Legal principle

Where redemption of seized goods is allowed under Section 125 and the department has disposed of the goods without notice in breach of Section 110(1A) and the 14.02.2006 circular, it must pay the owner the value of the goods as on the adjudication date, not the lower sale proceeds realised at disposal.

Court decision

The writ petitions were allowed and the impugned refund orders set aside; the respondent was directed to pay the petitioners the value of crude gold of 24K purity at the rate prevailing on the date of the De Novo order (02.05.2025), less the redemption fine, customs duty and penalties as computed in the De Novo order, within six weeks, failing which interest at 6% p.a. from 02.05.2025 till payment would be payable.

Facts

Petitioners returning from overseas in July 2013 through the green channel were stopped and searched, and undeclared gold (about 1659.200 grams in total) and electronic items were seized; show cause notices u/s 124 led to absolute confiscation u/s 111(d) and 111(l) and penalties u/s 112(a) and 114(i), with redemption allowed only for the electronic goods. Appeals and revision were dismissed, but on writ the High Court held that after repeal of the Gold (Control) Act, 1968 the gold was restricted, not prohibited, and remanded for de novo adjudication with an option of redemption u/s 125. The Joint Commissioner, by De Novo order dated 02.05.2025, allowed redemption of the gold on payment of redemption fine, applicable customs duty and penalties. Unknown to the petitioners during all proceedings, the department had disposed of the gold in 2014 (realising Rs.43,84,467/- as on 31.12.2014) without notice, and on refund applications the Assistant Commissioner computed the refund at the tariff value on the date of transfer to SPMCIL, per CBEC Instruction No.22/2022 dated 06.09.2022, after deducting fine, duty and penalties.

Key provisions

• Section 150, Customs Act, 1962 — Procedure for sale of goods and application of sale proceeds
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc