ORAL SHOW CAUSE NOTICE -VALID UNDER CUSTOMS ACT, 1962?

[DR.MARIAPPAN GOVINDARAJAN]

Issue of show cause notice

Section 124 of the Customs Act, 1962 (‘Act’ for short) requires the Department to issue show cause notice before confiscation of goods under the provisions of the Act.  The said section provides that no order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person –

• is given a notice in writing with the prior approval of the officer of Customs not below the rank of an Assistant Commissioner of Customs, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
• is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and
• is given a reasonable opportunity of being heard in the matter.

The first proviso to this section provides that the notice and the representation may, at the request of the person concerned be oral. Notwithstanding issue of notice under this section, the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed.

Case laws

 In MOHAMMAD ZAID SALIM VERSUS THE COMMISSIONER OF CUSTOMS (AIRPORT& GENERAL) - 2023 (9) TMI 773 - DELHI HIGH COURT, the Delhi High Court has held clearly that if a show cause notice is not given within six months of the seizure, the goods would be liable to be released. 

The Delhi High Court in AMIT KUMAR VERSUS THE COMMISSIONER OF CUSTOMS - 2025 (2) TMI 385 - DELHI HIGH COURT, held that show cause notice must be issued to the assessee before the confiscation of the goods.  In the above said case the petitioner came from Dubai and landed in Indira Gandhi International Airport, New Delhi on 03.03.2024.  He was intercepted by the Customs Officers and detailed gold ornaments, I-Phone, cosmetics etc., on the same day.  A receipt for the seizure of the above goods was issued to the petitioner. 

A printed form is in vogue in the Department.  The said form is known as ‘Green Channel Violations (Request for release of detained goods)’.  The said form was signed by the petitioner and submitted to the Authorities with the request to release the detained goods.  The gold ornaments and other items were valued on 21.03.2024.  The gold items were valued at Rs.14.25 lakhs and other items at Rs. 5.89 lakhs.

The petitioner, since the gold ornaments and other items were not refunded to him and no order was passed, filed the present writ petition before the High Court.  The matter was posed on 11.12.2024.  The Revenue informed that the order-in-original was passed on 29.11.2024 and submitted to the Court.  The copy of the same was handed over to the petitioner. The petitioner contended the following before the High Court-

• Under Section 124 of the Act, the show cause notice has to be issued within a period of 6 months.
• The show Cause Notice has not been issued within the period of 6 months from the date of appraisement of the said goods in his case.
• No opportunity was accorded for even a hearing.

Since show cause notice was not issued and personal hearing was not given the goods the petitioner contended that the detained are liable to be returned.

The Department contended that the show cause notice could be even oral as per the first proviso to Section 124 of the Act.   In the application for release of detained goods, the Petitioner has signed an undertaking that he does not want a written show cause notice or even a personal hearing.   Insofar as gold is concerned, the discretion vests with the authorities whether to release or not release the gold articles.   In the present case golden articles and other articles have been permitted to be redeemed by paying a sum of Rs. 85,000/-.

The High Court considered the submissions of the Department and the petitioner.  The High Court perused the application filed by the petitioner -Green Channel Violations – Request for release of detained goods.  In the said form the following was included-

• it is humbly requested that said detained goods may please be RELEASED. I regret my mistake of opting for Green Channel and further request you to please take a lenient view in the matter. I undertake that my case may be decided on merit and as such I do not want any written Show Cause Notice and Personal Hearing in the matter. An oral show cause notice has been received.

As per the said form the applicant cannot be expected to read a printed form, where –

• waiver of Show Cause Notice has been agreed to,
• waiver of personal hearing has been agreed to and
• it has also been recorded that an oral show cause notice has been received.

The High Court observed that the contents in the said form were in violation of the principles of Natural Justice.  The waiver under Section 124 of the Act would have to be a conscious wavier and an informed wavier.  If an oral show cause notice  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.

The High Court was of the opinion that the printed waiver of show cause notice and the printed statement made in the request for release of goods cannot be considered or deemed to be an oral show cause notice, in compliance with Section 124.   In the present case the show cause notice has not been issued and the order passed without the issue of the show cause notice is liable to be set aside.  The High Court set aside the order passed by the authorities and directed the Department to return the gold materials and other materials.

In MOHAMED SHAMIUDDEEN VERSUS COMMISSIONER OF CUSTOMS & ORS. - 2025 (2) TMI 911 - DELHI HIGH COURT, the Petitioner is an Indian passport holder, but is a permanent resident of Hong Kong.  The petitioner had arrived in India at IGI, Airport, New Delhi from Hong Kong on 16.10.2023. The petitioner was intercepted by the Customs Department at the airport and after a search of his possessions, the petitioner’s Rolex wrist watch was seized.  The petitioner signed the standard format for the return of the Rolex watch.  In the said form the petitioner waived the requirement of issue of show cause notice and personal hearing.  On 20.02.2024 the Department asked the proof of residency of the petitioner.  The petitioner submitted the same to the Department.  The department has handed over the appraisement report as per which the watch has been valued at Rs. 30,29,400/-. It is also submitted that the Department is in the process of passing the final order in this matter.

The High Court relied on its own order in ‘Amir Kumar’ (supra).  Following the said order the High Court held that the detention of the subject goods is itself liable to be set aside due to non-issuance of show cause notice, and the goods are accordingly directed to be released to the petitioner.