2026 (3) TMI 215 - HC - Customs

Show cause notice and personal hearing mandatory before confiscation; pre-printed or uninformed waivers are ineffective.

Issuance of a written show cause notice and provision of a reasonable opportunity for personal hearing are mandatory under the Customs statutory scheme ... Validity of issuance of Show cause notice u/s 124 of the Customs Act - Waiver of rights - confiscation of goods - reasonable opportunity of hearing - distinction between Section 28 and Section 124 - principles of natural justice. Show cause notice under Section 124 of the Customs Act - HELD THAT:- The Court held that show cause notices issued under Section 28 and Section 124 serve distinct purposes: Section 28 concerns recovery of duties, whereas Section 124 contemplates confiscation and penalties, with serious civil consequences for the importer. A waiver of show cause notice must be voluntary, conscious and informed; pre-printed or standard waiver forms and waivers given without full particulars are invalid for purposes of enabling confiscation. The right to a written show cause notice and a reasonable opportunity of hearing under Section 124 is mandatory and is required to protect the importer from grave civil consequences; therefore, the principle that a personal right may be waived (as held in cases concerned with Section 28) does not extend to permitting confiscation without compliance with Section 124. Where no valid show cause notice under Section 124 is issued and no personal hearing is afforded in accordance with departmental procedure, the resulting confiscation and penalty order is vitiated for breach of natural justice and prejudice to the importer. [Paras 27, 29, 31, 32, 33] The Court quashed the impugned confiscation and penalty order for failure to issue the mandatory Section 124 show cause notice and for violation of principles of natural justice, and granted liberty to the respondent to initiate fresh proceedings by issuing a show cause notice under Section 124 and deciding the matter afresh after affording due opportunity of hearing. Final Conclusion: The impugned confiscation and penalty order was quashed for non-compliance with the mandatory show cause and hearing requirements of Section 124 of the Customs Act; the respondent is permitted to reopen proceedings by issuing a Section 124 notice and following due procedure. Issues: Whether issuance of a show cause notice and grant of personal hearing under Section 124 of the Customs Act is mandatory prior to passing a confiscation order even where the importer had earlier executed a waiver of show cause notice and personal hearing.Analysis: Section 124 of the Customs Act mandates issuance of a written show cause notice and a reasonable opportunity of hearing before goods are confiscated or penalties imposed; this requirement is rooted in the principles of natural justice and is directed to protect the serious civil consequences of confiscation. Section 28 deals with recovery of duties and serves a different purpose; waivers in that context may be effective where voluntarily and informed, but the statutory scheme and consequences of confiscation under Section 124 distinguish the two provisions. Pre-printed or standard-form waivers and waivers obtained without full disclosure and a conscious informed decision are not valid to oust the mandatory safeguards of Section 124. The adjudicatory rule requiring a show cause notice and personal hearing under Section 124 is essential to avoid prejudice to the importer and to prevent the confiscation order from being a legal nullity.Conclusion: The requirement to issue a show cause notice and afford personal hearing under Section 124 of the Customs Act is mandatory and cannot be effectively waived by the importer by means of pre-printed or uninformed waivers; the impugned confiscation order passed without compliance with Section 124 and without affording personal hearing is quashed and the writ petition is allowed in favour of the petitioner.