Customs Confiscation Order Quashed for Failure to Issue Mandatory Section 124 SCN

Hiseins Exim Vs Additional Commissioner of Customs (Madras High Court)

The Madras High Court examined whether issuance of a show cause notice under Section 124 of the Customs Act, 1962 is mandatory before confiscation of goods, even when the importer had allegedly waived such notice and personal hearing. The petitioner challenged an order dated 17.10.2024 by which the imported goods were confiscated and fine was imposed under Section 125 of the Act without issuance of a show cause notice or grant of personal hearing.

The petitioner argued that show cause notices under Sections 28 and 124 serve distinct purposes. Section 28 concerns recovery of duties not levied, short levied, or erroneously refunded, whereas Section 124 specifically governs confiscation of goods and imposition of penalties. It was contended that even if a waiver letter had been issued, it would not apply to confiscation proceedings under Section 124, particularly when the petitioner had only sought re-export of goods. Reliance was placed on earlier Madras High Court decisions, including Salmag Enterprises, which held that issuance of show cause notice under Section 124 is mandatory despite alleged waiver.

The respondent contended that the petitioner had voluntarily waived issuance of show cause notice and personal hearing and therefore the Customs Department was not required to issue such notice. It was also argued that the petitioner had an alternative statutory remedy by way of appeal and that the Supreme Court in Virgo Steels had recognized that show cause notice, being personal to the concerned party, can be waived.