2025 (5) TMI 2024 - HC - Customs

Seeking release of goods - Procedure for detention of goods under the Customs Act 1962 - Baggage Rules - waiver of storage or warehousing charges - HELD THAT - At this stage the Court has been informed that despite the orders of this Court directing waiver of storage charges the Central Warehousing Corporation ( CWC ) continues to insist on payment of the said charges whenever the respective Petitioners approach for release of their goods. The concerned official has been sensitized about the complete compliance of the orders being passed by this Court failing which stringent action shall be liable to be taken against the concerned personnel/ management of CWC. Ms. Ralhan has assured the Court that the orders passed would be fully complied with. The Petitioner may collect the detained goods through an Authorised Representative in which case the detained goods shall be released after receiving a proper email from the Petitioner or some form of communication that the Petitioner has no objection to the same being released to the concerned Authorised Representative.

Summary

The Court considered several core legal questions pertaining to the detention of goods, particularly jewellery, by the Customs Department from passengers arriving in India, both Indian nationals and foreigners. The issues focused on the procedural and substantive aspects of such detentions under the Customs Act, 1962, and the Baggage Rules, 2016. Key legal questions included:

(i) The validity and applicability of the Baggage Rules, 2016, in regulating the detention and confiscation of passenger goods, especially jewellery;

(ii) The procedural safeguards required during detention, including issuance of detention receipts, show cause notices, and opportunities for personal hearings;

(iii) The permissible limits on the weight and quantity of used or personal jewellery that passengers may carry without attracting detention or confiscation;

(iv) The necessity and scope of amendments to the Baggage Rules to address anomalies and evolving circumstances;

(v) The role and obligations of Customs officials and other stakeholders, including the Central Warehousing Corporation (CWC), in implementing Court orders and ensuring non-harassment of passengers;

(vi) The procedural timelines and requirements for issuance and disposal of show cause notices and adjudication under the Customs Act;

(vii) The waiver of storage or warehousing charges in cases where the Court has ordered release or where appeals have succeeded.

Regarding the procedural and substantive framework, the Court relied on the Customs Act, 1962, particularly provisions concerning detention, confiscation, and show cause notices, alongside the Baggage Rules, 2016, which govern passenger baggage and duty exemptions. The Court observed that the existing Baggage Rules required reconsideration and amendment to address practical difficulties and inconsistencies, especially concerning personal jewellery carried by passengers.

The Court noted the Customs Department's acknowledgment that a detailed stakeholder consultation was underway, involving inter-ministerial meetings with the Ministry of Tourism, Ministry of Culture, Ministry of External Affairs, Directorate General of Foreign Trade, and various Customs formations. This process was aimed at revising the Baggage Rules and related procedures to ensure clarity and fairness.

In the interim, the Court emphasized the need for immediate procedural safeguards to prevent harassment of travellers. It directed the Customs Department to conduct sensitization initiatives for Customs officials, instructing them not to routinely detain old or personal jewellery worn by travellers. The Court mandated the creation and filing of a Standard Operating Procedure (SOP) to govern detention and appraisal processes until formal amendments to the Baggage Rules were enacted.

The draft SOP, submitted by the Customs Department and approved by the Court with modifications, established detailed procedural safeguards, including:

- Mandatory issuance of detention receipts containing comprehensive passenger and item details;

- Collection of copies of passports and boarding passes;

- Photographic documentation of seized items in the presence of passengers;

- Clear explanation to passengers regarding detention, appraisal, and timelines;

- Written or oral show cause notices with explicit passenger consent for waiver, eliminating pre-printed waiver forms;

- Mandatory personal hearings even where show cause notices are waived;

- Recording of passenger representations in their own handwriting during hearings;

- Prompt issuance of Orders-in-Original with clear communication of appellate rights and officer details;

- Consideration of passenger requests for early appraisal from a humane perspective;

- Waiver of storage/warehousing charges prior to appraisal, with charges applicable only upon payment of duty and release of goods;

- Sensitization initiatives on the Baggage Rules and export certificate provisions.

The Court identified additional unresolved issues requiring further policy clarity and amendment, including permissible weight limits for used gold jewellery worn or carried by Indian and foreign passengers, differentiated limits for Red and Green channel imports, and procedural timelines for show cause notices and adjudication. The Customs Department was granted further time to finalize these policy decisions and amendments.

In the interim, the Court warned that if no policy was forthcoming by the next hearing, it would issue interim directions based on the existing Baggage Rules, considering anomalies and changes in gold prices.

On specific factual applications, the Court dealt with a petition challenging confiscation orders involving gold jewellery. It noted the failure of the Revision Authority to decide within the stipulated time and ordered the release of detained gold items within four weeks, waiving storage charges given the petitioner's prior success on appeal.

The Court also addressed grievances against the Central Warehousing Corporation (CWC) for non-compliance with Court orders regarding storage charge waivers and delays in releasing goods. A senior CWC official was present and was directed to ensure strict compliance, with warnings of stringent action against non-compliance. The Court permitted release of goods through authorized representatives upon proper communication from the petitioner.

The Court's reasoning underscored the need to balance enforcement of customs laws with protection of passengers' rights and prevention of undue harassment. It stressed procedural transparency, accountability of Customs officials, and responsiveness to passenger concerns. The SOP aimed to institutionalize these principles pending formal amendment of the Baggage Rules.

Competing arguments from petitioners highlighted the hardships caused by routine detention of personal jewellery and delays in adjudication, while the Customs Department emphasized the need for a comprehensive policy framework and stakeholder consultations before substantive rule changes. The Court accommodated these positions by mandating interim procedural safeguards and allowing time for policy formulation, while retaining the power to issue interim directions if delays persisted.

Significant holdings include the Court's approval of a detailed SOP that sets out mandatory procedural requirements for Customs detention of passenger goods, emphasizing passenger rights to information, hearing, and timely adjudication. The Court held that show cause notices may be waived only upon explicit passenger consent, and personal hearings cannot be waived. It mandated photographic evidence and detailed documentation to ensure transparency.

The Court also established that storage charges must be waived prior to appraisal and only collected upon payment of duty and release, reflecting a humane approach to passenger hardship. It affirmed the necessity of sensitization initiatives for Customs officials to prevent routine and unjustified detention of personal jewellery.

On the issue of policy formulation, the Court recognized the complexity and multi-stakeholder nature of the matter, granting the Customs Department and CBIC time to finalize amendments to the Baggage Rules and related policies. However, it reserved the right to issue interim directions to prevent ongoing hardship.

In sum, the Court's determinations emphasized procedural fairness, transparency, and passenger protection in Customs detention practices, while facilitating a consultative process for substantive regulatory reform. The directives and SOP collectively establish a framework to minimize harassment and ensure lawful, timely, and accountable Customs procedures for passenger baggage, particularly jewellery.