Court emphasizes mandatory compliance with Customs Act's procedural safeguards, highlighting necessity of competent authority's factual determination on waiver of Show Cause Notice and personal hearing
In a significant judgment delivered on September 2, 2026, the Delhi High Court (Division Bench comprising Justices Anil Kshetarpal and Shail Jain) addressed two petitions challenging the prolonged detention of gold and jewellery seized by the Customs Department at Indira Gandhi International Airport, New Delhi. The cases-Mohammad Sadiq v. Commissioner of Customs and Ulugbek Zokirov v. Commissioner of Customs-raised critical issues concerning the statutory requirements under Sections 110(2) and 124 of the Customs Act, 1962, and procedural fairness in seizure and adjudication processes.
Background and Facts:
Mohammad Sadiq, an Indian citizen, arrived from Saudi Arabia in February 2022 with three gold bars weighing 253.2 grams, which were seized by Customs for alleged Green Channel violation. Similarly, Ulugbek Zokirov, a national of Uzbekistan, was found in possession of gold jewellery weighing 230 grams in February 2024 and faced similar detention.
Both petitioners challenged the continued detention of their goods on grounds that the Customs Department failed to issue mandatory Show Cause Notices within the prescribed statutory period of six months under Section 110(2). Furthermore, the petitioners disputed the voluntariness and validity of statements recorded under Section 108 of the Act, which purportedly contained waivers of their rights to a Show Cause Notice and personal hearing.
Legal Issues:
The core legal questions involved:
1. Whether the Customs Department complied with the mandatory timeline of issuing a Show Cause Notice within six months of seizure under Section 110(2), failing which the goods must be returned.
2. Whether the alleged waiver of the Show Cause Notice and personal hearing-recorded in contemporaneous statements-were voluntary and legally effective to satisfy Section 124's requirements.
3. Whether disputed factual claims regarding coercion, absence of translation, and procedural irregularities could be determined by the High Court in writ proceedings.
Court's Analysis:
The Court reiterated the binding precedent set by the Supreme Court in Union of India v. Jatin Ahuja (2025), underscoring that the statutory period for issuing Show Cause Notices under Section 124(a) is mandatory and non-compliance leads to the return of seized goods under Section 110(2). It emphasized that indefinite retention of goods by Customs is impermissible unless the statutory procedure is duly followed, including any valid extension of the six-month period.
However, the Court declined to conclusively resolve disputed factual issues such as voluntariness of waivers, circumstances of statement recordings, and alleged procedural lapses in writ jurisdiction. It noted that the Customs Department relies on contemporaneous documents indicating that the petitioners voluntarily waived their rights to written notice and hearing, but the petitioners contest these claims, citing language barriers, coercion, and lack of translator assistance.
The Court underscored that while a mere printed waiver or recital in documents cannot substitute a genuine oral Show Cause Notice, the question whether the recorded proceedings amounted to such oral notice must be adjudicated by the competent authority after examining the complete record, including CCTV footage and other evidence.
Directions and Conclusion:
The Delhi High Court directed the petitioners to appear before the competent adjudicating authority by September 26, 2026, for personal hearing. It mandated the authority to complete adjudication within six weeks, strictly adhering to the statutory provisions and judicial precedents. The Court clarified that the dismissal of the petitions should not be construed as an endorsement of the Department's reliance on waivers alone to fulfill procedural mandates.
The Court refrained from ordering the unconditional release of the seized gold and jewellery at this stage, leaving open the question of liability, ownership, duty, penalty, and confiscation to be determined by the adjudicating authority. It also held that detention and warehousing charges shall be decided in due course by the competent authority.
Significance:
This judgment reinforces the importance of procedural compliance under the Customs Act and safeguards against arbitrary detention of goods. It balances the mandatory nature of statutory timelines with the necessity of a fair adjudicatory process where disputed facts are resolved by the designated authority rather than courts exercising writ jurisdiction. The ruling also highlights the legal limitations of waivers of statutory rights and the critical need for informed consent, especially in cases involving foreign nationals and language barriers.
Bottom Line:
Customs Act, 1962 - Seizure of gold and jewellery - Compliance with mandatory requirements under Sections 110(2) and 124 - Disputed factual questions regarding voluntariness of waiver of Show Cause Notice and personal hearing - Adjudication to be undertaken by competent authority.
Statutory provision(s):
Customs Act, 1962 - Sections 108, 110(2), 124
Mohammad Sadiq v. Commissioner of Customs, (Delhi)(DB) : Law Finder Doc Id # 2971868
