HC Restores Right to Contest Seizure in Ongoing Confiscation Proceedings

The appellant, a jewellery company, faced seizure of gold and diamond-studded ornaments in 2017 when its employee was intercepted at Guwahati airport while carrying items stated to belong to customers for repair and polishing. The Customs Department seized the jewellery, alleging improper documentation under the Customs Act.

The assessee challenged the seizure before the High Court and obtained interim release upon furnishing security. Meanwhile, a show-cause notice proposing confiscation was issued, which was separately challenged but upheld at the motion stage. Subsequently, the writ petition challenging the seizure was dismissed by the Single Judge on the ground that since the confiscation notice had attained finality, the seizure itself could not be independently examined. Aggrieved, the assessee filed the present writ appeal, contending that it was denied an opportunity to challenge the legality of the seizure.

Issue Raised: Whether an assessee can be denied the right to challenge the seizure of goods merely because confiscation proceedings have been initiated or upheld.

HC Held: The High Court allowed the appeal, holding that the appellant must be given a fair opportunity to challenge the legality of the seizure during the confiscation proceedings. It was observed that the Single Judge erred in not examining the issue of seizure merely because a show-cause notice for confiscation had been upheld earlier.

The Court clarified that confiscation proceedings are subsequent in nature and cannot extinguish the assessee’s right to question the very basis of seizure. Denying such an opportunity would effectively deprive the appellant of a meaningful chance to defend its case. Therefore, the Court directed that the appellant shall be permitted to raise all objections, including the validity of the seizure, before the adjudicating authority in the ongoing confiscation proceedings. It also directed that a reasonable opportunity, including extension of time if sought, should be granted to enable proper representation.

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