No SCN in 6 Months? Seized Currency Must Be Returned, Clarifies Madras High Court

The Madras High Court has ruled that Indian currency falls within the definition of “goods” under the Customs Act and not merely “things”, as claimed by the Customs Department. As a result, the statutory safeguards under Section 110(2) of the Act—including issuance of a show cause notice within six months of seizure—were required to be strictly followed. The bench of Justice Abdul Quddhose while clarifying the scope of seizure powers under the Customs Act, 1962, quashed a seizure memo issued by the Customs Department and directed the return of Indian currency seized from a taxpayer, holding that authorities failed to follow the mandatory procedure prescribed under law. The case arose from a seizure memo dated May 8, 2024, under which Indian currency was seized by Customs authorities from the premises of the petitioner’s father, Mittalal. The petitioner approached the High Court seeking quashing of the seizure and return of the cash, contending that no show cause notice had been issued within the statutory period and that the seizure was arbitrary and illegal. The petitioner asserted that the seized currency belonged to him and was duly reflected in his income tax returns and balance sheet. He also pleaded that there was no allegation of any customs violation involving export or import of goods against him. The Customs Department defended its action by arguing that the seizure was made under Section 110(3) of the Customs Act, which permits seizure of “documents or things” relevant to proceedings under the Act. According to the department, since the cash was seized during an investigation into alleged corruption involving a Customs appraiser and certain exporters, no show cause notice was required within the six-month period prescribed under Section 110(2). It was further contended that the cash was seized from Mittalal, an alleged agent who had colluded with a corrupt Customs official, and not directly from the petitioner. The department also relied on earlier judicial precedents to argue that money could fall within the expression “things” under Section 110(3). Rejecting the Customs Department’s arguments, the High Court undertook a detailed analysis of Section 110 of the Customs Act. The Court drew a clear distinction between Section 110(2), which applies to seizure of “goods”, and Section 110(3), which deals with seizure of “documents or things” relevant to proceedings. The court noted that “goods” are expressly defined under Section 2(22) of the Customs Act to include “currency and negotiable instruments”. Once currency is seized under Section 110, the Court held, it can only be treated as “goods”, making Section 110(2) applicable. Consequently, failure to issue a show cause notice within six months—or to validly extend the period—renders the seizure unsustainable in law The Court also emphasised that the Customs Department can exercise its powers only in relation to violations arising out of imports or exports. In the present case, no criminal complaint or customs proceedings had been initiated against either the petitioner or his father, and no notice was issued within the statutory timeframe The judgment relied on earlier Division Bench rulings of the Gujarat High Court and the Delhi Holding the seizure to be unlawful, the Madras High Court quashed the seizure memo dated May 8, 2024, and directed the Customs Department to return the seized currency to the petitioner within eight weeks. However, the Court granted liberty to the authorities to initiate fresh proceedings, if warranted, strictly in accordance with law Case Details Case Title: Vikram Jain Versus Principal Commissioner Of Customs Customs House Case No.: WP No. 10428 of 2025 Date: 10-12-2025 Counsel For Petitioner: Nithyaesh Nataraj Counsel For Respondent: Sai Srujan Tayi Senior Standing Counsel Click Here To Read Order Read More: Simultaneous Deductions Under S. 80-IA, 80-HHC Upheld: Madras High Court

No SCN in 6 Months? Seized Currency Must Be Returned, Clarifies Madras High Court

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