2025 (7) TMI 651 - HC - Customs

Smuggling - seeking release of the two gold bangles seized by the Customs Department - It is the case of the Petitioner that no show cause notice had been issued with respect to the detained jewellery and no opportunity for personal hearing was granted to the Petitioner - violation of principles of natural justice - HELD THAT - The Petitioner was on a religious pilgrimage to Mecca and was on her way back when the detained jewellery was seized. It is normal practice and part of our culture at least in our country that women wear basic jewellery such as bangles as part of their personal effects. The same could not have been detained by the Customs Department only on the basis that the same were of 24 carat gold unless any other special circumstances exist for such detention. It is noted that no show cause notice 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 SCN 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 . 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 requirements of Section 124 of the Act. In light of the above discussion 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 - Once the goods are detained it is mandatory to issue a Show Cause Notice and afford a personal hearing to the Petitioner. The time prescribed under Section 110 of Act is a period of six months. However subject to complying with the requirements therein a further extension for a period of six months can be taken by the Customs Department for issuing the show cause notice. In this case the one year period itself has elapsed yet no show cause notice has been issued. Accordingly the detention is impermissible. Thus the used jewellery worn by the passenger would fall within the ambit of personal effects in terms of the Rules which would be exempt from detention by the Customs Department. In view of the above and considering the facts of the case it is clear that the detained jewellery are the personal effects of the Petitioner. Accordingly the detained jewellery would be liable to be released. The detention of the Petitioner s jewellery is not tenable. Accordingly the said detention is set aside. The detained jewellery shall be released to the Petitioner within a period of two weeks - Petition disposed off.

Summary

The core legal questions considered by the Court include:

1. Whether the Customs Department was justified in detaining and confiscating the Petitioner's gold jewellery without issuing a show cause notice or providing an opportunity for personal hearing, as mandated under the Customs Act, 1962.

2. The validity and legal effect of a pre-printed waiver form signed by the Petitioner purportedly waiving the issuance of a show cause notice and personal hearing.

3. Whether the detained gold bangles worn by the Petitioner qualify as "personal effects" exempt from customs duty and detention under the Baggage Rules, 2016.

4. The applicability of relevant statutory provisions and judicial precedents concerning the detention, confiscation, and release of jewellery carried by passengers returning from abroad.

Issue 1: Legality of Detention and Confiscation Without Show Cause Notice and Hearing

The legal framework governing this issue is Section 124 of the Customs Act, 1962, which mandates that no order confiscating goods or imposing penalty shall be made unless the owner is given a written notice specifying grounds for confiscation, an opportunity to make a written representation, and a reasonable opportunity of personal hearing. The statute permits oral show cause notices only if requested by the person concerned.

The Court relied on its prior authoritative decisions, notably Amit Kumar v. Commissioner of Customs and Makhinder Chopra v. Commissioner of Customs, which held that pre-printed waiver forms purporting to waive show cause notices and hearings do not satisfy the requirements of Section 124. The Court emphasized that natural justice principles cannot be circumvented by such standardized waivers, which are often incomprehensible and signed under duress or without informed consent. The Court held that the absence of a proper show cause notice and hearing renders detention and confiscation orders legally unsustainable.

In the present case, the Customs Department relied on a standard pre-printed waiver signed by the Petitioner to deny issuance of a show cause notice and hearing. The Court found this practice unlawful and contrary to Section 124, as no proper notice or hearing was afforded. The Court noted that more than a year had elapsed without issuance of a show cause notice, exceeding the statutory time limits under Section 110 of the Act, further invalidating the detention.

The Court rejected the Customs Department's reliance on the waiver and held that the detention of the jewellery was impermissible in the absence of compliance with Section 124.

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

The Court extensively analyzed the legal validity of the pre-printed waiver form. It held that such forms, which combine waiver of oral or written show cause notice and personal hearing, are fundamentally flawed and violate the principles of natural justice. The Court observed that the language of the waiver is often indecipherable to laypersons and that consent obtained thereby cannot be considered informed or voluntary.

