2025 (3) TMI 980 - HC - Customs

Seeking setting aside of the seizure of the gold Kada - waiver of SCN and perosnal hearing - no SCN was issued and more than one year has elapsed since the detention - HELD THAT - There was waiver of show cause notice and no personal hearing was also granted to the Petitioner. As per the operative portion of the order there is complete confiscation of one elongated gold piece bent in kada shape. This Court is of the opinion that following the decision in Mr. Makhinder Chopra v. Commissioner of Customs 2025 (3) TMI 19 - DELHI HIGH COURT waiver of show cause notice and waiver of personal hearing in standard format is contrary to law. It appears to the Court that even in the present case it is a standard form waiver. Under these circumstances the order in original cannot be sustained and the same is accordingly quashed. The gold Kada be released however subject to payment of storage charges - Let the Petitioner approach the Customs Department for release of said Kada. Conclusion - The gold Kada is ordered to be released to the Petitioner subject to payment of storage charges as the confiscation could not be sustained. Peition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered by the Court include:

1. Whether the waiver of the show cause notice and personal hearing by the Petitioner was valid under the Customs Act, 1962.

2. Whether the absolute confiscation of the gold Kada was justified under the circumstances, particularly in light of the alleged procedural lapses.

3. Whether the principles of natural justice were adhered to in the process of confiscation and adjudication by the Customs Department.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Waiver of Show Cause Notice and Personal Hearing

Relevant Legal Framework and Precedents: The Customs Act, 1962, particularly Section 124, mandates the issuance of a show cause notice and provision of a personal hearing before confiscation of goods. The precedent set in Mr. Makhinder Chopra v. Commissioner of Customs clarifies that waivers in a standard form are contrary to the Act.

Court's Interpretation and Reasoning: The Court noted that the waiver of the show cause notice and personal hearing was obtained in a standard format, which is inconsistent with the principles of natural justice and the statutory requirements under Section 124 of the Customs Act.

Key Evidence and Findings: The Court referred to paragraph 8 of the Order-in-Original, which indicated the waiver by the Petitioner. However, the Court found this waiver to be a standard form, thus invalid.

Application of Law to Facts: The Court applied the precedent from Mr. Makhinder Chopra to conclude that the waiver obtained was not in compliance with the law, thereby rendering the Order-in-Original unsustainable.

Treatment of Competing Arguments: The Customs Department argued that the waiver was voluntarily given by the Petitioner. However, the Court held that the standard form nature of the waiver undermined its validity.

Conclusions: The waiver of the show cause notice and personal hearing was invalid, leading to the quashing of the Order-in-Original.

2. Justification for Absolute Confiscation of the Gold Kada

Relevant Legal Framework: Sections 111 and 112 of the Customs Act, 1962, govern the confiscation of goods and imposition of penalties for violations.

Court's Interpretation and Reasoning: The Court found that the procedural lapses, particularly the invalid waiver, tainted the process leading to the confiscation. The principles of natural justice were not followed.

Key Evidence and Findings: The Order-in-Original cited various sections of the Customs Act for confiscation, but the lack of a valid waiver and personal hearing undermined its legitimacy.

Application of Law to Facts: The Court determined that without adherence to procedural safeguards, the confiscation could not stand.

Treatment of Competing Arguments: The Customs Department's argument for confiscation based on non-declaration was countered by the procedural deficiencies highlighted by the Court.

Conclusions: The absolute confiscation of the gold Kada was unjustified due to procedural lapses.

3. Adherence to Principles of Natural Justice

Relevant Legal Framework: The principles of natural justice require fair hearing and opportunity to present one's case, which are embedded in statutory requirements like those in Section 124 of the Customs Act.

Court's Interpretation and Reasoning: The Court emphasized the importance of these principles, noting that the standard form waiver deprived the Petitioner of a fair hearing.

Key Evidence and Findings: The lack of communication of the Order-in-Original to the Petitioner further demonstrated the failure to adhere to natural justice.

Application of Law to Facts: The Court applied these principles to find that the Customs Department's actions were contrary to law.

Treatment of Competing Arguments: The Customs Department's procedural justifications were insufficient to overcome the requirement for natural justice.

Conclusions: The failure to follow principles of natural justice rendered the confiscation process invalid.

SIGNIFICANT HOLDINGS

The Court made several significant holdings in this judgment:

- The practice of obtaining waivers in a standard form is contrary to the provisions of Section 124 of the Customs Act and violates principles of natural justice.

- The Order-in-Original was quashed due to procedural deficiencies, particularly the invalid waiver of show cause notice and personal hearing.

- The gold Kada was ordered to be released to the Petitioner, subject to payment of storage charges, as the confiscation could not be sustained.

- The Customs Department was directed to discontinue the practice of obtaining standard form waivers and to adhere to the principles of natural justice in future confiscation cases.