Customs Seizure Cannot Be Set Aside Merely For Want Of Written Show-Cause Notice Delhi High Court

The Delhi High Court on 2 September held that the absence of a separate written show-cause notice under Section 124 of the Customs Act, 1962 does not by itself warrant unconditional release of goods seized by Customs, particularly where the Department claims that an oral show-cause notice was issued within the statutory period.

A Division Bench of Justices Anil Khetarpal and Shail Jain disposed of a petition by Najir seeking unconditional release of three gold bars bearing the marking “1 Ounce Fine Gold 999.9”, which Customs had seized from the petitioner at Delhi airport upon his return from Saudi Arabia. The judges held:

“The statutory requirements have to be satisfied in accordance with law. However, whether an oral show-cause notice was in fact given to the Petitioner, what was communicated to him in the course thereof, and whether the proceedings undertaken on 20.01.2024 constituted sufficient compliance with Section 124, are matters which require examination of the contemporaneous record and the circumstances in which the statement came to be recorded,”

The petitioner sought unconditional release of the gold, contending that Customs had not issued a show-cause notice under Section 124 within the period prescribed under Section 110(2), which sets the time limit for issuing a notice after seizure of goods.

Counsel for the petitioner argued that once the statutory period expired without issuance of a valid show-cause notice, the seizure ceased to have legal efficacy and the goods became liable for unconditional release.

Customs, on the other hand, relied on the petitioner's statement recorded under Section 108 of the Customs Act, which recorded that he did not require a show-cause notice or personal hearing.

The Department also contended that the petitioner had failed to appear for appraisement. It submitted that disputed questions concerning the recovery and concealment of the gold and the voluntariness of the statement could not appropriately be decided in writ jurisdiction.

The Court noted that it was undisputed that no separate written show-cause notice under Section 124 had been issued. However, the Department had placed on record a proceedings chart which specifically recorded 20 January 2024 as the date of the oral show-cause notice.

It noted that Section 124 permits the notice referred to in clause (a), as well as the representation referred to in clause (b), to be oral at the request of the person concerned.

Therefore, the Bench held that the issue could not be decided merely by asking whether a formal written notice had been issued. It had to be examined whether the proceedings undertaken on 20 January 2024 actually complied with Section 124, including whether the petitioner had been informed of the grounds on which confiscation or penalty was proposed and had been afforded the statutory opportunity contemplated under the provision.

It also clarified that the recital in the petitioner's statement that he did not require a show-cause notice or personal hearing could not by itself be treated as conclusive proof of compliance with Section 124.

Accordingly, the High Court declined to adjudicate these questions in writ jurisdiction and relegated the petitioner to avail the statutory remedy.

For Petitioner: Dr. Ashutosh, Ms. Fatima, Mr. Rohit Swarup, Mr. Dalip Singh, Mr. Avinash Kumar Singh, Mr. Pravej Hasan, Mr. Abhijeet Sagar, Mr. S.Vijaykanth, Advs.

For Respondent: Mr. Vishal Chadha, Senior Standing Counsel with Mr. Chandan Kumar, Advs.