2025 (6) TMI 377 - HC - Customs

Customs authorities cannot use pre-printed waivers to bypass mandatory show cause notice and personal hearing under Section 124

Delhi HC ruled that customs authorities cannot rely on pre-printed waivers to bypass mandatory show cause notice and personal hearing requirements under ... Seeking release of the silver polished gold chain - reliability of a pre-printed waiver signed by the petitioner to dispense with the issuance of a show cause notice (SCN) and personal hearing as required under Section 124 of the Customs Act, 1962 - till date no show cause notice has been issued and no personal hearing has been granted to the Petitioner - Violation of principles of natural justice - 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 SCN 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] and Mr Makhinder Chopra vs Commissioner of Customs New Delhi, [2025 (3) TMI 19 - DELHI HIGH COURT] where it was held that 'This Court is of the opinion that 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. The order passed in original without issuance of SCN and without hearing the Petitioner, is not sustainable in law.' Thus, 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. Once the goods are detained, it is mandatory to issue a Show Cause Notice and afford a personal hearing to the Petitioner. The time prescribed under Section 110 of Act, is a period of six months. However, subject to complying with the requirements therein, a further extension for a period of six months can be taken by the Customs Department for issuing the show cause notice. In this case, the one year period itself has elapsed, yet no show cause notice has been issued. Accordingly, the detention is impermissible - the detention of the Petitioner’s jewellery is accordingly set aside. Considering that the Petitioner is willing to re-export the detained jewellery, it is directed that the Petitioner shall appear for appraisement before the Customs Authority on 9th June, 2025. After accepting the undertaking for re-export and payment of storage charges/warehousing charges, the detained jewellery shall be released to the Petitioner - petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court in this matter are:Whether the Customs Department can rely on a pre-printed waiver signed by the petitioner to dispense with the issuance of a show cause notice (SCN) and personal hearing as required under Section 124 of the Customs Act, 1962.Whether the detention of the petitioner's gold chain without issuance of a show cause notice and without affording a personal hearing is legally sustainable.The applicability and interpretation of Section 124 of the Customs Act, 1962, particularly the procedural safeguards it mandates before confiscation or detention of goods.The validity and effect of statements or waivers recorded under Section 108 of the Customs Act in lieu of formal show cause notices and hearings.The procedural obligations of the Customs Department regarding issuance of show cause notices within the stipulated time frame under Section 110 of the Customs Act.The appropriate relief and directions in light of the petitioner's willingness to re-export the detained jewellery.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Validity of Pre-Printed Waiver of Show Cause Notice and Personal HearingLegal Framework and Precedents: Section 124 of the Customs Act, 1962 mandates that no confiscation or penalty order shall be passed without (a) prior written notice specifying grounds of confiscation, (b) opportunity to make written representation, and (c) reasonable opportunity of being heard. The statute allows for oral SCN and representation only if requested by the person concerned. The Court relied heavily on two recent precedents where this issue was exhaustively examined: Amit Kumar v. Commissioner of Customs and Makhinder Chopra v. Commissioner of Customs.Court's Interpretation and Reasoning: The Court held that a pre-printed waiver form, which purportedly waives the issuance of SCN and personal hearing, does not satisfy the statutory requirements of Section 124. Such waivers are often incomprehensible to the common person and shock the conscience of the Court. The Court emphasized that natural justice is not mere lip service but must be complied with in letter and spirit. The requirement of a proper declaration consciously signed by the person concerned is essential, and even then, an opportunity of hearing must be afforded.Key Evidence and Findings: The petitioner had signed a standard waiver form recorded under Section 108 of the Act, which the Customs Department relied upon to justify non-issuance of SCN and non-affording of personal hearing. However, no show cause notice had been issued, and no personal hearing granted to the petitioner. The Court found this practice contrary to law.Application of Law to Facts: The Customs Department's reliance on the pre-printed waiver was rejected. The Court held that the waiver cannot be deemed to be an oral SCN compliant with Section 124. The detention of the jewellery without issuance of SCN and hearing was thus contrary to the statutory mandate.Treatment of Competing Arguments: The Customs Department argued that the waiver signed under Section 108 sufficed as compliance with Section 124. The Court rejected this, relying on precedents and statutory interpretation, stressing that procedural safeguards cannot be circumvented by standard form waivers.Conclusion: The pre-printed waiver of SCN and personal hearing is invalid and cannot substitute the statutory requirements under Section 124 of the Customs Act.Issue 2: Detention of Goods Without Issuance of Show Cause Notice and Personal HearingLegal Framework and Precedents: Section 124 of the Customs Act prescribes the procedure for issuance of