Issue of Show Cause Notice within 6 months is Mandatory in case of Detention/Confiscation of Goods under Customs Act: Delhi HC [Read Judgment]

Finance Act - Delhi High Court - taxscan

The Single bench of the Delhi High Court, recently held that at the time of detaining/confiscating the goods, the authorities shall give Show cause Notice under section 124(a) of the Customs Act within six months or within the extended period of further six months. While directing the customs authorities to release the goods to the person from whom it was seized, in the absence of such a notice, it was clarified that the release of the god so detained would not debar the respondents from taking appropriate action in accordance with law.

In the instant case, the petitioner was intercepted by the Customs Department before crossing through the green channel which was resulted in seizure of the gold bracelet of the petitioner alleging that it was imported from Dubai.The petitioner approached the High Court arraying for unconditional release of the gold claiming that it was his ancestral jewellery and was owned by him even before leaving for Dubai. He further contended that the gold is liable to be released since the Custom Authorities have not issued any show cause notice under Section 124(a) of the Act.

Reading of Section 110(2) clearly shows that where any goods have been seized under Sub-Section (1) and no notice thereof is given under Clause (a) of Section 124 within six months of the seizure, the goods are liable to be returned to the person from whose possession they were seized. Proviso to Section 110(2) stipulates that the said period of six months, may on sufficient cause, be extended by the Principal Commissioner or Commissioner of Customs for a further period not exceeding six months.

Justice Sanjeev Sachdeva noted that in terms of Section 110(2) read with Proviso, the maximum period for which the goods can remain seized without issuance of a notice under Section 124(a) is one year. the facts of the case shown that the goods were detained on 11.02.2015 and, till date, no notice under 124(a) of the Act has admittedly been issued.

“It is clear that there is a definite time limit within which the Department has to determine if the seized goods are to be confiscated or not. If the Department decides to confiscate the goods, a show cause notice under Section 124(a) of the Act has to be issued. The Division Bench in Mohd. Salman Khan (supra) has held that there appears to be a no provision for detention of goods instead of their seizure. The Custom Department cannot take shelter under the device of detention of goods in order to avoid the consequences flowing from seizure of goods. In case, the Custom Department, for any reason whatsoever, is not able to give a show cause notice under Section 124(a) within six months or within the extended period of further six months, then, in terms of Section 110(2) of the Act, the goods have to be released to the person from whom they have been seized.”

Read the full text of the Judgment below.