2025 (11) TMI 880 - HC - Customs

Petitioner entitled to unconditional release of one gold kada and one gold chain on payment of customs duty; no penalties

Sunil Kumar Gupta Versus Commissioner of Customs.

HC held petitioner entitled to unconditional release of one gold kada and one gold chain, on payment of applicable customs duty, because detention ... Seeking release of one gold kada and one gold chain seized - petitioner has not received any hearing notice from the Customs Department - violation of principles of natural justice - HELD THAT:- It is the settled position in law, after Union of India &Anr. v. Jatin Ahuja (Supra) that without a SCN under Section 110 of the Customs Act, 1962, the goods of the Petitioner would be liable to be unconditionally released. The relevant observation in Union of India & Anr. v. Jatin Ahuja [2025 (10) TMI 1285 - SC ORDER] stated that 'Although, it is not necessary for us to say anything further, yet we may clarify that the time period to issue notice under Clause (a) of Section 124 is prescribed only in sub-section (2) of Section 110 of the Act, 1962. This time period has nothing to do ultimately with the issuance of show-cause notice under Section 124 of the Act, 1962. The two provisions are distinct and they operate in a different field.' In view of the above decision, the Petitioner is entitled to unconditional release of the goods subject to payment of applicable Customs Duty. No redemption fine or penalty would be liable to be paid by the Petitioner and no interest would be liable to be charged. It is, however, made clear that warehousing charges shall be collected on the basis of the charges which were applicable on the date of detention. The Petitioner shall appear before the Customs Department on 18th November, 2025 at 11:00 AM in person or through an Authorised Representative, in which case, a proper email from the Petitioner or some form of communication to be sent to the Customs Department that the Petitioner has authorised the concerned Authorised Representative to appear on behalf of the Petitioner - petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether goods seized by Customs must be unconditionally released where no show-cause notice under Section 124 has been issued within the statutory period prescribed by Section 110(2) of the Customs Act, 1962. 2. Whether the interim power to release goods under Section 110A affects or curtails the mandatory consequence of failure to issue notice within the period fixed by Section 110(2). 3. Whether the first proviso to Section 110(2) (extension by the Principal Commissioner/Commissioner for reasons to be recorded and with prior information to the person from whom goods were seized) was complied with and, if not, the legal consequence. 4. The nature and extent of relief upon such failure: whether unconditional release, liability for customs duty, redemption fine, penalty, interest, and warehousing charges. 5. Procedural compliance for release - requirement of personal appearance or authorized representative and facilitation by the Customs office. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Mandatory release where no show-cause notice issued within Section 110(2) period Legal framework: Section 110(2) prescribes a time period within which notice under Clause (a) of Section 124 must be issued after seizure; failure attracts a statutory consequence. Section 124 concerns forfeiture proceedings and issuance of show-cause notices in relation to seized goods. Precedent treatment: The Court follows the binding pronouncement of the Supreme Court that non-issuance of the required notice within the time frame results in return of goods to the person from whom they were seized. Interpretation and reasoning: The statutory scheme imposes a mandatory consequence for non-compliance with the time limit in Section 110(2). The Court reasons that where no notice is given within the prescribed period (and no valid extension is effected), the statutory consequence is unconditional release of the seized goods to the person from whose possession they were taken. Ratio vs. Obiter: Ratio - failure to issue the requisite notice within the statutory period prescribed by Section 110(2) mandates return/release of seized goods. This is treated as the operative rule applied to the facts. Conclusion: Goods detained in the present matter are liable to be released unconditionally because no show-cause notice was issued within the statutory period. Issue 2 - Effect of Section 110A interim release power on the mandatory consequence of Section 110(2) Legal framework: Section 110A permits interim release of certain goods (e.g., fast-moving or perishable) but is textually and functionally distinct from Section 110(2)'s time-limited obligation to issue notice. Precedent treatment: The Court adheres to authority that the existence of Section 110A does not curtail, limit or extinguish the statutory consequence flowing from non-compliance with Section 110(2). Interpretation and reasoning: Section 110A is characterized as an interim power enabling temporary relief; it does not operate to validate or remedy the failure to comply with the mandatory notice-timeframe. Hence, any attempt to treat release under Section 110A as obviating Section 110(2) obligations is contrary to the statute's plain meaning. Ratio vs. Obiter: Ratio - Section 110A's interim release power does not negate the mandatory operation of Section 110(2); both provisions operate in different fields. Conclusion: Interim release under Section 110A cannot be relied upon to defeat the statutory consequence of non-issuance of the notice within Section 110(2)'s timeframe. Issue 3 - Requirements and consequences of the first proviso to Section 110(2) (extension) Legal framework: The first proviso permits the Principal Commissioner/Commissioner to extend the six-month period by up to six months for reasons recorded in writing and requires informing the person from whom goods were seized before expiry of the initial period. Precedent treatment: The Court follows authority holding that absence of written reasons and absence of prior information within the initial period (or within the extended period) defeats the validity of any purported extension. Interpretation and reasoning: The proviso imposes two pre-conditions for valid extension: (i) reasons recorded in writing, and (ii) communication to the person concerned before the expiry of the initial six months. Both conditions are jurisdictional to effect a lawful extension; failure to satisfy them means no extension validly exists. Ratio vs. Obiter: Ratio - where the extension under the proviso is not properly recorded or notified as required, the mandatory consequence of Section 110(2) remains and release follows. Conclusion: No valid extension having been shown/communicated, the statutory period expired without requisite notice and thus release is mandated. Issue 4 - Nature and extent of relief (duties, fines, penalties, interest, warehousing charges) Legal framework: Customs law permits recovery of applicable customs duty even where goods are released; separate provisions govern redemption fines, penalties and interest, but statutory consequence for non-issuance of notice may exclude certain liabilities. Precedent treatment: The Court applies the established principle that release under the mandatory consequence does not automatically attract redemption fine/penalty/interest where statutory default by authorities occurred, but duty remains payable. Interpretation and reasoning: The Court reasons that unconditional release consequent on statutory non-compliance should not penalize the person by imposing fines or interest resulting from the authority's lapse. However, the statutory incidence of customs duty is distinct and must be discharged even upon release. Warehousing charges are distinct commercial/administrative charges and may be collected as per rates applicable on date of detention. Ratio vs. Obiter: Ratio - on mandatory release for failure to issue notice, the goods are to be released subject only to payment of applicable customs duty; redemption fines, penalties and interest are not to be levied; warehousing charges may be collected as per rates on date of detention. Conclusion: Release ordered subject to payment of applicable customs duty; no redemption fine, penalty or interest to be charged; warehousing charges to be collected in accordance with rates applicable on the date of detention. Issue 5 - Procedural facilitation for release (appearance and representation) Legal framework: Administrative procedure requires the person entitled to release to appear before competent Customs authority or be represented by an authorised representative with proof of authorization; Customs office may designate nodal officers to facilitate compliance. Precedent treatment: The Court enforces procedural steps to give effect to its order while ensuring the petitioner's entitlement is safeguarded. Interpretation and reasoning: Practical implementation of release requires the person to appear in person or through an authorised representative, with proper communication/evidence of authorization, and the Customs authority is to facilitate appearance through a designated nodal officer. Ratio vs. Obiter: Ratio - compliance by the entitled person with appearance/representation formalities is a condition for operationalizing the release order; appointment of facilitative officer is an administrative directive necessary to implement the order. Conclusion: The person must appear in person or through an authorised representative with prior communication of authorization; the specified nodal officer shall facilitate compliance and release.