2025 (7) TMI 808 - HC - Customs

Seeking release of the two gold bangles weighing 117 grams seized by the Customs Department - no SCN issued with respect to the detained jewellery - no opportunity for personal hearing granted - 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 were seized. It is normal practice 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 was of 24 carat gold. 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 . 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 requirements 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. Thus it is now settled that 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 set aside. The detained jewellery shall be released to the Petitioner within a period of two weeks. The Petitioner shall appear before the Customs Department on 21st July 2025 and may collect the detained jewellery through an Authorised Representative in which case the detained jewellery 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. Petition disposed off. 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 availed 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. Reliance on the waiver of show cause notice and personal hearing notice is not permissible. Accordingly the detention is untenable.

Summary

The core legal questions considered in this case include:

1. Whether the Customs Department was justified in detaining and confiscating the gold bangles worn by the petitioner without issuing a Show Cause Notice (SCN) or providing an opportunity for personal hearing, in compliance with Section 124 of the Customs Act, 1962.

2. Whether a pre-printed waiver signed by the petitioner, purportedly waiving the right to SCN and personal hearing, is valid and sufficient to dispense with the statutory requirements under Section 124 of the Act.

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

4. The applicability and interpretation of relevant customs laws, rules, and judicial precedents concerning the detention and confiscation of jewellery carried by passengers returning from abroad.

Issue-wise detailed analysis:

1. Validity of detention and confiscation without issuance of Show Cause Notice and personal hearing:

The legal framework under Section 124 of the Customs Act, 1962 mandates that no order of confiscation or penalty can be passed without issuing a written notice to the owner specifying the grounds for confiscation, providing an opportunity to make a written representation, and affording a reasonable opportunity of personal hearing. The statute allows for an oral SCN only if requested by the person concerned.

The Court examined the Customs Department's reliance on a pre-printed waiver form signed by the petitioner, which purportedly waived the issuance of SCN and personal hearing. The Court referred to binding precedents, including Amit Kumar v. Commissioner of Customs and Makhinder Chopra v. Commissioner of Customs, where it was held that such pre-printed waivers are fundamentally flawed and violate the principles of natural justice. The Court emphasized that natural justice is not mere lip service and must be complied with in letter and spirit.

The Court held that a pre-printed waiver, which is indecipherable and incomprehensible to a layperson, cannot substitute the statutory requirements of Section 124. It cannot be deemed a valid oral SCN. Consequently, the absence of a proper SCN and hearing rendered the detention and confiscation orders unsustainable in law.

The Court further noted that the statutory timeline under Section 110 of the Act prescribes six months for issuing the SCN, extendable by another six months. In this case, over one year had elapsed without issuance of SCN, further invalidating the detention.

2. Classification of the detained jewellery as personal effects under the Baggage Rules, 2016:

The Court analyzed the Baggage Rules, 2016, particularly Rules 2(vi), 3, and 5, which define "personal effects" and prescribe free allowance limits for jewellery carried by passengers. Rule 2(vi) excludes jewellery from the definition of personal effects; however, Rule 3 allows clearance free of duty for used personal effects and travel souvenirs. Rule 5 permits duty-free clearance of jewellery up to specified weight and value limits depending on the passenger's gender.

The Court relied on authoritative judicial precedents, including the Supreme Court's decision in Directorate of Revenue Intelligence v. Pushpa Lekhumal Tolani, which clarified that jewellery worn by passengers cannot be categorically excluded from personal effects. The Court held that bona fide jewellery worn or carried by a passenger, especially if used and intended for personal use, falls within the ambit of personal effects and is exempt from customs duty and detention.

The Court also referred to the Division Bench decision in Saba Simran v. Union of India, which distinguished between "jewellery" and "personal jewellery," holding that used personal jewellery worn by the passenger is not subject to the monetary caps applicable to newly acquired jewellery under the Baggage Rules. This position was upheld by the Supreme Court when the Union of India's challenge was dismissed.

Further, the Court reiterated its own ruling in Makhinder Chopra, affirming that the Customs Department must differentiate between bona fide personal jewellery and other jewellery for regulatory purposes.

3. Application of law to facts and treatment of competing arguments:

The petitioner's case was that the detained gold bangles weighing 117 grams were personal effects worn as part of her attire during her pilgrimage and travel. The Customs Department contended that the petitioner herself had appealed the Order-in-Original and the Order-in-Appeal was reasonable, imposing a penalty and redemption fine along with customs duty.

The Court observed that it is customary for women to wear basic jewellery such as bangles as personal effects, and mere purity or value of gold does not warrant detention if the jewellery is bona fide personal use. The Court rejected the Customs Department's reliance on the pre-printed waiver and absence of SCN and personal hearing, holding such practice contrary to law and natural justice.

On the classification issue, the Court found the petitioner's jewellery to be used personal effects exempt under the Baggage Rules, and thus not liable for detention or confiscation.

4. Conclusions:

The Court concluded that the detention and confiscation of the petitioner's gold bangles were illegal due to failure to comply with Section 124 of the Customs Act, 1962, and the jewellery constituted personal effects exempt from customs duty under the Baggage Rules, 2016. The Court set aside the Order-in-Original and Order-in-Appeal, directed the release of the detained jewellery within two weeks, and mandated the Customs Department to discontinue the practice of obtaining pre-printed waivers that waive SCN and personal hearing rights.

Significant holdings include:

"A perusal of Section 124 of the Act along with the alleged waiver which is relied upon would show that 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."

"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."

"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. Further, the Department is required to make a distinction between 'jewellery' and 'personal jewellery' while considering seizure of items for being in violation of the Baggage Rules."

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

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