2024 (2) TMI 686 - HC - Customs

Customs authorities must release seized gold chains after failing to issue show cause notice within six months under Section 110(2)

Delhi HC directed customs authorities to release seized gold chains from petitioners. The court held that detention receipts issued by customs constituted ... Seeking release of seized gold - no show cause notice for seizure of the said gold chain - petitioners seek release of the gold chains that have been seized from the petitioners under the garb of a detention receipt - HELD THAT:- Reference may be had to the judgment of a co-ordinate bench of this Court in MOHD SALMAN KHAN VERSUS UNION OF INDIA AND OTHERS [2016 (4) TMI 97 - DELHI HIGH COURT], wherein a co-ordinate bench has held that there is no provision in the Customs Act 1962 which permits detention of goods in lieu of seizure. Said bench has noticed that since no show cause notice was issued under section 124 (a) of the Act within six months of the detention/ seizure, the goods were liable to be returned to the person from whose possession they have been seized in terms of section 110 (2) of the Act. Section 110 (1) of the Act provides that where the proper office has reason to believe that any goods are liable to confiscation, he may seize such goods. Section 110 (2) mandates that where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure, the goods shall be returned to the person from whose possession they were seized. Proviso to Section 110 (2) grants power to the Principal Commissioner of Customs or Commissioner of Customs for reasons to be recorded in writing to extend the said period by a further period of six months. As held in Mohd. Salman Khan there is no provision under the Act which permits detention of goods instead of seizure. The Custom Department cannot take shelter under the device of detention in order to avoid the consequences of seizure. In terms of Section 110 (2) of the Act if the Show Cause Notice under Section 124 of the Act is not issued within the statutory period the goods have to be released. By resorting to detention instead of seizure the custom authorities cannot circumvent the mandate of Section 110 (2) of the Act - In the instant case, the Gold Chains were taken possession by the Custom Authorities by issuing a detention receipt which infact amounted to seizure of the said Gold Chains. There is no dispute that the Gold Chains are lying in the custody of the Customs Authorities since their seizure dated 20.12.2022, i.e., over a period of one year. The respondents/Customs Authorities are directed to forthwith release the gold chains seized from the petitioners in terms of section 110 (2) of the Act - Petition allowed. Issues involved:The petitioners seek quashing of detention receipts and release of Gold Chains seized by Custom Authorities upon returning from Dubai to India.Details of the Judgment:Issue 1: Detention of Gold ChainsThe petitioners were intercepted at the airport, and Gold Chains were found in their possession without declaration. Custom Authorities detained the Gold Chains without issuing a show cause notice for seizure. The petitioners sought release of the Gold Chains seized under the detention receipt.Issue 2: Legal ProvisionsReference was made to Section 124 of the Customs Act, stating that no confiscation or penalty order can be made without prior notice to the owner of the goods. Section 110 allows seizure of goods believed to be liable for confiscation, with a mandate to return the goods if no notice is issued within six months.Issue 3: Precedent and Legal InterpretationA co-ordinate bench judgment highlighted that detention cannot substitute seizure under the Act. Failure to issue a show cause notice within the statutory period mandates the return of seized goods to the owner. The Customs Department cannot detain goods to avoid the consequences of seizure.Issue 4: Judgment and DirectionsIn line with legal provisions and precedents, the court directed the Customs Authorities to release the Gold Chains seized from the petitioners. The petitioners were required to be present for the appraisal of the Gold Chains' weight and purity. Any custom duty payable was to be informed and deposited for the release of the Gold Chains. The release did not prevent further legal actions by Customs Authorities regarding the alleged wrongful import.Conclusion:The petitions were allowed, and the Gold Chains were directed to be released in accordance with Section 110(2) of the Act. The petitioners' presence was required for appraisal, and any custom duty payable had to be deposited for the release. Customs Authorities were allowed to take legal action for the alleged wrongful import despite the release.