Two other alleged drug smugglers, Gurpartap Singh and Husan Lal alias Johni, were sent to judicial custody.
The trio was arrested by the police from in and around Phagwara on the intervening night of Monday and Tuesday and around 300 grams of smack was recovered from their possession.
Informing about the development at a press meet here, Phagwara SP Jasbir Singh Rai claimed that Bittu belonged to the Khalistan Commando Force's Jaffarwal faction (KCF-Jaffarwal) and was an expert in making "indigenous" bombs.
He said during preliminary questioning, Bittu confessed to having adopted a false name, Sarwan Singh, and pretended to have belonged to Shero village in Patti in Tarn Taran district, while his real name was Ravinder Singh and he hailed from Saidpur village in Patti.
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He lived in the house of one Jagtar Singh at Arvind Nagar in Chandanpur, Maharashtra, the SP said.
He had got a driving license issued in his name and started driving a truck, which also served as his dwelling place at times, the SP added.
Bittu was convicted in the Kalyan blast case and awarded a life term. He had come out on a 28-day parole in 2007 but was declared a proclaimed offender after he did not return, he said.
"We are looking into his recent activities, places where he lived and those associated with him since 2007," said Rai, adding that whether he was part of any terror organisation or was only dealing in drugs was also being investigated.
Meanwhile, SSP Rajinder Singh has formed a four-member Special Investigation Team (SIT) led by Rai to question Bittu.