2025 (6) TMI 207 - HC - Customs

Seeking a direction to the Customs Department to release the goods being two gold bangles weighing about 58 grams belonging to the Petitioner - detention without issuing a show cause notice (SCN) or granting a personal hearing to the Petitioner - violation of principles of natural justice - HELD THAT - It is noted that no SCN has been issued in this case as the Customs Department is relying on the standard pre-printed waiver that was obtained from the Petitioner. The validity of such pre-printed waiver of show cause notices and personal hearing has been considered by this Court in various matters including in Amit Kumar v. The Commissioner of Customs 2025 (2) TMI 385 - DELHI HIGH COURT and Mr Makhinder Chopra vs Commissioner of Customs New Delhi 2025 (3) TMI 19 - DELHI HIGH COURT where it was held that 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. The order passed in original without issuance of SCN and without hearing the Petitioner is not sustainable in law. Thus the law is well settled that the Customs Department cannot rely on pre-printed waiver of show cause notice as the same would be contrary to the requirement of Section 124 of the Act. In light of the above discussions it is clear that the continued detention or seizure of goods by the Customs Department would be untenable in law where the show cause notice or the personal hearing have been waived via a pre-printed waiver. Conclusion - In the facts of this case since no show cause notice has been issued to the Petitioner due to a pre-printed waiver the detention is set aside. The detained articles would be liable to be released to the Petitioner. Petition disposed off.

Summary

The core legal questions considered by the Court in this matter were:

1. Whether the Customs Department was justified in detaining and confiscating the gold bangles without issuing a show cause notice (SCN) or granting a personal hearing to the Petitioner, as mandated under Section 124 of the Customs Act, 1962.

2. Whether a pre-printed waiver signed by the Petitioner, purportedly waiving the issuance of SCN and personal hearing, can be legally valid and binding.

3. Whether the Order-in-Original directing absolute confiscation and imposition of penalty without compliance with procedural safeguards was sustainable in law.

4. The appropriate relief and directions concerning the detained goods given the procedural infirmities.

Issue 1: Validity of Detention and Confiscation without Issuance of Show Cause Notice and Personal Hearing

The legal framework governing confiscation and penalties in customs matters is primarily Section 124 of the Customs Act, 1962. This provision mandates that before any order of confiscation or penalty is passed, the person concerned must be:

• Given a written notice specifying the grounds of proposed confiscation or penalty, with prior approval of a Customs officer not below the rank of Assistant Commissioner;
• Afforded an opportunity to make a written representation within a reasonable time;
• Given a reasonable opportunity of being heard personally.

The statute allows for the notice and representation to be oral at the request of the person concerned but does not dispense with the requirement of an opportunity to be heard.

In the present case, the Customs Department did not issue any SCN or provide a personal hearing before detaining and confiscating the gold bangles. The Petitioner was intercepted after crossing the Green Channel, and the goods were seized on the basis of "Green Channel Violation." The Department relied on a pre-printed waiver signed by the Petitioner, which purportedly waived the requirement of SCN and hearing.

The Court examined the Order-in-Original dated 21st August 2024 and found that the procedural safeguards under Section 124 were not complied with. The Petitioner had not been issued any SCN, nor was any personal hearing granted. The confiscation and penalty order was thus held to be legally unsustainable.

Issue 2: Validity of Pre-Printed Waiver of Show Cause Notice and Personal Hearing

The Court extensively analyzed the legal validity of pre-printed waivers, relying on precedents from earlier decisions in similar customs matters. The judgments cited include those where the Court held that such waivers are fundamentally violative of natural justice and the statutory requirements under Section 124 of the Act.

In particular, the Court referred to the judgment in Amit Kumar v. Commissioner of Customs and Makhinder Chopra v. Commissioner of Customs, which held:

"The oral SCN cannot be deemed to have been served in this manner as is being alleged by the Department. If an oral SCN 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 three-pronged waiver which the form contains is not even decipherable or comprehensible to the common man... Such a form in fact shocks the conscience of the Court."

"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 Court emphasized that the undertaking signed by the Petitioner in the present case, which was a standard pre-printed form waiving SCN and personal hearing, could not satisfy the statutory requirements. The Court directed the Customs Department to discontinue the practice of obtaining such waivers from tourists and travelers, reaffirming the necessity to adhere to natural justice principles.

Issue 3: Sustainability of the Order-in-Original Confiscating the Goods and Imposing Penalty

The Order-in-Original passed by the Customs Department directed absolute confiscation of the gold bangles and imposed a penalty of Rs. 55,000 on the Petitioner. However, the Court found that the order was passed without issuance of any SCN or personal hearing, relying solely on the pre-printed waiver signed by the Petitioner.

The Court held that such an order is not sustainable in law, as it violates the mandatory procedural safeguards under Section 124. The absence of SCN and hearing rendered the detention and confiscation contrary to law.

Further, the Court noted that the weight of the gold (58 grams) and the facts of the case did not warrant absolute confiscation without due process.

Issue 4: Relief and Directions Regarding the Detained Goods

Given the procedural lapses, the Court set aside the Order-in-Original dated 21st August 2024 and directed the release of the detained gold bangles to the Petitioner.

The Court ordered that the goods be released subject only to payment of applicable Customs Duty, without imposition of any penalty or fine. Warehouse charges were waived off.

The Petitioner was directed to appear before Customs officials on a specified date for collection of the goods. The Court also allowed for release through an authorized representative upon proper communication from the Petitioner.

Significant Holdings and Core Principles Established

"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."

"Natural justice is not merely lip-service. It has to be given effect and complied with in letter and spirit."

"The Customs Department is directed to discontinue the practice of obtaining standard form waivers of show cause notice and personal hearing from tourists and travelers."

"The detention and confiscation of goods without issuance of show cause notice and without affording an opportunity of hearing is contrary to law and not sustainable."

The Court reaffirmed the three-fold requirement under Section 124 of the Customs Act: issuance of notice specifying grounds of confiscation, opportunity to make written representation, and reasonable opportunity of personal hearing.

The final determination was that the Customs Department's action in detaining and confiscating the Petitioner's gold bangles without compliance with Section 124 was unlawful. The pre-printed waiver relied upon was invalid and could not substitute for the statutory requirements. Accordingly, the detention was quashed, and the goods were ordered to be released upon payment of duty without penalty.