2025 (4) TMI 193 - HC - Customs

Customs Department's preprinted waiver forms for notices and hearings ruled invalid under Section 124

Delhi HC ruled that Customs Department's preprinted waiver forms for show cause notices and personal hearings are invalid under Section 124 of the Customs ... Detention of goods by the Customs Department belonging to the tourists travelling to India, of both Indian and foreign origin - personal jewellery worn by travelers - Baggage Rules - legality of the Customs Department's practice of using preprinted waiver forms for show cause notices (SCN) and personal hearings - HELD THAT:- In Amit Kumar vs. Commissioner of Customs, [2025 (2) TMI 385 - DELHI HIGH COURT], the Court had considered the validity of a preprinted waiver form, being relied upon by the Customs Department, by which the Petitioner was stated to have waived the show cause notice (hereinafter “SCN”) and personal hearing. The said preprinted document was alleged to be an oral SCN by the Customs Department in terms of the proviso to Section 124 of the Customs Act. The Court held that the preprinted waiver form cannot be considered to be considered an oral SCN in compliance with Section 124 of the Act. The passengers shall be duly informed about the applicable provisions in respect of issuance of an oral SCN and the procedure thereto. In any event, even if notice is waived, notice of personal hearing would be given to the concerned passenger through Whatsapp, email id as also through the authorized signatory. This would ensure that the passenger’s right to a personal hearing cannot be waived off, as is clear from a reading of Section 124 of the Act and the decisions passed by this Court. Accordingly, notice of personal hearing would be given to the passenger so that submissions can be made on behalf of the passenger prior to passing of the adjudicating order - let the Department look into the applicable provisions of law and as part of the next status report, place before the Court, the mechanism which the Department wishes to adopt for issuing oral SCN and providing the opportunity of personal hearing in compliance with the law. Insofar as travellers of foreign origin, whether foreign passport holders or foreign residence permit holders, are concerned, in respect of personal effects including jewellery, so long as the same are declared in the ‘Red Channel’ and the said travellers undertake to re-export the same, the said personal effects shall not be detained. Since the CBIC and Customs Department is now seeking further time to amend the Baggage Rules and to place the same before this Court, a sensitisation initiative shall be carried out by the Customs Department to all Customs officials. The Customs officials shall ensure that old jewellery of even Indian travellers, personal jewellery which is being worn by the travellers during travel or used jewellery is not unnecessarily detained in a routine manner, so as to ensure that no harassment is caused to travellers coming to India - If the Baggage Rules cannot be amended by the next date of hearing, a Standard Operating Procedure (hereinafter “SOP”) shall be placed on record by the next date which shall be followed by the Customs Department till the time the Baggage Rules are amended. Conclusion - i) The Baggage Rules, 2016 require reevaluation to align with current economic realities and to balance the interests of travelers and the need to curb smuggling. ii) Preprinted waiver forms for SCNs and personal hearings are invalid as they contravene Section 124 of the Customs Act. iii) Personal jewellery worn by travelers should not be detained under the Baggage Rules as it constitutes personal effects. Let the Respondents file a further affidavit by the next date of hearing in terms of the directions passed today. The draft SOP as directed above be also placed before the Court - In the facts of this case the concerned Revision Authority is directed to take a decision within one month. List on 19th May, 2025. ISSUES PRESENTED and CONSIDEREDThe Court considered several core legal issues primarily revolving around the procedure for detention of goods by the Customs Department, particularly focusing on the Baggage Rules, 2016. The issues included:1. Whether the Baggage Rules, 2016 require a re-evaluation in light of current market realities, particularly concerning the permissible limits on gold and jewellery.2. The legality and appropriateness of the Customs Department's practice of using preprinted waiver forms for show cause notices (SCN) and personal hearings.3. The distinction between 'jewellery' and 'personal jewellery' under the Baggage Rules and the implications for detention of personal effects.4. The procedural requirements under Section 124 of the Customs Act concerning the issuance of SCNs and personal hearings.5. The need for interim measures to prevent the arbitrary detention of goods and harassment of genuine travelers.ISSUE-WISE DETAILED ANALYSIS1. Reevaluation of Baggage Rules, 2016The Baggage Rules, 2016 were scrutinized for being outdated, particularly in the context of increased gold prices. The Court observed that the rules were not in tune with current market values and required reconsideration by the Central Board of Indirect Taxes & Customs (CBIC) to prevent harassment of genuine travelers while curbing illegal smuggling.The Court directed the CBIC to reevaluate the permissible limits under the Baggage Rules, taking into account the interests of both Indian and foreign travelers.2. Preprinted Waiver Forms for SCN and Personal HearingsThe Court examined the validity of preprinted waiver forms used by the Customs Department, which purportedly allowed travelers to waive their right to a SCN and personal hearing. It was determined that these forms did not comply with Section 124 of the Customs Act, which mandates a written SCN and an opportunity for a personal hearing.The Court set aside orders based on such waivers, emphasizing the need for adherence to principles of natural justice and directing the Customs Department to discontinue this practice.3. Distinction between 'Jewellery' and 'Personal Jewellery'The Court highlighted the need to distinguish between 'jewellery' and 'personal jewellery' when considering the detention of items under the Baggage Rules. It was noted that personal jewellery worn by travelers should not be mechanically detained as part of baggage, as it falls under personal effects protected by law.The Court referenced a Madras High Court judgment which clarified that the Baggage Rules apply only to baggage and not to articles carried on the person, thus excluding personal jewellery from detention under these rules.4. Procedural Requirements under Section 124 of the Customs ActSection 124 of the Customs Act requires a three-fold process before confiscation of goods: a written notice, an opportunity for written representation, and a personal hearing. The Court reiterated that these requirements must be strictly followed, and any waiver of these rights must be informed and voluntary.The Court directed the Customs Department to ensure compliance with these requirements and to communicate orders effectively to the concerned parties.5. Interim Measures and RecommendationsIn light of ongoing stakeholder consultations, the Court acknowledged the need for interim measures to address issues of detention and harassment. The Customs Department proposed changes to detention receipts and procedures for oral SCNs, ensuring passengers are informed of their rights and procedures.The Court emphasized the importance of sensitizing Customs officials to avoid unnecessary detention of personal effects and directed the CBIC to develop a Standard Operating Procedure (SOP) if amendments to the Baggage Rules could not be completed promptly.SIGNIFICANT HOLDINGSThe Court established several core principles and directives:1. The Baggage Rules, 2016 require reevaluation to align with current economic realities and to balance the interests of travelers and the need to curb smuggling.2. Preprinted waiver forms for SCNs and personal hearings are invalid as they contravene Section 124 of the Customs Act.3. Personal jewellery worn by travelers should not be detained under the Baggage Rules as it constitutes personal effects.4. The Customs Department must adhere to the principles of natural justice, ensuring proper issuance of SCNs and personal hearings.5. Interim measures, including detailed detention receipts and communication protocols, are necessary to prevent harassment and ensure compliance with legal standards.The Court directed the Customs Department to implement these measures and report back on progress, ensuring that the rights of travelers are protected while addressing concerns about smuggling and compliance with customs regulations.