Delhi High Court Orders Customs to Re-Examine Seizure of Gold Bar, Cites Mandatory SCN Rule

New Delhi: The Delhi High Court, presided over by Justices Prathiba M. Singh and Shail Jain, has directed the Customs Department to conduct a fresh hearing regarding a 117-gram gold bar seized from a passenger in January 2023. The Court underscored the legal mandate under the Customs Act, 1962 , that seized goods must be returned if a Show Cause Notice (SCN) is not issued within the prescribed statutory period.

Background of the Case

The petitioner, Mr. Gulfam, filed a writ petition seeking the release of his gold bar, which was seized by customs officials at Indira Gandhi International Airport on January 5, 2023, upon his return from Saudi Arabia. Mr. Gulfam argued that since his gold was seized, the Customs Department had neither issued a Show Cause Notice nor granted him a personal hearing, rendering the continued detention of the gold illegal.

Arguments of the Parties

Petitioner's Stance: The petitioner’s primary argument rested on the Supreme Court's recent decision in * Union of India and Ors. v. Jatin Ahuja * (2025). This landmark judgment clarified that Section 110 (2) of the Customs Act, 1962 , is a mandatory provision. It requires the authorities to issue an SCN within six months of seizure (extendable by another six months). Failure to do so results in the automatic release of the goods to the person from whom they were seized.

Customs Department's Stance: The Customs Department, represented by ld. SSC Ms. Narain, countered by presenting a statement recorded from Mr. Gulfam under Section 108 of the Customs Act at the time of seizure. In the statement, the petitioner had purportedly admitted that the gold bar did not belong to him, waived the need for an SCN and personal hearing, and agreed to pay applicable duties and penalties. The department argued that since the petitioner disowned the gold, which also bore foreign markings, releasing it to him would be contrary to law and that the item was liable for confiscation.

Court's Analysis and Legal Precedents

The High Court acknowledged the factual dispute arising from the petitioner's statement under Section 108 . However, it noted that such statements' admissibility is a matter for inquiry and cannot be conclusively determined in a writ petition.

The bench placed significant emphasis on the legal principles established in the Jatin Ahuja case, quoting the Supreme Court's observation:

> “...indisputably the car was seized...and furthermore no notice...was given...within six months of the seizure. The consequence, therefore, in such a case is that the goods shall be returned to the person from whose possession they were seized.”

The High Court also referred to its own Division Bench ruling in * Amit Kumar v. The Commissioner of Customs * (2025), which dealt with the issue of pre-printed waivers of SCNs and hearings, indicating judicial skepticism towards such standard-form declarations.

Final Decision and Directions

While not ordering the immediate release of the gold, the Court sought to balance the petitioner’s rights with the need for a factual inquiry by the department. The bench disposed of the petition with the following directions:

• Personal Hearing: Mr. Gulfam is to appear before the competent Customs authority on December 22, 2025, either physically, virtually, or through an authorized representative.
• Order based on Law: The Customs Department must pass a fresh, reasoned order after affording the petitioner a proper hearing.
• Mandatory Compliance: In passing its order, the department must strictly adhere to the legal position laid down in the Jatin Ahuja judgment regarding the mandatory nature of issuing an SCN within the time limit stipulated by Section 110 of the Customs Act.

The decision reaffirms the procedural safeguards available to citizens against prolonged detention of property by customs authorities and highlights the critical importance of adhering to statutory timelines.