2025 (8) TMI 1083 - HC - Customs

Detention of 84-gram gold chain quashed for lack of Section 110, 1962 notice; Baggage Rules, 2016 apply

Akmal Usmanov Through Aziza Versus Commissioner Of Customs

DELHI HC held that detention of petitioner's 84-gram gold chain was impermissible and quashed it, directing release to the petitioner. The court found no ... Detention of the gold chain of the Petitioner weighing 84 grams - till date, no SCN has been issued to the Petitioner - violation of principles of natural justice - HELD THAT:- The present writ petition has been filed on 28th May, 2025. It is clear that personal hearing has been given post the filing of the writ petition. Further, no Show Cause Notice has been issued in this matter till date. The Petitioner being a foreign national, is willing to re-export the gold chain weighing 84 grams. Considering the weight of the article and the fact that it is merely a gold chain, the Petitioner being a foreign national is an eligible passenger in terms of the Baggage Rules, 2016. It has been repeatedly observed by this Court that once the goods are detained by the Customs department, 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 said 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. This principle of law was affirmed in Mohammad Arham v. Commissioner of Customs [2025 (3) TMI 1110 - DELHI HIGH COURT], wherein the Court observed that the Customs department is required to issue a Show Cause Notice in accordance with Section 110 of the Customs Act, 1962. It was further held that upon the expiry of the one-year period prescribed under the said provision, the continued detention of goods, in the absence of such notice, is impermissible. The detention of the Petitioner’s article is quashed. The gold chain of the Petitioner is directed to be released in favour of the Petitioner. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether continued detention of a seized gold chain without issuance of a Show Cause Notice within the time prescribed under Section 110 of the Customs Act, 1962 is permissible. 2. Whether a foreign national passenger is entitled to treatment as an eligible passenger under the Baggage Rules, 2016 for personal jewellery (an 84 gram gold chain), and whether such personal jewellery is liable to confiscation. 3. Whether appraisement and personal hearing requirements have been complied with and the consequences of post-filing grant of personal hearing dates by the Customs authority. 4. Whether an overseas-based petitioner's representative (pairokar) may be treated as a bona fide authorised representative for purposes of pursuing release of detained goods and appearing for verification/appraisement. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Detention without Show Cause Notice under Section 110 of the Customs Act, 1962 Legal framework: Section 110 requires issuance of a Show Cause Notice within prescribed timeframes (initial six months, with a possible extension of a further six months subject to formalities) for prosecuting confiscation proceedings; mandatory procedural safeguards include issuance of notice and affording a hearing. Precedent Treatment: The Court followed its prior decisions establishing that continued detention without issuance of a Show Cause Notice within the one-year period is impermissible; those precedents were applied rather than distinguished. Interpretation and reasoning: The facts show no Show Cause Notice was issued even though more than one year has elapsed since detention. The Court reasoned that once the statutory timeframe expires without compliance, the Department loses the procedural basis to continue detention; hence continued detention is unlawful. Ratio vs. Obiter: Ratio - Where goods are detained and no Show Cause Notice is issued within the statutory period under Section 110, continued detention is impermissible and detention must be quashed. The observation that formalities may permit a six-month extension is existing law applied, not obiter. Conclusion: Detention is quashed for non-issuance of Show Cause Notice within the one-year period; the detained article must be released subject to verification and appraisement. Issue 2 - Entitlement of foreign national passenger to personal jewellery exemption under Baggage Rules, 2016 Legal framework: Baggage Rules, 2016 provides entitlements for eligible passengers regarding carriage of personal jewellery; treatment of personal gold jewellery as distinct from goods liable to confiscation. Precedent Treatment: The Court applied a series of prior decisions of the same Court holding that seized personal jewellery is not liable to confiscation when it constitutes bona fide personal effects; these authorities were followed. Interpretation and reasoning: Considering the weight (84 grams) and nature (a mere gold chain) of the article and the passenger's foreign-national status, the Court held the petitioner fits within the eligible passenger category under the Baggage Rules, 2016. The Court emphasized the distinction between personal jewellery and cargo/goods intended for commercial importation. Ratio vs. Obiter: Ratio - Personal jewellery carried by an eligible passenger within reasonable limits (as exemplified by this 84 gm chain) is not liable to confiscation; such items should be appraised and released when procedural defects (e.g., failure to issue Show Cause Notice) are present. Observations on the reasonableness of weight are explanatory. Conclusion: The petitioner (a foreign national passenger) is eligible under the Baggage Rules, 2016 and the seized gold chain is not liable to confiscation on the present facts; it must be released after verification. Issue 3 - Appraisement, personal hearing and effect of post-filing grant of hearing dates Legal framework: Principles require appraisement and affording of a hearing before confiscation or final detention; procedural fairness in administrative decision-making is mandatory. Precedent Treatment: The Court relied on its prior decisions emphasizing mandatory issuance of Show Cause Notice and hearing; these authorities were followed and applied to the factual chronology. Interpretation and reasoning: The record shows appraisement was undertaken only after filing of the writ petition and that personal hearing dates were offered after the petition was filed but were not availed by the petitioner. The Court noted that post-filing procedural opportunities do not cure the statutory lapse where the one-year period has expired without issuance of a Show Cause Notice. Consequently, the detention cannot be validated by belated procedural acts. Ratio vs. Obiter: Ratio - Post-filing grant of personal hearing or appraisement does not validate continued detention where statutory timelines for issuing a Show Cause Notice have lapsed; failure to appear for granted hearings does not resurrect an already impermissible detention. Observations on practical facilitation (nodal officer details) are ancillary directions. Conclusion: Appraisement and hearing offered post-filing do not cure the failure to issue a Show Cause Notice within the statutory period; release is ordered subject to verification/appraisement in presence of the petitioner or authorised representative. Issue 4 - Validity of appearance and role of pairokar/representative (OCI holder) in pursuing release Legal framework: Procedural practice permits authorised representatives or bona fide local agents to pursue administrative and judicial relief on behalf of overseas persons; courts may require demonstration of bonafides. Precedent Treatment: The Court applied standard principles regarding standing of authorised representatives and accepted documentary demonstration of authority/bona fides; no contrary precedent was invoked. Interpretation and reasoning: The pairokar, an Overseas Citizen of India card holder residing in India, appeared in person and the Court was satisfied as to her bona fides and authority. The Court therefore permitted her to represent the interests and directed her to appear before Customs for verification/appraisement, with the department to facilitate via the nodal officer. Ratio vs. Obiter: Ratio - A bona fide local representative with demonstrable authority may be permitted to appear and facilitate release/verification of detained goods on behalf of an overseas passenger. Directions to approach the nodal officer are incidental and procedural. Conclusion: The pairokar was recognised as a bona fide representative; the Court directed appearance before Customs for verification/appraisement and provided facilitative directions (nodal officer contact), subject to payment of applicable warehousing charges. Relief and Incidental Directions Reasoning and conclusion: In view of the statutory lapse in issuance of Show Cause Notice and the character of the article as personal jewellery of an eligible foreign passenger, the detention was quashed and the detained gold chain directed to be released after due verification/appraisement. The petitioner/pairokar was directed to appear before Customs on a specified date; release is subject to verification and payment of applicable warehousing charges.