Case Law Details
Imran Vs Commissioner of Customs (Delhi High Court)
Delhi High Court orders Customs Department to create accessible counters for passengers at IGI Airport to submit representations and grievances, ensuring smoother handling of seized goods and compliance with procedural requirements.
This case, heard by the Delhi High Court, involves a petition filed by Imran, a resident of Kuwait, challenging the actions of the Customs Department. The core of the dispute revolves around the seizure and subsequent disposal of a gold piece weighing 338 grams from Imran upon his arrival at Indira Gandhi International Airport in New Delhi. The court’s judgment provides clarity on the procedural requirements for the Customs Department when handling seized goods, particularly when a redemption option is available to the owner.
The petitioner’s journey began on March 23, 2024, when he arrived at IGI Airport. Customs officials detained a gold piece in his possession, as documented by a detention receipt dated March 24, 2024. According to Imran, his authorized representative submitted a representation to the Customs Department on May 20, 2024, requesting that the gold piece not be disposed of, and expressing his willingness to re-export it. However, he alleged that the gold was disposed of on June 10, 2024, well before the issuance of the formal Order-in-Original (OIO) and without any prior intimation.
The OIO, issued on December 30, 2024, directed the confiscation of the gold but also offered Imran a redemption option. This option allowed him to reclaim the gold upon payment of a redemption fine of Rs. 2,00,000. Additionally, the OIO imposed a penalty of Rs. 1,90,000 under various sections of the Customs Act, 1962. A key condition of the redemption was that the goods were to be re-exported, acknowledging Imran’s status as a Kuwaiti resident.
The Customs Department, in its counter-affidavit, disputed the petitioner’s claims. It argued that an intimation was sent to Imran’s address in Sikar, Rajasthan, before the gold’s disposal. The department also contended that the representation dated May 20, 2024, was a forgery, stating that the seal on the letter was not genuine and the document was not recorded in their receipt register. The counter-affidavit further revealed that the gold was released to the Security Printing and Minting Corporation of India Limited (SPMCIL) for disposal on June 28, 2024. The net value realized from the sale of the gold was Rs. 23,12,917.15.
The Delhi High Court took note of the significant procedural discrepancies. The court observed that the gold piece was disposed of on June 28, 2024, nearly three months before the Show Cause Notice was issued on September 23, 2024, and six months before the OIO was passed on December 30, 2024. This pre-mature disposal was a central issue, as it effectively nullified the redemption option granted to the petitioner in the OIO. The court did not delve into the veracity of the forged representation, stating that the Customs Department was free to take action on that matter separately. However, it did acknowledge the difficulty that passengers face in accessing Customs counters in secured airport areas, suggesting that the Commissioner of Customs should establish a more accessible mechanism.
Judicial Precedents and Court’s Holding
While the judgment does not explicitly cite judicial precedents by name, the court’s reasoning aligns with established principles of administrative law and natural justice. The principle that an administrative authority must act fairly and provide an opportunity for an individual to be heard before taking action that affects their rights is a cornerstone of Indian jurisprudence. In this case, the premature disposal of the gold piece without a final order or proper intimation to the petitioner violated these fundamental principles. By selling the gold before the OIO, the Customs Department rendered the redemption option a hollow formality, thereby undermining the very purpose of the provision under Section 125 of the Customs Act, 1962.
The court’s holding effectively provided a remedy for the procedural lapses by the Customs Department. It issued the following directives:
1. Monetary Compensation: From the net amount of Rs. 23,12,917.15 realized from the disposal of the gold, the court ordered the Customs Department to deduct the redemption fine of Rs. 2,00,000 and the penalty of Rs. 1,90,000. The remaining amount of Rs. 19,22,917 was to be paid to the petitioner within one month. This direction essentially gave effect to the OIO’s provisions in a modified, monetary form, ensuring the petitioner was not unfairly penalized by the department’s procedural errors.
2. Interest Payment: Recognizing that the Customs Department had held the petitioner’s money since the date of disposal, the court also directed the payment of interest. A statutory interest rate of 6% was applied to the net value of the gold (Rs. 23,12,917.15) from the date of disposal, June 28, 2024, until the date of the judgment. The calculated interest amount of Rs. 1,67,045 was also ordered to be paid to the petitioner within one month.
The court’s decision did not exonerate the petitioner from the fines and penalties, but rather ensured that he was justly compensated for the premature disposal of his property. The ruling sends a clear message to the Customs Department about the importance of adhering to due process and the procedural safeguards enshrined in the law. It underscores that while the department has the authority to seize and confiscate goods, it must do so in a manner that respects the rights of the individuals involved, including their right to appeal or redeem their property.
In addition to the specific directives regarding Imran’s case, the court also made a broader recommendation for systemic improvement. It suggested that the Commissioner of Customs at the airport should create a new, easily accessible mechanism for passengers to submit letters and representations without having to enter the secured airport premises. This recommendation addresses the practical difficulties highlighted by the petitioner’s counsel regarding the alleged forged representation.
The petition was disposed of with these directions, and all pending applications were also settled. The judgment ensures that the petitioner, despite the procedural mishandling by the Customs Department, is compensated for his property while still being subject to the fines and penalties legally imposed. The case serves as a reminder that administrative actions must be procedurally sound and cannot preemptively nullify the legal rights and options available to a party.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner- Imran under Articles 226 and 227 of the Constitution of India, inter alia, seeking release of one gold rectangular shaped cut piece, weighing 338 gms, (hereinafter, ‘gold piece’) seized by the Customs Department vide detention receipt dated 24th March, 2024.
3. The case of the Petitioner, who is a resident of Kuwait, is that he arrived at the Indira Gandhi International Airport, New Delhi (hereinafter, ‘IGI Airport’) on 23rd March 2024. Upon arrival at the IGI Airport, the said gold piece was detained by the Customs Department.
