The Delhi High Court has directed Customs authorities to release 12 confiscated gold bars after finding that their failure to quantify the payable duty prevented the holder from exercising his redemption option within the prescribed period and the missed deadline could not be attributed solely to him.

A bench of Justices Anil Kshetarpal and Vimal Kumar Yadav has observed that  the Petitioner has not committed any default in complying with aforesaid Order-in-Original and the failure is on the part of the department. The department never took trouble to communicate to the Petitioner that the applicable duty, on quantification, can be paid later on, but the Petitioner should pay the redemption fine along with penalty.

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The petitioner was intercepted at Delhi’s Indira Gandhi International Airport while travelling from Delhi to Chennai. Customs officers detained 12 gold bars weighing 1,200 grams.

In an order dated November 18, 2022, the Joint Commissioner of Customs ordered confiscation of the gold but allowed the petitioner to redeem it on payment of the applicable duty, a redemption fine of ₹50,000 and a penalty of ₹50,000. The order specified the fine and penalty but did not quantify the duty.

the petitioner had 120 days from the order to seek redemption. On December 28, 2022, within that period, he applied to Customs for the duty amount so that he could make the required payment. The authorities received the application but did not respond, the High Court recorded.

The department appealed against the adjudication order, but its appeal was dismissed on August 3, 2023, and the redemption order attained finality. The petitioner later applied for a refund on the assumption that the gold had been disposed of. Customs rejected that request on April 30, 2024, as premature. During the High Court proceedings, the department confirmed that all 12 bars remained in its possession.

Customs relied on the Delhi High Court’s earlier decision in Gillette India Ltd. v. Commissioner of Customs, which held that failure to pay a redemption fine within the stipulated time makes confiscation absolute and causes the goods to vest in the Central Government under Sections 125 and 126 of the Customs Act, 1962.

The bench distinguished Jhaver’s case. He had approached Customs during the 120-day period and asked for an amount that the adjudication order had left unspecified. The department neither quantified the duty nor told him that he could pay the redemption fine and penalty first and pay the duty after its calculation.

“The Petitioner has not committed any default in complying with aforesaid Order-in-Original and the failure is on the part of the Respondents,” the court observed. It said the petitioner had not asked for more time to redeem the gold; he had asked the authorities to state what he needed to pay.

The court held that Gillette India did not bar relief where the authorities’ own failure to provide the duty figure had impeded redemption. It did not displace the general rule on what happens when a redemption deadline expires; its decision turned on Jhaver’s timely request and Customs’ lack of response.

The High Court directed Customs to communicate the applicable duty within 15 days. Once informed of the amount, the petitioner must pay the duty, redemption fine and penalty, together with interest at 8% in terms of the November 2022 order. Customs must release the 12 gold bars upon receiving that payment.

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