2025 (4) TMI 196 - HC - Customs

Confiscation of goods - Gold jewellery - Violation of principles of natural justice - no SCN issued within the prescribed period and no personal hearing given to the Petitioner - HELD THAT - After having perused the record considering the fact that the export certificates were obtained by the Petitioner and these are jewellery items which are stated to be gifts to the Petitioner by his family members the Court is inclined to permit release of all the goods. Such release shall be made within a period of four weeks subject to payment of redemption fee of Rs. 80, 000/-. The penalty amount is waived. Petition disposed off.

ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court were:

Whether the confiscation of the goods by the Customs Commissioner was valid under the Customs Act, 1962, given the circumstances of the case.
Whether the procedural requirements, such as issuing a show cause notice and providing a personal hearing, were fulfilled by the Customs authorities.
Whether the petitioner was entitled to the release and redemption of the confiscated goods, considering the claim that they were gifts and the petitioner's residency status in the UAE.
Whether the penalties imposed under Sections 112(a) and 112(b) of the Customs Act, 1962, were justified.

ISSUE-WISE DETAILED ANALYSIS

Confiscation Validity under the Customs Act, 1962

Relevant Legal Framework and Precedents: The confiscation was ordered under Sections 111(d), 111(i), 111(j), and 111(m) of the Customs Act, 1962. These provisions allow for confiscation of goods improperly imported or attempted to be improperly imported.
Court's Interpretation and Reasoning: The Court noted that the goods were not declared to the proper officer at the Red Channel or the Customs Officer at the Green Channel, rendering the passenger ineligible for the free allowance under the applicable notification and Baggage Rules.
Key Evidence and Findings: The goods were seized at the airport, and the petitioner failed to declare them as required by customs regulations.
Application of Law to Facts: Based on the facts, the Court found the initial confiscation was procedurally justified under the Customs Act.
Treatment of Competing Arguments: The petitioner argued that the goods were gifts and should not be subject to confiscation. However, the Court focused on the procedural lapse of non-declaration.
Conclusions: The initial confiscation was upheld, but the Court considered the release of goods under specific conditions.

Procedural Requirements: Show Cause Notice and Personal Hearing

Relevant Legal Framework and Precedents: The Customs Act mandates a show cause notice and an opportunity for a personal hearing before confiscation.
Court's Interpretation and Reasoning: The Court acknowledged the absence of a show cause notice and personal hearing, which are procedural safeguards under the Act.
Key Evidence and Findings: The Customs authorities did not provide evidence of a waiver of the show cause notice.
Application of Law to Facts: The Court found procedural lapses in the customs process.
Treatment of Competing Arguments: The respondent's counsel sought time to verify the waiver, but the Court proceeded with its decision based on available records.
Conclusions: The procedural lapses warranted reconsideration of the confiscation and penalties.

Entitlement to Release and Redemption of Goods

Relevant Legal Framework and Precedents: Section 125 of the Customs Act allows for redemption of confiscated goods upon payment of a fine.
Court's Interpretation and Reasoning: Considering the petitioner's claim of the goods being gifts and his UAE residency, the Court was inclined to permit release upon payment of a redemption fee.
Key Evidence and Findings: Export certificates and the petitioner's UAE residency status were considered.
Application of Law to Facts: The Court applied Section 125 to allow redemption, subject to conditions.
Treatment of Competing Arguments: The Court balanced the procedural lapses with the petitioner's situation, allowing for redemption.
Conclusions: The goods were ordered to be released upon payment of Rs. 80,000 as a redemption fee, with the penalty waived.

Justification of Penalties under Sections 112(a) and 112(b)

Relevant Legal Framework and Precedents: These sections pertain to penalties for improper importation of goods.
Court's Interpretation and Reasoning: The Court found the penalty imposition unjustified due to procedural lapses.
Key Evidence and Findings: The lack of a show cause notice and personal hearing influenced the decision.
Application of Law to Facts: The procedural deficiencies led to the waiver of the penalty.
Treatment of Competing Arguments: The Court prioritized procedural fairness over strict penalty enforcement.
Conclusions: The penalty of Rs. 2,50,000 was waived.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court noted, "Considering the fact that the export certificates were obtained by the Petitioner, and these are jewellery items which are stated to be gifts to the Petitioner by his family members, the Court is inclined to permit release of all the following goods."
Core Principles Established: Procedural fairness, including the issuance of a show cause notice and personal hearing, is critical in customs proceedings.
Final Determinations on Each Issue: The Court ordered the release of goods subject to a redemption fee, waived the penalty, and highlighted the importance of procedural compliance by customs authorities.