2025 (8) TMI 732 - HC - Customs

SCNs under Section 110 Customs Act issued within limitation; Petitioners to get hearing before disposal of gold chains

Aarti Mangla Aggarwal, Manish Aggarwal, Shilpi Gupta, Abhishek Gupta, Rishi Goel Versus Commissioner Of Customs New Delhi.

Aarti Mangla Aggarwal, Manish Aggarwal, Shilpi Gupta, Abhishek Gupta, Rishi Goel Versus Commissioner Of Customs New Delhi. - 2025:DHC:6613 - DB 1. ISSUES PRESENTED and CONSIDERED Whether the Show Cause Notices (SCNs) issued by the Customs Department were issued within the limitation period prescribed under Section 110 of the Customs Act, 1962. Whether the initial panchnama and issuance of SCNs only to two passengers was valid, given that gold chains were recovered from multiple passengers. Whether the gold chains seized qualify as 'personal effects' exempt from customs duty or are liable for declaration and duty payment. Whether there is any apprehension or risk of disposal of the seized gold chains by the Customs Department prior to adjudication. Whether the Petitioners' willingness to pay customs duty affects the relief sought regarding release of the seized gold chains. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Limitation for Issuance of Show Cause Notices under Section 110 of the Customs Act, 1962 Relevant legal framework and precedents: Section 110 of the Customs Act, 1962 mandates that a SCN must be issued within one year from the date of detention or seizure of goods. The procedure includes an initial period of 6 months for issuance, extendable by another 6 months upon intimation to the affected party. Court's interpretation and reasoning: The Court examined the dispatch register produced by the Customs Department, which indicated that SCNs were dispatched on 10th June, 2024, within the prescribed one-year period from the detention date of 15th June, 2024. The Court found no reason to disbelieve the official dispatch record. Key evidence and findings: The dispatch register and photographic evidence of the gold chains were taken on record. The Petitioners' contention that SCNs were sent only on 20th June, 2025 (beyond limitation) was rejected based on the dispatch register. Application of law to facts: Since the SCNs were dispatched within the limitation period, the issuance is valid and compliant with statutory requirements. Treatment of competing arguments: The Petitioners argued delay and invalidity of SCNs; however, the Court relied on documentary evidence from the Customs Department to uphold the validity of SCNs. Conclusions: The SCNs were issued within the limitation period under Section 110 of the Customs Act, 1962, and are therefore valid. Issue 2: Validity of Initial Panchnama and Scope of Notice Recipients Relevant legal framework and precedents: Proper identification of persons from whom goods are seized and issuance of notices to all concerned is essential for fair adjudication under customs law. Court's interpretation and reasoning: Initially, panchnama was drawn only in the names of two passengers who admitted ownership of the gold chains. Subsequently, after retraction of ownership statements, SCNs were issued to all five Petitioners from whom gold chains were recovered. Key evidence and findings: Statements of initial ownership and subsequent retraction were considered. The Court noted that the Customs Department acted in accordance with the evolving facts by issuing SCNs to all relevant Petitioners. Application of law to facts: The issuance of SCNs to all Petitioners after retraction of ownership statements was appropriate and complied with procedural fairness. Treatment of competing arguments: Petitioners contended wrongful initial panchnama and selective issuance of notices; however, the Court found the Customs Department's approach reasonable given the circumstances. Conclusions: The initial panchnama and subsequent issuance of SCNs to all Petitioners was valid and procedurally proper. Issue 3: Classification of Seized Gold Chains as Personal Effects or Dutiable Goods Relevant legal framework and precedents: Customs law exempts certain personal effects from duty if they are worn or carried for personal use. However, goods exceeding prescribed limits or intended for commercial use require declaration and payment of customs duty. Court's interpretation and reasoning: The Court examined photographs and invoices of the gold chains produced by the Customs Department and Petitioners respectively. The Court observed that the gold chains were identical and collectively weighed 455 grams, which is substantial and not automatically exempt as personal effects. Key evidence and findings: Photographic evidence, invoices, and the fact that the Petitioners did not declare the gold chains upon arrival were considered. The Court noted the duty of the Petitioners to declare such goods and pass through the red channel. Application of law to facts: The gold chains were liable for declaration and customs duty as they did not qualify as mere personal effects under customs regulations. Treatment of competing arguments: Petitioners claimed the gold chains were personal effects worn by them; however, the Court found this insufficient given the quantity and non-declaration. Conclusions: The gold chains are dutiable goods requiring declaration and payment of customs duty under applicable customs law. Issue 4: Apprehension of Disposal of Seized Gold Chains by Customs Department Relevant legal framework and precedents: Seized goods must be preserved until adjudication and disposal as per law. Unauthorized disposal before adjudication is impermissible. Court's interpretation and reasoning: The Customs Department assured the Court that the gold chains have not been disposed of and that no disposal would occur pending adjudication. Key evidence and findings: Oral assurance by Customs Department's Senior Standing Counsel and the fact that SCNs have been issued, which triggers procedural safeguards against disposal. Application of law to facts: The Court accepted the assurance and found no basis for the Petitioners' apprehension. Treatment of competing arguments: Petitioners expressed concern over possible disposal; the Court relied on official assurance and procedural safeguards. Conclusions: There is no risk of disposal of the gold chains by the Customs Department prior to adjudication. Issue 5: Petitioners' Willingness to Pay Customs Duty and Impact on Relief Sought Relevant legal framework and precedents: Customs law permits payment of duty and compliance to regularize goods, which may influence adjudication and release of seized goods. Court's interpretation and reasoning: Petitioners expressed willingness to pay the applicable customs duty and have filed replies to the SCNs. The Court directed the Customs Department to hear the Petitioners and consider their submissions accordingly. Key evidence and findings: Petitioners' submissions and replies to SCNs indicating readiness to pay duty. Application of law to facts: The Court's direction to Customs to provide a hearing and consider payment willingness aligns with principles of natural justice and statutory provisions. Treatment of competing arguments: No opposition to hearing or consideration of duty payment was noted from Customs Department. Conclusions: The Customs Department shall conduct a hearing, consider the Petitioners' willingness to pay duty, and pass an order in accordance with law.