Relying on the decisions in Amit Kumar and Makhinder Chopra, the Court reiterated that the statutory scheme does not permit such blanket waivers, and that the Customs Department must issue a proper show cause notice and provide a hearing opportunity before confiscation or penalty. The Court directed the Customs Department to discontinue the practice of obtaining such waivers in future cases.

Issue 3: Whether the Detained Gold Bangles Constitute Personal Effects Exempt from Detention

The relevant legal framework comprises the Baggage Rules, 2016, particularly Rule 2(vi) defining "personal effects" as things required for satisfying daily necessities but excluding jewellery, and Rule 3 which permits duty-free clearance of used personal effects and travel souvenirs up to specified value limits. Rule 5 allows duty-free clearance of jewellery brought by passengers residing abroad, with weight and value caps differentiated by gender.

The Court examined judicial precedents, including the Supreme Court's ruling in Directorate of Revenue Intelligence v. Pushpa Lekhumal Tolani, which held that jewellery cannot be completely excluded from the ambit of personal effects. The Supreme Court recognized that bona fide jewellery worn by a passenger for personal use, including used jewellery, is exempt from customs duty and detention, provided it is not intended for import or sale in India.

The Court also relied on the Division Bench decision in Saba Simran v. Union of India, which distinguished between "personal jewellery" and "jewellery" in the context of customs rules, affirming that used personal jewellery worn by passengers is to be treated as personal effects exempt from detention. This decision was upheld by the Supreme Court on dismissal of the Special Leave Petition.

Further, the Court referred to its own decision in Makhinder Chopra, which confirmed that bona fide jewellery in personal use falls within the exemption under the Baggage Rules and should not be detained or confiscated.

In the present case, the detained gold bangles were worn by the Petitioner during travel and were of 24-carat purity. The Court noted the cultural practice of women wearing bangles as personal effects and found no special circumstances justifying detention. The jewellery was held to be bona fide personal effects exempt from customs duty and detention.

Issue 4: Application of Law to Facts and Treatment of Competing Arguments

The Petitioner contended that the jewellery was personal effects worn during pilgrimage and could not be seized. She relied on the precedent of Manan Karan Sharma, where similar facts led to release of detained jewellery. The Respondent argued that the Order-in-Appeal imposing penalty and redemption fine was reasonable and should not be disturbed.

The Court critically examined the facts, noting that no show cause notice was issued and no personal hearing was granted, violating statutory requirements. It rejected the Respondent's reliance on the waiver and the penalty order, which was passed without due process. The Court emphasized the cultural context and the settled legal position that used personal jewellery worn by passengers is exempt from detention.

Applying the law to facts, the Court held that the detention was unlawful and ordered release of the jewellery within two weeks. The Court also provided procedural directions for release through an authorized representative and adjustment of any pre-deposit amounts against warehousing charges.

Significant Holdings:

"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."

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

"The practice of making tourists sign undertaking in a standard form waiving the show cause notice and personal hearing is contrary to the provisions of Section 124 of the Act, hereinafter, the Customs Department is directed to discontinue the said practice."

"Jewellery that is bona fide in personal use by the tourist would not be excluded from the ambit of personal effects as defined under the Baggage Rules."

"It is normal practice and part of our culture, at least in our country, that women wear basic jewellery such as bangles as part of their personal effects. The same could not have been detained by the Customs Department only on the basis that the same were of 24 carat gold, unless any other special circumstances exist for such detention."

"The detained jewellery are the personal effects of the Petitioner. Accordingly, the detained jewellery would be liable to be released."

In conclusion, the Court set aside the Order-in-Original and Order-in-Appeal, quashed the detention and confiscation of the gold bangles, and directed their release. The Court underscored the mandatory compliance with Section 124 of the Customs Act regarding show cause notices and hearings, invalidated reliance on pre-printed waiver forms, and affirmed the exemption of bona fide personal jewellery from customs detention under the Baggage Rules and established judicial precedents.