Seized goods retention and compensation principle: prolonged custody after failed penalty proceedings justified payment of value with interest.

Seized goods were retained in departmental custody for over eleven years, and the penalty proceedings had already ended in the petitioner's favour; in those circumstances, the Department had a legal obligation to return the goods or compensate the petitioner by paying their value. As no outstanding dues remained against the petitioner or the goods, the Court directed payment of the value of the seized goods with interest. The value was fixed on the basis of the seizure order and bill, and interest was awarded at 6% per annum from the date of seizure until realization.

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Issues: Whether seized goods, not returned after prolonged custody and after the penalty proceedings failed, had to be released or its value paid to the petitioner with interest.

Analysis: The goods were seized by the Trade Tax Department and kept in the custody of a transport company on behalf of the Department. There was no outstanding dues against the petitioner or the goods. In these circumstances, the Department was under a legal obligation to return the goods or compensate the petitioner by paying their value. Since more than eleven years had elapsed and the penalty proceedings had already been decided in favour of the petitioner, award of interest was warranted. The Court fixed the value of the goods on the basis of the seizure order and bill at Rs. 1,40,625 and directed interest at 6% per annum from the date of seizure until payment.

Conclusion: The petitioner was entitled to payment of the value of the seized goods with interest at 6% per annum from 10 February 1999 until realization.

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