4. Thereafter, the Petitioner’s Authorized Representative claims to have submitted a representation to the Customs Department on 20th May, 2024 seeking that the gold piece may not be disposed of. Despite this being the position, it is the allegation of the Petitioner that the same has been disposed of on 10th June 2024.
5. The Order-in-Original dated 30th December 2024 (hereinafter, ‘OIO’), directed confiscation of the gold piece, however, the OIO permitted redemption of the same upon making a payment of Rs 2 Lakhs. The operative portion of the said OIO reads as under:-
“i) I deny the ‘Free Allowance’ to the Noticee on account of various omission and commission made by the Noticee;
ii) I order confiscation of seized goods namely the Gold Jewellery total weighing 338 Grams Gold having Tariff Value Rs.19,70,202/ -(Rupees Nineteen Lakh Seventy Thousand Two Hundred and Two Only) recovered from him seized from possession of the Noticee and seized under Panchnama proceedings dated 24.03.2024, under Section 111(d), lll (i), 111 (j), 111(l), l l l (m) & l l l (o) of the Customs Act, 1962;
ii) I give an option to redeem the goods confiscated above, on payment of Redemption Fine of 2,00,000 under Section 125 of Customs Act, 1962 and allowed the same for re-export only. The Noticee is a resident of Kuwait holding a residence of State of Kuwait Civil ID No.299070704109. The redemption is to be allowed after the completion of legal formalities in this regard and also fulfillment of any regulatory clearances/approvals required. The offer of redemption, if accepted, shall be subject to condition that the Noticee shall not dispute the identity and valuation of the seized goods. The offer of redemption shall cease after ‘One Hundred Twenty Days’ from date of the receipt of this order;
iv) I also impose a Penalty of Rs. 1,90,000 upon the Noticee under Section 112(a), 112(b) and 114AA of the Customs Act, 1962.”
6. The challenge in this petition is to the fact that the gold piece has been disposed of prior to the passing of the OIO and without any intimation to the Petitioner. It is further submitted that the said disposal has been undertaken despite the representation filed on behalf of the Petitioner stating that the Petitioner is willing to re-export the gold piece.
7. On the last date of hearing, the Court had directed filing of a reply by the Department. Today, ld. Counsel for the Department has placed on record the counter affidavit, in which the following submissions are made:
(1) That the gold was appraised and intimation was given to the Petitioner at the Sikar address in Rajasthan, prior to the disposal of the gold.
(2) That the representation dated 20th May 2024, according to
8. Counsel for the Respondent, is a forged representation as the seal which is visible on the letter is not genuine. The said letter is also not reflected in the receipt register of the Customs Department. A counter affidavit has been handed over by ld. counsel for the Respondent. The same is taken on record. The counter affidavit reveals that the gold piece was released to the SPMCIL for disposal, on 28th June 2024. The amount recovered has been set out below:
“14. That in the present case, the goods detained vide DR no. 35144 dated 24.03.2024 having file no. VIII (AP) 10/P&1/4806-C/Arrival/ 2024 containing one rectangular shaped cut piece of gold weighing 338 gm in r/o Mr. Imran was inventorised on 11.06.2024 and released to SPMCIL on 28.06.2024. The details are as under:
Amount paid by RBI to CBIC per gram (in Rs): Rs. 6,867.1828
Amount of 338 grams gold comes out to Rs. 23,21,107.79/-
Less Conversion Charges for 338 grams: – 7578.636/-Less photography and videography charges: – 612 / –
Net value realized of 338 gm of gold of pax: – Rs. 23,12,917.15/-
From the above it is clear that intimation to petitioner was duly sent before inventorisation process. It may also be noted thatfinal disposal takes 1-2 months after inventorisation, so ample time was given to the petitioner for representing before the departmentfor not disposing of the seized gold.”
9. The OIO clearly records that the Petitioner is a resident of Kuwait and accordingly, re-export was permitted in the terms as extracted above.
10. This Court is not going into the question as to how the entire gold piece came to be disposed prior to issuance of the Show Cause Notice dated 23rd September 2024 (hereinafter, ‘SCN’). Even the OIO does not record that the gold has been disposed of.
11. While these issues are being considered in separate matters by this Court, however, insofar as the Petitioner is concerned, since the gold has been disposed of and amount has been recovered by the Customs Department upon disposing the gold piece, the following directions are issued:
(i) From the amount of Rs. 23,12,917.15/- the redemption fine of Rs. 2,00,000/- and penalty of Rs. 1,90,000/- shall be deducted and the remaining amount of Rs. 19,22,917/- shall be paid to the Petitioner without any further deductions, within a period of one month.
(ii) The interest on the amount which was recovered by the Customs Department on the date of disposal i.e. 28th June, 2024, shall be liable to be paid @ 6%, which is the statutory interest. Accordingly, interest @ 6% on Rs. 23,12,917.15/-, from the date of disposal till date, which is calculated to be Rs. 1,67,045/- shall be paid to the Petitioner within a period of one month.
12. If any action needs to be taken by the Customs Department in respect of the alleged forgery of representation dated 20th May 2024, the Customs Department is free to do so.
13. Ld. Counsel for the Petitioner submits that insofar as the representation is concerned, there is a genuine difficulty that, passengers whose goods are detained, face at the airport. Since the counter of the Customs Department is in the secured area, it is not easy to access the said counter for delivery of letters. Hence, the passengers take help of the airport staff to deliver letters and to obtain seals.
14. This matter may be looked into by the concerned Commissioner of Customs at the Airport and a mechanism shall be set up so that some counters can be created at a designated area which can be easily accessed without entering the secured airport premises.
15. The petition is disposed of in the above terms. Pending applications, if any, are also disposed of.
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