Customs Cannot Indefinitely Retain Seized Goods Merely Because Adjudication Is Pending: Delhi High Court

The Delhi High Court has observed that the Customs Department cannot retain seized goods indefinitely merely because adjudication proceedings have not been completed.

The Division Bench of Justices Anil Kshetarpal and Shail Jain made the observation while dealing with two petitions seeking release of gold and gold jewellery detained by Customs at the Delhi airport.

Petitioners contended that the goods had remained with Customs for several years without any order being passed and that no Show Cause Notice under Section 124 of the Customs Act, 1962, had been issued within the statutory period prescribed under Section 110(2).

Section 110(2) provides that where goods are seized under Section 110(1), and no notice under Section 124(a) is given within six months of seizure, the goods shall be returned to the person from whose possession they were seized. The period can be extended by a further period of up to six months.

Relying on the Supreme Court's judgment in Union of India v. Jatin Ahuja, the High Court noted that the statutory period for issuance of the notice is mandatory and where no notice is issued within the prescribed or validly extended period, the consequence contemplated under Section 110(2) is return of the seized goods.

"Thus, there can be no dispute with the proposition that the Department cannot retain seized goods indefinitely merely because adjudication has not been completed," the Court observed.

However, it declined to order unconditional release of the goods at this stage.

Customs relied upon statements purportedly recorded under Section 108, which recorded that Petitioners did not require a Show Cause Notice or personal hearing. The Department argued that the proceedings undertaken at the time of interception constituted an oral Show Cause Notice under the first proviso to Section 124.

Petitioners disputed this. One alleged that he was made to sign pre-prepared documents, while the other, an Uzbek national, claimed that he knew only the Uzbek language and that the documents were signed without assistance from a translator.

At this juncture, the High Court reiterated that a mere waiver of a Show Cause Notice cannot by itself satisfy the statutory requirement.

At the same time, it held that determining whether a valid oral notice was actually given would require examination of disputed factual issues which could be examined by the adjudicating authority.

As such, the Court directed Petitioners to appear before the adjudicating authority and ordered that the proceedings be completed within six weeks.

For Petitioner: Advocates Ashutosh, Fatima, Rohit Swarup, Dalip Singh, Avinash Kumar Singh, Pravej Hasan, Abhijeet Sagar, S.Vijaykanth

For Respondent: Advocates Anushree Narain, SSC with Mr. Apurv Yadav and Naman Choula