Petitioner challenged a Customs refund order and corrigendum that undervalued his detained gold and deducted duty, after the gold had been disposed of without intimation despite an appellate order for release. Court held the Department's conduct arbitrary and directed payment of full current market value without duty deduction.
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Through: Mr. S. Vijay Kanth and Mr. Utkarsh Tripathi, Advs.
THE COMMISSIONER OF CUSTOMS .....Respondent Through: Mr. Gibran Naushad, Sr. SC. (M: 9910305746).
Mr. Sumit Kumar, A.C.S, Mr. Sunil Kumar, A.C.S and Mr. Abhitesh Kumar, A.L.O, Customs Department.
CORAM:
JUSTICE PRATHIBA M. SINGH JUSTICE DHARMESH SHARMA
Prathiba M. Singh, J. (Oral)
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
Order-in-Original No. 242/Adj/2021 dated 17th November, 2021. The said Order-in-original was challenged by the Petitioner in appeal before the Commissioner of Customs (Appeals). Vide Order-in-Appeal dated 26th July, 2022 the said appeal was allowed and, inter alia, the detained goods were directed to be released to the Petitioner on payment of redemption fine of Rs. 4,60,000/- as also penalty of Rs. 4,60,000/-. The operative portion of the said Order-in-Appeal dated 26th July, 2022 is extracted below:
“6.0 In view of the discussion above, I allow the appeal against the O-in-O 242/Adj/2021 dated 17.11.2021 and order that the impugned Gold chain weighing 1065.10 grams, valued at Rs. 45,80,271/- be released to the Appellant on payment of redemption fine of Rs. 4,60,000/- under Section 125 of the Customs Act, 1962, for re-export only. I reduce the penalty under Section 112 & 114A to Rs. 4,60,000/-. The Appeal is disposed with such modifications and consequential relief as above.”
“3. According to the petitioner, although the redemption fine as well as penalty have been duly deposited, the gold chain has neither been released nor has the petitioner been permitted to receive the same for reexport.
4. Mr. Ojha, learned counsel appearing for the respondent, on instructions submits that there appears
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
to be an issue of some discrepancy in the total deposit made by the petitioner and the amounts which were otherwise payable in terms of the order passed by the Commissioner of Customs (Appeals).
5. If that be the only issue which survives, let the respondents communicate to the petitioner the shortfall, if any, in respect of the deposit which is stated to have been effected in terms of the aforenoted order within a period of one week from today.
6. Subject to the petitioner making good any shortfall that may be indicated, the seized gold chain may thereafter be released and the petitioner's prayer for permission for re-export be processed and disposed of in light of the order of the Commissioner of Customs (Appeals).”
“8. It is noticed in the present case that the impugned Refund Order has been passed without taking into consideration the various chronology of events that have taken place in this matter. The Petitioner was
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
permitted to re-export the goods and had in fact deposited the redemption amount, the fine and the penalty as imposed by the Commissioner of Customs (Appeals). The manner in which the impugned Refund Order and the impugned Corrigendum Order has been issued shows a complete lack of application of mind by the concerned Assistant Commissioner (Refund).
9. It is also noticed that in these impugned orders, the names of the officers who are passing these orders are not mentioned except the designation. In future, it shall be ensured that the name of the concerned officer who is passing the order shall also be mentioned in the full so that the said official can be held responsible for such glaringly incorrect orders that have been passed.
10. The impugned orders have been passed in this case by one Mr. Meena whose name is not clear and whose designation is mentioned as Assistant Commissioner (Refund).
11. At this stage, Mr. Gibran Naushad, ld. Senior Standing Counsel for the Respondent seeks time to take instructions.
12. In view of the above, the Court is inclined to direct the Customs Department to deposit the entire value of the detained gold of the Petitioner. However, on a request by the ld. Counsel for the Respondent, the matter is adjourned to tomorrow.”
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not communicated to the Department concerned. It is also submitted that the gold detained from the Petitioner, actually stood disposed of on 29th November, 2022 along with various other gold items which were detained/confiscated.
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
e-mail communicating the said letter to the Petitioner attached to this letter handed over by the ld. Counsel for the Customs Department. It is noted that the letter also is signed by an official, whose name is not clear and along with the signatures, the date 7th November, 2022 has been mentioned.
