2025 (2) TMI 385 - HC - Customs

Seeking release of the detained goods under Section 110 (2) of the Customs Act 1962 - no SCN was issued - no opportunity was accorded for even a hearing - liability to pay storage charges to Central Warehousing Cooperation IGI Airport - violation of principles of natural justice - HELD THAT - A perusal of Section 124 of the Act would show that even after an oral show cause notice is given the authority has the discretion to issue supplementary notice under circumstances which may be prescribed. A perusal of Section 124 of the Act along with the alleged waiver which is relied upon would show that the oral SCN cannot be deemed to have been served in this manner as is being alleged by the Department. If an oral SCN waiver has to be agreed to by the person concerned the same ought to be in the form of a proper declaration consciously signed by the person concerned. Even then an opportunity of hearing ought to be afforded inasmuch as the person concerned cannot be condemned unheard in these matters. Printed waivers of this nature would fundamentally violate rights of persons who are affected. Natural justice is not merely lip-service. It has to be given effect and complied with in letter and spirit. This Court is of the opinion that the printed waiver of SCN and the printed statement made in the request for release of goods cannot be considered or deemed to be an oral SCN in compliance with Section 124. The SCN in the present case is accordingly deemed to have not been issued and thus the detention itself would be contrary to law. The order passed in original without issuance of SCN and without hearing the Petitioner is not sustainable in law. The Order-in-Original dated 29th November 2024 is accordingly set-aside. Conclusion - i) The detained goods are directed to be released to the Petitioner. ii) The storage charges of the detained goods shall however be borne by the Petitioner. Petition allowed.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the detained goods under Section 110(2) of the Customs Act, 1962 should be released due to the absence of a Show Cause Notice (SCN) within the prescribed period.2. Whether the waiver of written SCN and personal hearing by the petitioner was valid and compliant with the principles of natural justice.3. Whether the Order-in-Original dated 29th November 2024, passed without issuing an SCN and hearing the petitioner, is sustainable in law.Issue-wise detailed analysis:The court considered the relevant legal framework of Section 124 of the Customs Act, which mandates the issuance of a written notice, opportunity for representation, and a reasonable opportunity for a hearing before confiscation of goods or imposition of penalties. The court interpreted that the waiver of these rights must be conscious and informed, and a printed form signed by the petitioner, waiving the SCN and personal hearing, did not meet the requirements of natural justice.Key evidence and findings included the petitioner's request for release of detained goods, the appraisal of the detained items, and the standard printed form signed by the petitioner. The court found that the waiver of the SCN and personal hearing in the printed form was not a valid oral SCN as required by law.The court applied the law to the facts by emphasizing the importance of upholding principles of natural justice and ensuring that individuals are not deprived of their rights without a fair process. Competing arguments were presented by the respondent, arguing that the waiver was valid, and the discretion to release or not release the goods rested with the authorities.The court concluded that the waiver of the SCN and personal hearing in the printed form was not compliant with Section 124 of the Act. Therefore, the detention of goods without issuing an SCN and hearing the petitioner was contrary to law. The Order-in-Original dated 29th November 2024 was set aside, and the detained goods were directed to be released to the petitioner, with the storage charges to be borne by the petitioner.Significant holdings:The court established the core principle that waivers of fundamental rights, such as the right to an SCN and personal hearing, must be conscious, informed, and compliant with the principles of natural justice. The final determination was to set aside the Order-in-Original and release the detained goods to the petitioner, while directing a review of forms and procedures by the Central Board of Indirect Taxes and Customs to ensure compliance with the law and principles of natural justice.The judgment highlighted the importance of procedural fairness and adherence to legal requirements in customs matters, emphasizing the need to protect individuals' rights in detention and confiscation cases.