2025 (4) TMI 1550 - HC - Customs

Smuggling of gold - detention and confiscation of the Petitioner s personal gold jewellery by the Customs Department without issuance of a Show Cause Notice (SCN) or personal hearing - Respondent has also not produced any voluntary signed waiver declaration - violation of principles of natural justice - HELD THAT - This Court has held in several matters that signing of waiver of SCN and waiver of personal hearing by a way of preprinted waiver form would be contrary to principles of natural justice and in any case cannot be recognized as legally followed procedure by this Court. In the cases of Mr Makhinder Chopra vs. Commissioner of Customs New Delhi 2025 (3) TMI 19 - DELHI HIGH COURT and Amit Kumar v. The Commissioner of Customs 2025 (2) TMI 385 - DELHI HIGH COURT this Court has discussed various issues arising in several cases where the goods have been detained from a tourist by the Customs Department including the issue of personal jewellery being part of personal effects under the Baggage Rules 2016 and waiver of SCN and personal hearing by way of a preprinted waiver form. Moreover once the Commissioner of Customs (Appeals) has also allowed redemption the decision to file revision cannot be a ground to withhold the release of the goods. Further there is no stay which has been granted by the Commissioner of Customs (Appeals). This Court is of the opinion that the items deserve to be released to the Petitioner in terms of the OIA dated 29th January 2025 - no warehouse charges shall be collected from the Petitioner. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the detention and confiscation of the Petitioner's personal gold jewellery by the Customs Department without issuance of a Show Cause Notice (SCN) or personal hearing is legally valid and in accordance with the principles of natural justice and statutory provisions under the Customs Act, 1962.

- Whether the signing of a preprinted waiver form by the Petitioner, purportedly waiving the right to SCN and personal hearing, can be regarded as a valid and legally binding waiver under the Customs Act and constitutional principles.

- Whether the Order-in-Original (OIO) directing absolute confiscation and imposition of penalty on the Petitioner is sustainable in law given the procedural irregularities.

- Whether the Order-in-Appeal (OIA) allowing partial relief by permitting release of the gold items on payment of redemption fine under Section 125 of the Customs Act, 1962, while upholding penalty, is lawful and binding pending any revision application by the Customs Department.

- Whether the Customs Department's decision to file a revision against the OIA can justify withholding the release of the goods.

- Whether warehouse charges can be levied on the Petitioner during the pendency of the writ petition and appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of detention and confiscation without issuance of Show Cause Notice and personal hearing

Relevant Legal Framework and Precedents:

The Customs Act, 1962 mandates issuance of a Show Cause Notice (SCN) and an opportunity for personal hearing before confiscation of goods under Section 124 and imposition of penalties under Sections 112 and 125. The principles of natural justice require that no person should be condemned unheard. The Delhi High Court in prior decisions (Mr Makhinder Chopra vs. Commissioner of Customs, Amit Kumar v. Commissioner of Customs) has held that preprinted waivers of SCN and personal hearing are contrary to the statutory scheme and principles of natural justice.

Court's Interpretation and Reasoning:

The Court observed that in the present case, no SCN or hearing notice was issued to the Petitioner. The Customs Department relied on a waiver purportedly signed by the Petitioner, which was a standard form. The Court held that such waivers are not legally recognized and violate the principles of natural justice. The Court relied on its earlier rulings which explicitly directed the Customs Department to discontinue the practice of obtaining such waivers.

Key Evidence and Findings:

The OIO itself recorded that the Petitioner's advocate submitted a letter expressing regret for opting for the Green Channel and requested leniency and release of goods without SCN or hearing. The Customs Department did not produce any voluntary signed waiver declaration beyond this standard form.

Application of Law to Facts:

The absence of SCN and personal hearing rendered the confiscation order legally unsustainable. The Court found the OIO passed without compliance with Section 124 of the Customs Act to be contrary to law and principles of natural justice.

Treatment of Competing Arguments:

The Customs Department contended that the waiver signed by the Petitioner precluded the need for SCN and hearing. The Court rejected this argument based on binding precedents and statutory interpretation.

Conclusion:

The detention and confiscation without issuance of SCN and personal hearing is invalid and contrary to law.

Issue 2: Legality and effect of the Order-in-Appeal allowing release on payment of redemption fine

Relevant Legal Framework and Precedents:

Section 125 of the Customs Act provides for release of detained goods on payment of redemption fine. The appellate authority has jurisdiction to modify or set aside confiscation orders.

Court's Interpretation and Reasoning:

The Commissioner of Customs (Appeals) allowed the appeal partially, directing release of the gold items on payment of a redemption fine of Rs. 1,48,000/-, while upholding the penalty of Rs. 1,00,000/-. The Court noted that this appellate order is binding unless stayed or set aside by a higher authority.

Key Evidence and Findings:

The OIA dated 29th January 2025 was produced, showing the appellate authority's considered decision to allow release subject to payment of fine and penalty.

Application of Law to Facts:

Since no stay was granted on the OIA, and the Customs Department's intention to file revision cannot justify withholding release, the Court found that the Petitioner is entitled to release of the goods in terms of the OIA.

Treatment of Competing Arguments:

The Customs Department sought time to take instructions and indicated intention to file revision. The Court held that such future action cannot delay or deny relief granted by the appellate order.

Conclusion:

The OIA allowing release on payment of redemption fine is lawful and binding, and the goods must be released accordingly.

Issue 3: Levy of warehouse charges during pendency

Relevant Legal Framework and Precedents:

Warehouse charges are typically levied for storage of detained goods. However, when detention is found to be unlawful or goods are ordered released, such charges may be waived.

Court's Interpretation and Reasoning:

The Court observed the procedural irregularities and the eventual direction for release of goods and held that no warehouse charges shall be collected from the Petitioner.

Application of Law to Facts:

Given the unlawful detention and the appellate order for release, the Court found it just and equitable to waive warehouse charges.

Conclusion:

No warehouse charges shall be levied on the Petitioner in the present case.

3. SIGNIFICANT HOLDINGS

"Since, the Court has made clear that the practice of making tourists sign undertaking in a standard form waiving the show cause notice and personal hearing is contrary to the provisions of Section 124 of the Act, hereinafter, the Customs Department is directed to discontinue the said practice. The Customs Department is expected to follow the principles of natural justice in each case where goods are confiscated in terms of Section 124 of the Act."

"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."

"Once the Commissioner of Customs (Appeals) has also allowed redemption, the decision to file revision cannot be a ground to withhold the release of the goods."

"Under these facts and circumstances, no warehouse charges shall be collected from the Petitioner."

Core principles established include the inviolability of the right to SCN and personal hearing under the Customs Act and the Constitution, the non-recognition of preprinted waivers as valid legal instruments to circumvent these rights, and the binding nature of appellate orders unless stayed or set aside.

Final determinations:

- The confiscation order passed without SCN and hearing is invalid.

- The appellate order permitting release on payment of redemption fine is binding and must be implemented.

- The Petitioner is entitled to release of the seized gold items upon payment of redemption fine and penalty as per the appellate order.

- No warehouse charges shall be levied on the Petitioner.