(i) The Order-in-Appeal dated 26th July, 2022 was either not communicated or was completely ignored by the said authority. (ii) The detained gold was disposed of on 29th November, 2022 without proper intimation to the Petitioner. (iii) The Order-in-Appeal had permitted release of the detained gold to the Petitioner, subject to payment of redemption fine and penalty. The said redemption fine and the penalty of a sum of Rs.7,00,000/- and Rs. 2,20,000/-was paid by the Petitioner on 8th December, 2021 and 8th May, 2023, respectively. On the date of the second deposit, the detained gold itself was disposed of, however, the redemption fine and penalty was still accepted by the Department.
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
(iv) There was no proper communication or intimation given to the Petitioner prior to the disposal of the detained gold. (v) The disposal of the detained gold was also not informed to this Court, when the order dated 20th July, 2023 was passed. (vi) The impugned Refund Order was passed on 3rd October, 2024. The operative portion of the said order reads as under:
“17. Return of tariff value of 1065.10 grams of confiscated gold amounting to Rs. 50,14,704/- (Rupees Fifty Lakh Fourteen Thousand Seven Hundred and Four Only) in lieu of the re-export of the same after realizing the Redemption Fine of Rs. 4,60,000/- and Penalty of Rs. 4,60,000/- and order to pay an amount of Rs. 50,14,704/- (Rupees Fifty Lakh Fourteen Thousand Seven Hundred and Four Only) to the applicant/Authorized representative through RTGS against Cheque No. 604890 Dated. 10.2024 issued to PNB, Sansad Marg, New Delhi. ”
As per the impugned Refund order, the confiscated gold has been valued at Rs.50,14,704/-, after realizing the redemption fine which has been deposited along with the penalty.
(vii) To further compound the irregularities, the impugned Corrigendum Order is then issued, holding the Petitioner liable for customs duty, further reducing the amount payable in the following terms:
“Refund of Rs. 29,46,139/- (Twenty Nine Lakh Forty Six Thousand One Hundred Thirty Nine Only) in lieu of re-export of the confiscated gold after realizing the applicable duty of Rs. 20,68,565/-, Redemption fine of Rs. 4,60,0001- and penalty of Rs. 4,60,0001- and order to pay an amount of Rs. Rs. 29,46,139/- (Twenty Nine Lakh Forty Six Thousand One Hundred Thirty Nine
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
Only) to the applicant1Authorized representative through RTGS against Cheque No. 604894 Dated. 01.2025 issued to PNB, Sansad Marg, New Delhi.”
“3.1.2 Whenever seized gold has to be returned on account of any order from a judicial forum and the gold has already been disposed of, the amount to be refunded in lieu of such gold shall be calculated as given below:
i. If the seizure is made in the Customs area, calculation shall be based on the tariff value of gold on the date of transfer of such seized/confiscated gold to SPMCIL; and
ii. If the seizure is made at any place other than Customs area, calculation shall be based on the average market price of gold on the date of transfer of such seized/confiscated gold to SPMCIL.”
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
paying the amount of the value of the detained gold to the Petitioner. 16. In the opinion of this Court, this course of action would be completely contrary to law inasmuch as the Order-in-Appeal had clearly directed the release and re-export of the detained gold, subject to payment of redemption fine and penalty. The said order could not have been ignored by the Customs Department. Even if there was a lack of communication, the fact of disposal of the detained gold ought to have been communicated to the Court, when the W.P. (C) No. 6690/2023 was being heard and the final order therein was passed on 20th July, 2023.
Signature Not Verified
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
said payment of the value of the detained gold as the Petitioner has already deposited the redemption fine and penalty in terms of the Order-in-Appeal. 21. The said amount shall be credited to the Petitioner’s bank account directly. The Petitioner shall provide his bank details to the official concerned from his registered Email:- [email protected]. Mr. Gibran Naushad, ld. Senior Standing Counsel shall ensure that the Petitioner speaks to the official concerned before the remittance is paid.
PRATHIBA M. SINGH JUDGE
DHARMESH SHARMA JUDGE
FEBRUARY 14, 2025/ gunn/ms
Signature Not Verified
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Digitally Signed By:PRAMOD KUMAR VATS Signing Date:17.02.2025 10:56:18
2 issues framed by the court
Was the Petitioner entitled to the full market value of detained gold after disposal without intimation despite an Order-in-Appeal directing release?
Were the Refund Order and Corrigendum Order deducting duty and reducing payment tenable?
4 provisions across 2 enactments
Gor Sharian
The Commissioner of Customs
Prathiba M. Singh
Dharmesh Sharma
As recorded by the court registry
A petition under Article 226 of the Constitution asking a High Court to issue a writ against the State or a public authority in a civil matter.
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