2025 (6) TMI 378 - HC - Customs

Seeking release of one gold chain and iPhones - goods were for personal use or not - detention and confiscation of goods without issuance of a valid show cause notice and personal hearing - violation of principles of natural justice - waiver of SCN - pre-printed waiver obtained by the Customs Department from the Petitioner - HELD THAT - The detained gold chain weighing 117 grams has been permitted to be released subject to payment of a sum of Rs. 1, 10, 000/- along with applicable duty - whereas the three iPhones have been ordered for absolute confiscation. 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 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 . 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 - in the facts of this case since no show cause notice has been issued to the Petitioner due to a pre-printed waiver the detained goods would be liable to be released to the Petitioner. Since the Petitioner is already before the Revisional Authority in so far as the gold chain is concerned the same is directed to be released upon payment of the redemption fine and storage charges only - Further in so far as the three iPhones are concerned let the Revisional Authority decide the same within a period of two months bearing in mind the order passed by this Court in Chaksu Garg 2025 (6) TMI 277 - DELHI HIGH COURT where the Adjudicating Authority had given an option to redeem the seized iPhones upon payment of Rs. 32, 000/- as redemption fee. Conclusion - i) 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. ii) The order passed in original without issuance of SCN and without hearing the Petitioner is not sustainable in law. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the detention and confiscation of the gold chain and three iPhones by the Customs Department without issuance of a valid show cause notice and personal hearing is lawful under the Customs Act, 1962.

- Whether the pre-printed waiver obtained by the Customs Department from the Petitioner, purportedly waiving the issuance of show cause notice and personal hearing, satisfies the requirements of Section 124 of the Customs Act.

- Whether the gold chain and the iPhones should be released to the Petitioner, subject to payment of redemption fine and customs duty, or confiscated absolutely.

- Whether the Customs Department's inconsistent approach in confiscation or redemption of electronic devices such as iPhones is justified.

- The validity and applicability of the impugned Order-in-Original and Order-in-Appeal directing confiscation of the goods.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Lawfulness of detention and confiscation without valid show cause notice and personal hearing

Relevant legal framework and precedents: Section 124 of the Customs Act, 1962 mandates that before confiscation of goods or imposition of penalty, the owner must be given a written notice specifying grounds, an opportunity to make a representation, and a reasonable opportunity of being heard. The provisos allow oral show cause notice at the request of the person concerned but do not permit blanket waivers of this right.

Precedents relied upon include Amit Kumar v. The Commissioner of Customs and Mr. Makhinder Chopra v. Commissioner of Customs, where this Court held that pre-printed waivers of show cause notice and personal hearing are fundamentally violative of natural justice and Section 124 requirements. The Court emphasized that natural justice is not mere lip service and that such waivers are not valid substitutes for proper notice and hearing.

Court's interpretation and reasoning: The Court found that the Customs Department relied solely on a standard pre-printed waiver form signed by the Petitioner, which purported to waive issuance of show cause notice and personal hearing. The Court held such a waiver invalid, as it does not comply with the statutory mandate of Section 124. The Court observed that the waiver was neither comprehensible nor voluntarily and consciously signed with full understanding of rights, and thus cannot substitute for the statutory show cause notice and hearing.

Key evidence and findings: The absence of any written or oral show cause notice issued by the Customs Department, reliance on the pre-printed waiver form, and the prior judicial pronouncements invalidating such waivers.

Application of law to facts: Since no valid show cause notice was issued and no personal hearing was granted, the detention and confiscation orders are contrary to law and violate principles of natural justice under Section 124.

Treatment of competing arguments: The Customs Department argued that the waiver form sufficed to dispense with show cause notice. The Court rejected this, emphasizing the statutory safeguards and the need for meaningful opportunity to be heard.

Conclusions: The orders of detention and confiscation without valid show cause notice and hearing are unsustainable. The detention itself is illegal and liable to be set aside.

Issue 2: Confiscation versus redemption of the gold chain and iPhones

Relevant legal framework and precedents: Under the Customs Act, confiscation or redemption of goods is governed by Sections 111(d), 111(j), 111(m), 112(a), 112(b), and 125(3). The Court referred to the decision in Chakshu Garg v. Commissioner of Customs, where iPhones were permitted to be redeemed on payment of a redemption fee.

Court's interpretation and reasoning: The impugned Order-in-Original permitted redemption of the gold chain on payment of a fine and customs duty but ordered absolute confiscation of the iPhones. The Court noted the inconsistency in the Customs Department's approach towards similar electronic devices. The Court directed the Revisional Authority to reconsider the confiscation of iPhones in light of the Chakshu Garg precedent, allowing redemption subject to payment of a reasonable redemption fee.

Key evidence and findings: The gold chain was valued at Rs. 7,40,837/- and weighed 117 grams; the three iPhones were valued at Rs. 3,56,420.10/-. The Petitioner claimed the gold chain was worn and the iPhones were for personal use. The Customs Department's Orders imposed a fine of Rs. 1,10,000/- on the Petitioner and allowed redemption only for the gold chain.

Application of law to facts: Given the settled law on redemption of electronic devices and the absence of any show cause notice, the Court found that the iPhones should not be absolutely confiscated without an opportunity for redemption. The gold chain's release was permitted upon payment of redemption fine and storage charges.

Treatment of competing arguments: The Customs Department maintained the confiscation order for iPhones. The Court, however, emphasized consistency and fairness, directing reconsideration by the Revisional Authority.

Conclusions: The gold chain is to be released on payment of redemption fine and storage charges. The iPhones' confiscation is to be reconsidered, with the Revisional Authority to decide on redemption within two months.

Issue 3: Validity of pre-printed waiver forms and adherence to natural justice principles

Relevant legal framework and precedents: Section 124 of the Customs Act and the principles of natural justice require meaningful notice and hearing. The Court referred extensively to Amit Kumar and Makhinder Chopra decisions, which declared pre-printed waiver forms invalid.

Court's interpretation and reasoning: The Court reiterated that natural justice cannot be bypassed by mechanical reliance on pre-printed waivers. The Court observed that such waivers are incomprehensible to laypersons and shock the conscience of the Court, especially in cases involving tourists and travelers.

Key evidence and findings: The waiver form signed by the Petitioner was standard and pre-printed, lacking clarity and voluntariness.

Application of law to facts: The Customs Department's practice of obtaining such waivers is contrary to law and is directed to be discontinued.

Treatment of competing arguments: The Customs Department's reliance on the waiver was rejected outright.

Conclusions: The practice of obtaining pre-printed waivers for show cause notice and hearing is unlawful and must cease. The Customs Department must comply with Section 124 and principles of natural justice in every case.

3. SIGNIFICANT HOLDINGS

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

- "Printed waivers of this nature would fundamentally violate rights of persons who are affected."

- "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 order passed in original without issuance of SCN and without hearing the Petitioner, is not sustainable in law."

- "The Customs Department is directed to discontinue the said practice [of making tourists sign standard waivers] and to follow the principles of natural justice in each case where goods are confiscated in terms of Section 124 of the Act."

- The Court held that the continued detention or seizure of goods without valid show cause notice and hearing is untenable in law.

- The gold chain is to be released upon payment of redemption fine and storage charges.

- The Revisional Authority is directed to decide on the confiscation or redemption of the iPhones within two months, considering the precedent permitting redemption upon payment of a reasonable fee.