2025 (6) TMI 380 - HC - Customs

Pre-printed waiver of show cause notice invalid, violates Section 124 requirements and natural justice principles

Zinat Begum Versus Commissioner Of Customs.

Delhi HC set aside absolute confiscation order of detained goods due to Customs Department's reliance on pre-printed waiver of show cause notice, ... Seeking release of deatined goods - 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 absolute confiscation order was set aside due to non-compliance with Section 124. ii) The detained jewellery was ordered to be released upon payment of penalty and storage charges. iii) The petitioner's waiver of SCN and hearing was held invalid and cannot be relied upon to bypass statutory safeguards. Petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court include:- 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 valid under the Customs Act, 1962.- Whether a pre-printed waiver signed by the petitioner, purportedly waiving the right to SCN and personal hearing, can substitute the statutory requirement of issuance of SCN and hearing under Section 124 of the Customs Act.- The applicability and interpretation of Section 124 of the Customs Act, 1962, which mandates issuance of SCN and opportunity of hearing before confiscation of goods or imposition of penalty.- The legitimacy of the Customs Department's reliance on an oral SCN or waiver thereof in the context of the petitioner's case.- The appropriate relief and penalty in light of the procedural irregularities and the petitioner's admission of non-declaration of dutiable goods.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Validity of detention and confiscation without issuance of Show Cause Notice and personal hearingThe relevant legal framework is Section 124 of the Customs Act, 1962, which requires that before confiscating goods or imposing penalty, the Customs Department must issue a written notice specifying grounds for confiscation, allow a reasonable time for written representation, and provide an opportunity for personal hearing. The section also allows, at the request of the person concerned, the issuance of an oral SCN instead of a written one.The Court examined the Order-in-Original passed by the Customs Department which ordered absolute confiscation of the jewellery and imposed a penalty of Rs. 1,00,000/-. It was noted that no formal SCN was issued; rather, the Department relied on a pre-printed waiver form signed by the petitioner, which purportedly waived the issuance of SCN and personal hearing.Precedents considered include Amit Kumar v. The Commissioner of Customs and Makhinder Chopra vs Commissioner of Customs, where this Court held that such pre-printed waivers cannot substitute the statutory requirement of SCN and hearing under Section 124. The Court emphasized that natural justice principles require that affected persons cannot be condemned unheard, and that printed waivers which are not comprehensible to a layperson and which waive fundamental rights shock the conscience of the Court.The Court reasoned that the purported oral SCN and waiver signed by the petitioner did not satisfy the procedural safeguards mandated by the Act. The waiver was neither a proper declaration nor a conscious informed consent compliant with Section 124. The Court reiterated that natural justice is not mere lip service but must be complied with in letter and spirit.On application of law to facts, since the petitioner was not issued a proper SCN and was not granted a personal hearing, the detention and confiscation of the jewellery were held to be contrary to law and unsustainable.Competing arguments by the Customs Department relying on the waiver were rejected based on the Court's prior rulings and the statutory mandate.Issue 2: Legitimacy of reliance on pre-printed waiver forms in Customs proceedingsThe Court analyzed the Customs Department's practice of obtaining pre-printed waivers from travellers, which purportedly waive their right to SCN and personal hearing. The Court held that such practice is illegal and contrary to the provisions of Section 124 of the Customs Act.The Court referred to its prior decisions which categorically held that such waivers are not valid, as they do not amount to a proper SCN or hearing and violate principles of natural justice. The Court directed the Customs Department to discontinue this practice and to comply strictly with the statutory requirements in future cases.Issue 3: Appropriate relief and penaltyAlthough the Court set aside the order of absolute confiscation due to procedural lapses, it recognized that the petitioner admitted to non-declaration of dutiable goods and agreed to pay customs duty and penalty.Accordingly, the Court directed release of the detained jewellery subject to payment of the penalty of Rs. 1,00,000/- and 50% of warehousing/storage charges. The Court allowed the petitioner to collect the jewellery through an authorized representative upon proper communication.3. SIGNIFICANT HOLDINGSThe Court held:'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.'Further, the Court established the principle that:'Natural justice is not merely lip-service. It has to be given effect and complied with in letter and spirit.'And:'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 directed to discontinue the said practice and to follow the principles of natural justice in each case where goods are confiscated.'On the final determinations:- The absolute confiscation order was set aside due to non-compliance with Section 124.- The detained jewellery was ordered to be released upon payment of penalty and storage charges.- The petitioner's waiver of SCN and hearing was held invalid and cannot be relied upon to bypass statutory safeguards.