2026 (3) TMI 261 - HC - Customs

Mandatory Show Cause Notice required before confiscation; order quashed and matter remitted for fresh consideration.

Absence of a show cause notice prior to a confiscation order under the Customs Act invalidates the order as a procedural infirmity and breach of ... Mandatory issuance of show cause notice prior to confiscation - principles of natural justice - Validity of seizure u/s 110 of the Customs Act - seizure and detention - detention due to non-declaration versus detention for non-payment of duty - confiscation and penalty - burden of proof on passenger - requirement of a final speaking order after personal hearings. Mandatory issuance of show cause notice prior to confiscation - Failure to issue a show cause notice before passing a confiscation order rendered the impugned order illegal. - HELD THAT:- The Court applied settled law (including the Court's recent decision in M/s.Hiseins Exim [2026 (3) TMI 215 - MADRAS HIGH COURT] and held that issuance of a show cause notice under the Customs Act is mandatory prior to any confiscation, even where the party is alleged to have waived such notice. As no show cause notice was issued to the petitioner before the confiscation order, the impugned order was passed in breach of the principles of natural justice and had to be quashed. The Court therefore required fresh consideration consistent with the mandatory requirement of a show cause notice and fair opportunity to be heard. [Paras 19, 21, 22] Impugned confiscation order quashed for failure to issue a mandatory show cause notice; matter remitted for fresh consideration. Validity of seizure under Section 110 of the Customs Act - detention due to non-declaration versus detention for non-payment of duty - HELD THAT: - The Court recognised factual disputes about the character and validity of the detention/seizure and the reasons recorded in the detention order. Because these questions of fact require elaborate consideration, the Court declined to decide them on the writ and remitted those issues to the respondents for fresh examination and determination in accordance with law. [Paras 20] Questions as to whether a proper seizure under Section 110 was made and whether detention was for non-declaration or non-payment are remitted to the respondents for fresh consideration. Personal hearing - speaking order - HELD THAT: - The Court directed that the petitioner may treat the impugned order as a show cause notice and submit a reply within two weeks; on receipt, the respondents must afford three personal hearings with adequate intervals and consider the petitioner's submissions and supporting documents before passing a final speaking order on merits within 12 weeks. The Court further ordered that the seized goods shall not be disposed of until the final order is passed. [Paras 23, 24] Petitioner to file reply within two weeks; respondents to grant three personal hearings and pass a final speaking order within 12 weeks; seized goods to remain undisturbed until final decision. Final Conclusion: The confiscation order was quashed for failure to issue the mandatory show cause notice; factual issues regarding seizure and grounds of detention are remitted to the respondents for fresh consideration. The petitioner is permitted to file a reply and must be afforded personal hearings; the respondents shall pass a final speaking order within the directed timeframe and shall not dispose of the goods in the interim. Issues: Whether the confiscation order dated 03.06.2024 passed under Section 124 of the Customs Act, 1962 is valid in the absence of issuance of a show cause notice and whether the impugned order must be quashed and remitted for fresh consideration.Analysis: The undisputed facts include that no show cause notice was issued prior to the confiscation order, a detention receipt recorded non-release due to non-payment of duty, and duty was paid by the petitioner on 02.05.2024. A disputed letter purporting to waive show cause notice is placed on record by the respondents but is contested by the petitioner. Recent authority of this Court has held that issuance of a show cause notice is mandatory prior to confiscation under Section 124 of the Customs Act, 1962 even if a waiver letter is produced. In view of the admitted absence of a show cause notice before the confiscation order, the confiscation order suffers from procedural infirmity and violation of principles of natural justice. Questions regarding the propriety of the seizure under Section 110 and whether detention was for non-declaration or for non-payment of duty involve disputed facts and require fresh consideration by the respondents.Conclusion: The confiscation order dated 03.06.2024 is quashed and the matter is remitted to the second respondent for fresh consideration. The petitioner is directed to furnish a reply within two weeks and the second respondent shall afford three personal hearings and pass a final speaking order on merits within 12 weeks. The seized goods shall not be disposed of until final orders are passed. This conclusion is in favour of the assessee.