer (Control)
Order,1985. Therefore, the subjective satisfaction of the Detaining Authority that the consignments sought to be exported were fertiliser grade
Muriate of Potash is based on materials, which cannot be relied on and to the said extent there is non-application of mind on the part of the
Detaining Authority. It is also pertinent to note that the samples drawn from the consignments at M/s. Viking Ware housing Container Freight
Station, Chennai, was not sent for test to any laboratory and the Detaining Authority has omitted to notice the same and the same will also exhibit
on-application of mind on the part of the Detaining Authority.
The second ground pertains to the valuation of the consignment as determined by the customs authorities. The detenu had declared the value of
the consignments as Rs. 30,72,197.50P. But the Sponsoring Authority, namely the officers of Customs Department, have valued the consignment
at Rs. 62,72,000/-. The Valuation Report is found in page No. 228 of the booklet. It contains the following observation:
The value of Muriate of Potash is arrived based on the inputs furnished by the Assessment Group 2, which is the jurisdictional group in Custom
House, Chennai dealing with the imports of Muriate of Potash. The value of landed cost of MOP per metric ton is US $ 732.26. With the
exchange rate of Rs. 48.95 per dollar prevailing at that time, the landed value of Muriate of Potash per kg. has been assessed to Rs. 35.84 per kg.
Therefore, in the subject case (M/s. Zandra TradingCo.,), the value of 175 MTS of Muriate of Potash works out to Rs. 62,72,000/-.
Excepting such a bald statement that the inputs for the valuation were furnished by Assessment Group II, which is the jurisdictional group in
Customs House, Chennai dealing with the import of Muriate of Potash, no other material was placed before the Detaining Authority to show that
the valuation arrived at was in accordance with the rules, namely Customs Valuation (Determination of Value of Imported Goods)Rules, 2007.
Rules 4 to 6 of the said Rules deal with the method of valuation of imported goods. As rightly pointed out by the learned senior counsel for the
Petitioner, none of the procedures contemplated under the said rules was followed. As no material is found in the booklet containing copies of the
materials placed before the Detaining Authority as to the basis on which the valuation was arrived, more particularly in the light of the fact that there
is a wide difference between the valuation given by the exporter and the valuation arrived at by the customs authorities, the sponsoring authority
ought to have clarified as to how the valuation came to be made at a higher rate than the declared value or the Detaining Authority ought to have
called for clarification in this regard. The failure to do so, as rightly contended by the learned senior counsel, shows non-application of mind on the
part of the Detaining Authority, which will vitiate the order of detention. It is pertinent to note that this Bench, on an earlier occasion, in A.
Sundaran v. The State of Tamil Nadu rep. by the Secretary to Government, Public(SC) Department, Fort St. George, Ch-9 and Ors. reported in
2010(2) TNLJ 51 dealt with a similar case on similar grounds and held that the order of detention therein was vitiated on both the grounds raised
therein, namely unreliable and inconclusive test reports and valuation of the export goods without particulars regarding which no clarification was
sought for by the Detaining Authority.
So far as the contention based on delay in clamping the order of detention is concerned, factually the last of the reports, namely the report of
the Dy. Director of Regional Fertilizer Control Laboratory was obtained on 03.08.2009. Thereafter the proposal was placed before the Detaining
Authority and the Detaining Authority passed the impugned order of detention on 08.10.2009. Therefore, the contention that the order of detention
stands vitiated on the ground of delay in clamping the order of detention is not well founded and the same deserves to be rejected. So far as the
other part of the delay, namely the execution of the order of the detention is concerned, it took about 10 months to effect execution of the order of
detention. It is obvious from records that the detenu was at large after having been released on bail initially with a condition directing him to appear
before the Superintendent of Customs daily and the condition was subsequently relaxed with a direction to appear before the Superintendent of
Customs as and when required and cooperate for the enquiry. It is obvious that after the condition was relaxed, the detenu was at large and he
was not available for service of the order of detention and the order was executed only on arrest based on the warrant issued. Therefore, the
attack made on the order of detention on the ground of the said delay also cannot be countenanced.
The other contention is that the order of detention based on solitary instance is unsustainable. Admittedly, there was no other past activity on
the part of the detenu to come to a reasonable conclusion that he was regularly indulging in smuggling activities. However, the law in this regard is
well settled that, even on the basis of a solitary instance, if sufficient materials are available and the Detaining Authority subjectively satisfy that the
detenu is indulging in smuggling activities detrimental to the national economy, an order of detention under COFEPOSA Act can be clamped. It
was held so in ""1. Attorney General for India and Ors. v. Amratlal Prajivandas and Ors. (1994) SCC 1325 (Constitution Bench) and 2. Joint
Commnissioner, Hindu Religious and Charitable Endowments, Administration Department Vs. Jayaraman and Others, . In view of the settled
proposition declared by the highest court of this country, which is the law of the land, we are not inclined to accept the contention of the learned
Senior Counsel that the impugned order of detention based on solitary instance is unsustainable. The impugned order cannot be set aside on the
said score alone and the arguments advanced in this regard on behalf of the detenu has got to be discountenanced.
For all the reasons stated above, we come to the conclusion that the impugned order of detention dated 08.10.2009 passed by the first
Respondent in G.O. No. SR.I/535-4/2009 stands vitiated on the ground of non-application of mind since the subjective satisfaction of the
detaining authority regarding the description of the contraband is based on inconclusive test report and on reports obtained from laboratories,
which are not notified and also on the ground that the valuation was not made as per Customs Valuation (Determination of Value of Imported
Goods) Rules, 2007 and that on the above grounds alone the order of detention is liable to set aside.
In the result, the Habeas Corpus Petition is allowed and the impugned detention order of the first Respondent in Detention Order G.O. No.
SR.I/535-4/2009 dated 08.10.2009 is set aside. The detenu Stephen Stanislaus Rosario, son of Late S. Stanislaus, is ordered to be set at liberty
forthwith, unless his custody is required in connection with any other case.