2025 (3) TMI 394 - HC - Customs

Seeking release of the Gold jewellery which has been detained - case of the Petitioner is that he was only served with the impugned Order-in-Original without proper hearing being given - Violation of principles of natural justice - HELD THAT - This Court has already held in the case of Amit Kumar v. The Commissioner of Customs 2025 (2) TMI 385 - DELHI HIGH COURT that such waiver of show cause notice and personal hearing that too when obtained on a Standard Performa would be contrary to law. This Court has now pronounced several orders/judgments following various judgments of the Supreme Court and this Court wherein it has been held clearly that if the gold items seized are personal jewellery the same would not be liable to be confiscated. The Respondent Department has failed to provide a Show Cause Notice and a Proper Hearing to the Petitioner - The gold chain was clearly personal jewellery of the Petitioner the impugned order is not sustainable. The impugned order in original dated 13th November 2024 is accordingly set aside. The Respondent is directed to release the gold item of the Petitioner within a period of four weeks - Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The primary legal issues considered in this judgment are:

• Whether the Customs Department followed the principles of natural justice, specifically regarding the issuance of a show cause notice and provision of a personal hearing before detaining the gold jewellery of the Petitioner.
• Whether the gold chain seized from the Petitioner qualifies as personal jewellery and is therefore exempt from confiscation under the relevant customs regulations and baggage rules.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Compliance with Principles of Natural Justice

• Relevant Legal Framework and Precedents: The Customs Act, particularly Section 124, mandates that before confiscating goods or imposing a penalty, the owner must be given a written notice, an opportunity to make a representation, and a reasonable opportunity to be heard. The Court referenced previous judgments, including Amit Kumar v. The Commissioner of Customs and Mr. Makhinder Chopra v. Commissioner of Customs, which emphasize the necessity of adhering to these procedural safeguards.
• Court's Interpretation and Reasoning: The Court noted that the Customs Department claimed the Petitioner waived his right to a show cause notice and personal hearing through a standard form. However, the Court found this waiver insufficient to satisfy the requirements of Section 124, as it did not constitute an informed and conscious waiver.
• Key Evidence and Findings: The impugned order indicated that the Petitioner had waived his rights, but the Court found that such waivers, especially when obtained through standard forms, do not meet the requirements of natural justice.
• Application of Law to Facts: The Court applied Section 124 of the Customs Act, concluding that the lack of a proper show cause notice and hearing rendered the order unsustainable.
• Treatment of Competing Arguments: The Court dismissed the Department's reliance on the standard form waiver, emphasizing the necessity for a conscious and informed waiver, which was not evident in this case.
• Conclusions: The Court concluded that the procedural deficiencies, particularly the absence of a proper show cause notice and hearing, violated the principles of natural justice, rendering the detention order invalid.

Issue 2: Classification of the Gold Chain as Personal Jewellery

• Relevant Legal Framework and Precedents: The Baggage Rules, 2016, and Notification No. 50/2017-Customs provide guidelines on what constitutes personal jewellery. Past judgments, such as Nathan Narayanswamy v. Commissioner of Customs, have clarified that personal jewellery is exempt from confiscation.
• Court's Interpretation and Reasoning: The Court interpreted the relevant rules to determine that personal jewellery, such as the gold chain in question, should not be subject to confiscation.
• Key Evidence and Findings: The Petitioner provided photographs showing the gold chain as personal jewellery. The Court noted this evidence and the Petitioner's employment status in the UAE, supporting the claim that the chain was for personal use.
• Application of Law to Facts: The Court applied the Baggage Rules and relevant notifications, concluding that the gold chain qualified as personal jewellery and was not subject to confiscation.
• Treatment of Competing Arguments: The Court considered the Department's classification of the Petitioner as an "ineligible passenger" but found that the gold chain's status as personal jewellery exempted it from confiscation.
• Conclusions: The Court concluded that the gold chain was personal jewellery, and its detention was unjustified under the applicable legal framework.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court emphasized, "Such signing of the standard form would not be in compliance with the principles of natural justice, inasmuch as, the waiver under Section 124 of the Act would have to be a conscious waiver and an informed waiver."
• Core Principles Established: The judgment reaffirms that procedural fairness, including the right to a show cause notice and personal hearing, is fundamental in customs proceedings. It also clarifies that personal jewellery is not subject to confiscation under the Baggage Rules.
• Final Determinations on Each Issue: The Court set aside the impugned order, directing the release of the gold chain to the Petitioner, emphasizing the need for compliance with natural justice and recognizing the chain as personal jewellery.