2025 (4) TMI 123 - HC - Customs

Detention of personal jewelry as baggage invalid without valid show cause notice; Section 110 limits SCN to six months

Kartik Sahdev Versus Commissioner Of Customs.

HC held detention of personal jewelry as bona fide baggage impermissible where no valid show cause notice (SCN) was issued. The court found the SCN ... Detention of personal jewelry as part of the bona fide baggage of travelers - time limitation for issuance of SCN - No SCN issued as right to SCN waived by signing a pre-printed standard proforma - HELD THAT:- This court is of the opinion that the said goods ought not to have been detained. Once the goods are detained, it is mandatory to issue a show cause notice and afford a hearing to the Petitioner. The time prescribed under Section 110 of The Customs Act, 1962, is a period of six months and subject to complying with the formalities, a further extension for a period of six months can be taken by the Department for issuing the show cause notice. In this case, the one year period itself has elapsed, thus no show cause notice can be issued. The detention is therefore impermissible. In the opinion of this Court, this is a case where the Petitioner has already been given the option of redeeming the goods on payment of fine and penalty. The facts of this case show that the goods are two gold kadas and two gold chains. Considering the fact that the Petitioner had fully participated in the proceedings of show cause notice, the Petitioner may pay the redemption fine and penalty in terms of the order in original and the goods shall be released to him within four weeks. Storage charges are waived in this case. Conclusion - The waiver of the SCN is invalid. The detention of personal jewelry is impermissible under the Baggage Rules, and the failure to issue a timely show cause notice rendered the detention impermissible. Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:1. Whether the waiver of a show cause notice via a pre-printed standard proforma violates the principles of natural justice.2. Whether the detention of personal jewelry as part of the bona fide baggage of travelers is permissible under the Baggage Rules, 2016.3. Whether the Customs Department's failure to issue a show cause notice within the prescribed time frame under Section 110 of The Customs Act, 1962, renders the detention of goods impermissible.ISSUE-WISE DETAILED ANALYSIS1. Waiver of Show Cause Notice and Principles of Natural JusticeRelevant legal framework and precedents: The Court referenced Section 124 of The Customs Act, 1962, which mandates the issuance of a show cause notice and the opportunity for a hearing before confiscating goods. The Court also cited its previous judgment in Amit Kumar v. The Commissioner of Customs, emphasizing that waivers must be conscious and informed decisions.Court's interpretation and reasoning: The Court found that the use of a pre-printed form for waiving the right to a show cause notice and personal hearing does not comply with the principles of natural justice. Such waivers must be consciously and knowingly agreed upon by the affected individual, which was not the case here.Key evidence and findings: The Petitioner signed a standard form waiving the right to a show cause notice, which the Court deemed insufficient for a valid waiver of rights.Application of law to facts: The Court concluded that the waiver obtained through a pre-printed form was invalid, as it did not constitute an informed waiver under Section 124 of the Act.Treatment of competing arguments: The Respondent argued for the validity of the waiver, but the Court rejected this, emphasizing the need for compliance with natural justice principles.Conclusions: The Court held that the waiver obtained was not in compliance with natural justice and thus invalid.2. Detention of Personal Jewelry under Baggage Rules, 2016Relevant legal framework and precedents: The Court referred to Rule 5 of the Baggage Rules, 2016, which exempts personal jewelry from duty as part of bona fide baggage. The Court also cited decisions in Nathan Narayanswamy v. Commissioner of Customs and Rahul Vattamparambil Remesh v. Union Of India & Ors.Court's interpretation and reasoning: The Court opined that personal jewelry, being part of bona fide baggage, should not have been detained by customs authorities.Key evidence and findings: The goods in question were personal jewelry items, specifically two gold kadas and two gold chains.Application of law to facts: The Court applied the Baggage Rules to determine that the jewelry was exempt from duty and should not have been detained.Treatment of competing arguments: The Respondent did not present a compelling argument against the exemption under the Baggage Rules.Conclusions: The Court concluded that the detention of the jewelry was impermissible under the Baggage Rules.3. Issuance of Show Cause Notice under Section 110 of The Customs Act, 1962Relevant legal framework and precedents: Section 110 of The Customs Act, 1962, requires the issuance of a show cause notice within six months of detention, extendable by another six months.Court's interpretation and reasoning: The Court noted that the Customs Department failed to issue a show cause notice within the prescribed time frame, rendering the detention of goods impermissible.Key evidence and findings: The detention occurred on 14th October, 2023, and no show cause notice was issued within the one-year period allowed by the statute.Application of law to facts: The Court applied Section 110 to determine that the failure to issue a timely show cause notice invalidated the detention.Treatment of competing arguments: The Respondent's intention to file a review was noted, but it did not affect the Court's determination regarding the impermissibility of the detention.Conclusions: The Court concluded that the failure to issue a show cause notice within the statutory period rendered the detention impermissible.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'Such signing of the standard form would not be in compliance with the principles of natural justice, inasmuch as, the waiver under Section 124 of the Act would have to be a conscious waiver and an informed waiver.'Core principles established: Waivers of legal rights must be informed and conscious; personal jewelry as bona fide baggage is exempt from duty; failure to issue a timely show cause notice invalidates detention.Final determinations on each issue: The Court determined that the waiver of the show cause notice was invalid, the detention of personal jewelry was impermissible under the Baggage Rules, and the failure to issue a timely show cause notice rendered the detention impermissible.