2025 (6) TMI 381 - HC - Customs

Seeking release of detained gold - 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 - 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. The impugned order-in-original is set aside to the effect that it orders absolute confiscation. However in the facts of this case the Petitioner shall pay the penalty of Rs. 1, 00, 000/- and 50% of the warehousing/storage charges. 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. The SCN in the present case is accordingly deemed to have not been issued and thus the detention itself would be contrary to law. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the detention and confiscation of the jewellery by the Customs Department without issuance of a show cause notice (SCN) and without granting a personal hearing is legally valid under the Customs Act, 1962.

- Whether a pre-printed waiver signed by the petitioner, purportedly waiving the right to SCN and personal hearing, satisfies the procedural requirements under Section 124 of the Customs Act, 1962.

- Whether the petitioner's act of not declaring the jewellery at the Green Channel constitutes a violation warranting confiscation and imposition of penalty.

- The applicability and interpretation of Section 124 of the Customs Act regarding procedural safeguards before confiscation and penalty.

- The validity of the Customs Department's practice of relying on standard pre-printed waivers to dispense with SCN and personal hearing.

- The appropriate relief and penalty in light of the above considerations.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of detention and confiscation without issuance of show cause notice and personal hearing

Relevant legal framework and precedents: Section 124 of the Customs Act, 1962 mandates that no order confiscating goods or imposing penalty shall be made unless (a) a written notice specifying grounds is issued with prior approval of an Assistant Commissioner or above, (b) an opportunity to make written representation is given, and (c) a reasonable opportunity of personal hearing is provided. The section allows for oral SCN and representation only at the request of the person concerned.

Precedents include two key decisions of this Court: Amit Kumar v. The Commissioner of Customs and Mr. Makhinder Chopra vs Commissioner of Customs. Both judgments emphasize that natural justice principles must be strictly followed, and that pre-printed waivers purporting to dispense with SCN and personal hearing are impermissible.

Court's interpretation and reasoning: The Court noted that no SCN was issued in this case; instead, the Customs Department relied on a pre-printed waiver signed by the petitioner. The Court held that such a waiver does not comply with Section 124's requirements. The waiver was neither a proper declaration nor intelligible to a layperson. The Court emphasized that natural justice cannot be reduced to mere formality and that the affected person cannot be condemned unheard.

Key evidence and findings: The petitioner signed a standard pre-printed waiver form on the date of detention, agreeing to waive SCN and personal hearing. The petitioner's authorized representative also requested release of goods without SCN or hearing. The order-in-original was passed without issuance of SCN or hearing.

Application of law to facts: The Court applied the principles from Amit Kumar and Makhinder Chopra, finding that the pre-printed waiver did not satisfy Section 124. The absence of a proper SCN and hearing rendered the confiscation order unsustainable.

Treatment of competing arguments: The Customs Department argued that the waiver sufficed as an oral SCN and that the petitioner had admitted omission and commission. The Court rejected this, holding that procedural safeguards cannot be circumvented by a standard waiver form.

Conclusion: The detention and confiscation without issuance of SCN and personal hearing violated Section 124 and principles of natural justice, rendering the order invalid.

Issue 2: Validity of pre-printed waiver of show cause notice and personal hearing

Relevant legal framework and precedents: Section 124 of the Customs Act requires written notice and opportunity for representation and hearing before confiscation or penalty. The provisos allow oral SCN only if requested by the person concerned. The Court in Amit Kumar and Makhinder Chopra held that pre-printed waivers do not satisfy these requirements.

Court's interpretation and reasoning: The Court held that a pre-printed waiver, especially one that is not clearly comprehensible, cannot be treated as a valid waiver of SCN or hearing. Such waivers undermine the right to be heard and violate natural justice. The Court noted that the practice of making tourists sign such waivers "shocks the conscience" and directed Customs to discontinue this practice.

Key evidence and findings: The petitioner signed a pre-printed form waiving SCN and personal hearing, but the Court found this was not a conscious, informed waiver compliant with law.

Application of law to facts: The Court applied the settled legal position that procedural safeguards cannot be waived by a standard form and that the Customs Department's reliance on such waivers is unlawful.

Treatment of competing arguments: Customs contended that the waiver was a conscious acceptance by the petitioner. The Court disagreed, emphasizing the need for clear, informed consent and opportunity to be heard.

Conclusion: The pre-printed waiver does not satisfy Section 124 and cannot be relied upon to dispense with SCN or personal hearing.

Issue 3: Whether the petitioner's act of not declaring jewellery at Green Channel constitutes violation warranting confiscation and penalty

Relevant legal framework: Under the Customs Act and Baggage Rules, goods exceeding free allowance must be declared at the Red Channel. Failure to declare constitutes a violation, attracting confiscation and penalty under Sections 111 and 112 of the Act.

Court's interpretation and reasoning: The petitioner admitted crossing the Green Channel without declaration and that the jewellery was recovered by Customs. The jewellery was appraised and valued at Rs. 7,44,582. The Customs Department declared the petitioner an "ineligible passenger" under Notification No. 50/2017-Cus and ordered absolute confiscation with a penalty of Rs. 1,00,000.

Key evidence and findings: The petitioner's statement under Section 108 admitted the acts of omission and commission. The jewellery was physically examined and appraised by the Jewellery Appraiser. The petitioner's authorized representative subsequently requested release of goods and offered to pay duty and penalty.

Application of law to facts: The Court accepted that the petitioner violated customs regulations by not declaring the jewellery. The valuation and classification were undisputed. However, the procedural irregularity in not issuing SCN and hearing rendered the confiscation order invalid.

Treatment of competing arguments: The petitioner claimed the jewellery was for personal use and did not belong to her. Customs emphasized the violation and statutory provisions. The Court acknowledged the violation but emphasized adherence to procedural safeguards.

Conclusion: The petitioner's non-declaration constituted a violation warranting confiscation and penalty, but procedural lapses vitiated the confiscation order.

Issue 4: Appropriate relief and penalty

Court's reasoning: While setting aside the confiscation order due to procedural non-compliance, the Court recognized the petitioner's violation. The Court imposed the penalty of Rs. 1,00,000/- as ordered by the Customs Department and directed payment of 50% warehousing/storage charges.

The Court directed release of the detained jewellery within four weeks upon payment of penalty and storage charges and upon receipt of proper communication from the petitioner if release is to an authorized representative.

Conclusion: Confiscation set aside; penalty and partial storage charges imposed; jewellery to be released accordingly.

3. 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... The Customs Department is expected to follow the principles of natural justice in each case where goods are confiscated."

"No order confiscating any goods or imposing any penalty on any person shall be made unless the person is given a written notice of grounds, an opportunity to make written representation and a reasonable opportunity of being heard." (Section 124 of the Customs Act, 1962)

"The petitioner's detention and confiscation of jewellery without issuance of show cause notice and personal hearing is unsustainable in law."

"The detained jewellery is liable to be released upon payment of penalty and storage charges, notwithstanding the violation, due to procedural infirmities in the confiscation order."