Separate Show-Cause Notice Not Needed Before Remanding Customs Case For Fresh Adjudication: Delhi High Court

The Delhi High Court has held that a separate show-cause notice under Section 129DD(5) of the Customs Act, 1962 is required when the Revisional Authority proposes to enhance the penalty or fine in lieu of confiscation, or to confiscate goods of greater value, but is not required merely when the matter is remanded for fresh adjudication.

The Division Bench of Justices Avneesh Jhingan and Shail Jain made the observation while dismissing a writ petition challenging an order passed by the Revisional Authority (RA) under Section 129DD of the Customs Act in a case concerning the seizure of 2 kg of gold at the Delhi airport.

Petitioner had arrived at Delhi airport from Dubai and was intercepted by Customs officers for hiding gold inside the false wall behind the flush assembly of a toilet at the airport.

A search led to the recovery of two gold bars, each weighing 1 kg, valued at approximately ₹61.09 lakh.

In his statements recorded under Section 108 of the Customs Act, Petitioner stated that the gold belonged to an Afghan national, who had handed over the pouch to him in Dubai. He stated that he was supposed to deliver the gold to an unidentified person outside the airport and would receive ₹30,000 for the delivery.

The gold was subsequently confiscated under Section 111 of the Customs Act. The adjudicating authority, while allowing redemption of the gold on payment of fine and applicable duty, imposed a penalty of ₹12 lakh each under Sections 112 and 114AA.

The Commissioner of Customs (Appeals) subsequently reduced the redemption fine and penalty to ₹6.10 lakh each.

The Customs Department thereafter initiated revision proceedings under Section 129DD of the Customs Act. The RA found that the appellate order and the original adjudication order were not legal or proper and remanded the matter to the adjudicating authority for fresh consideration.

Before the High Court, Petitioner argued that the RA had no power to remand the matter under Section 129DD and that a separate notice ought to have been issued before the matter was remanded.

The High Court however held that Section 129DD empowers the RA to annul or modify an order passed by the appellate authority and "the annulment of the order carries an inherent power to remand the matter for fresh adjudication."

It noted that Section 129DD contains no express bar against directing fresh adjudication.

The Court then dealt with Petitioner's reliance on Section 129DD(5), which provides that no order enhancing any penalty or fine in lieu of confiscation, or confiscating goods of greater value, can be passed in specified circumstances unless the affected person is given notice to show cause.

The provision was not attracted in the present case, the Court said, adding,

"Sub-section(5) contemplates notice where the RA proposes to enhance the penalty or fine in lieu of confiscation or to confiscate goods of greater value than that ordered by the appellate authority…The present case is not one of enhancement of penalty or redemption fine."

The Court further noted that Petitioner had already been granted an opportunity of hearing before the RA and had been represented on May 20 and May 23, 2025.

The remand, the Court said, gave Petitioner another opportunity to establish his case and discharge the burden under Section 123 of the Customs Act, which applies to goods seized on the reasonable belief that they are smuggled.

The Court also rejected Petitioner's challenge to the remand on the ground that the RA had allegedly pre-judged the matter.

It noted that the RA had considered the legality and propriety of the orders in light of the material on record, including the circumstances of the recovery and the invoice produced by the petitioner.

The Court observed that the invoice had been produced before the adjudicating authority and not at the time of interception. It also noted that the invoice did not contain Petitioner's passport number and that, while the invoice showed purchase of gold from Dubai, Petitioner had stated in his reply to the show-cause notice that he was in Bangkok during that period.

The Court further rejected Petitioner's challenge based on limitation under Section 129DD. It held that there was no material establishing that the revision application had been filed beyond the permissible six-month period from communication of the appellate order.

"The date of communication of the appellate order to the department has not been established and therefore there is no factual foundation that the application was filed beyond the period of six months," the Court held.

As such, the Court dismissed the writ petition.

For Petitioner: Ms. Riya Soni, Mr. Satish Kumar, Mr. Sunil Kumar Tripathi & Ms. Kavya Thapliyal, Advs.

For Respondents: Mr. Neeraj Dubey, SPC for R1 & 2. Mr. Anurag Ojha, SSC with Mr. Vipul Kumar & Mr. Manish Sharma, Advs.