SCN and hearing before confiscation or penalty. Section 110 prescribes a six-month period for issuance of SCN, extendable by six months under prescribed conditions.Court's Interpretation and Reasoning: The Court noted that the detention of goods without issuance of SCN and hearing is impermissible. The statutory timeline for issuance of SCN had expired in the present case, as more than one year had elapsed without issuance of any SCN. This renders the detention unlawful.Key Evidence and Findings: The petitioner's gold chain was detained on 26th October 2023. No SCN has been issued till date, and the petitioner has not been afforded a hearing. The Customs Department's failure to comply with statutory timelines and procedural safeguards was evident.Application of Law to Facts: The Court applied the statutory provisions strictly and found the detention untenable in law. The absence of SCN and hearing violated the petitioner's rights under the Act and principles of natural justice.Treatment of Competing Arguments: The Customs Department did not dispute the absence of SCN but relied on the waiver. The Court rejected this reliance, underscoring the mandatory nature of SCN and hearing.Conclusion: The detention of the petitioner's jewellery without issuance of SCN and personal hearing is illegal and must be set aside.Issue 3: Directions Regarding Release of Detained Jewellery and Future ComplianceLegal Framework: The Customs Act allows for release of goods on furnishing an undertaking and payment of charges. The Court's supervisory jurisdiction under Articles 226 and 227 of the Constitution empowers it to issue appropriate directions.Court's Interpretation and Reasoning: Since the petitioner has expressed willingness to re-export the jewellery, the Court directed that the petitioner should appear for appraisement and furnish an undertaking for re-export. Upon payment of storage and warehousing charges, the jewellery should be released. The Court also permitted release through an authorized representative upon proper communication.Key Evidence and Findings: The petitioner's willingness to re-export and cooperate was noted. The jewellery had not yet been appraised, and no formal proceedings had been initiated by Customs.Application of Law to Facts: The Court balanced the petitioner's rights and the Customs Department's regulatory role, facilitating release subject to conditions ensuring compliance.Treatment of Competing Arguments: No significant opposition to release was recorded. The Customs Department was directed to discontinue the practice of obtaining pre-printed waivers in future cases.Conclusion: The detained jewellery shall be released after appraisement, undertaking for re-export, and payment of charges. The Customs Department must adhere to natural justice principles in future cases.3. SIGNIFICANT HOLDINGSThe Court held, preserving verbatim key reasoning from Amit Kumar (supra):'The oral SCN cannot be deemed to have been served in this manner as is being alleged by the Department. If an oral SCN waiver has to be agreed to by the person concerned, the same ought to be in the form of a proper declaration, consciously signed by the person concerned. Even then, an opportunity of hearing ought to be afforded, inasmuch as, the person concerned cannot be condemned unheard in these matters. Printed waivers of this nature would fundamentally violate rights of persons who are affected. Natural justice is not merely lip-service. It has to be given effect and complied with in letter and spirit.''This Court is of the opinion that 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. The order passed in original without issuance of SCN and without hearing the Petitioner, is not sustainable in law.''The issuance of a show cause notice before confiscation of goods by the Customs officials is covered under Section 124 of the Act, which reads as under: ... The Section provides a three-fold requirement: (i) a notice in writing informing the grounds of confiscation; (ii) An opportunity of making a representation in writing against the said grounds of confiscation; (iii) A reasonable opportunity of personal hearing.''In view of the above observations, it is clear that the undertaking signed by the Petitioner in the present case cannot be sustained in law. Accordingly, the Customs Department has failed to satisfy the requirements of Section 124 of the Act in the present case. Therefore, the detention of the Petitioner's gold chain has to be set aside.''Since, the Court has made clear that 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, hereinafter, the Customs Department is directed to discontinue the said practice. The Customs Department is expected to follow the principles of natural justice in each case where goods are confiscated in terms of Section 124 of the Act.'Core principles established include:Pre-printed waivers of show cause notice and personal hearing are invalid and violate natural justice.Section 124 mandates issuance of SCN and opportunity for hearing before confiscation or penalty.Detention or confiscation without compliance with Section 124 is illegal and unsustainable.The Customs Department must discontinue the practice of obtaining standard waivers and adhere strictly to procedural safeguards.Petitioners detained goods must be released if statutory procedures are not followed within prescribed timelines.Final determinations:The detention of the petitioner's gold chain without issuance of SCN and personal hearing is set aside.The petitioner shall appear for appraisement and furnish undertaking for re-export; upon payment of charges, the jewellery shall be released.The Customs Department is directed to discontinue the practice of obtaining pre-printed waivers and comply with natural justice principles in all future cases.