Redemption of confiscated gold allows refund of sale proceeds without customs duty deduction, but fine, penalty, and interest remain payable.

Confiscated gold should not be disposed of while an appeal against the confiscation order is pending, especially where the assessee has promptly notified the authorities of the intended appeal. If the gold is nevertheless sold and redemption is later allowed, the sale proceeds are refundable without deduction of customs duty because duty arises only on actual redemption of the goods themselves. Redemption fine and penalty may still be deducted, and interest is payable on the amount wrongly withheld.

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Issues: (i) Whether the customs authorities could dispose of confiscated gold during the pendency of the appeal against the confiscation order; and (ii) whether, on redemption being allowed, the assessee was entitled to the sale proceeds without deduction of customs duty, while deduction of redemption fine and penalty was permissible, together with interest.

Issue (i): Whether the customs authorities could dispose of confiscated gold during the pendency of the appeal against the confiscation order.

Analysis: The confiscation order had been communicated and the assessee had promptly informed the authorities that an appeal was being filed. In that situation, the authorities ought to have withheld disposal of the gold. Selling the gold during the pendency of the appeal was contrary to the departmental instructions and was improper.

Conclusion: The disposal of the confiscated gold during the pendency of the appeal was not justified.

Issue (ii): Whether, on redemption being allowed, the assessee was entitled to the sale proceeds without deduction of customs duty, while deduction of redemption fine and penalty was permissible, together with interest.

Analysis: The claim for market value of the gold was rejected. Once redemption was allowed, the assessee remained liable for redemption fine and penalty. However, when the gold had already been sold and only sale proceeds were being returned, customs duty could not be deducted from those proceeds, as duty would arise only if the gold itself was actually redeemed. Interest was also warranted on the amount wrongly withheld.

Conclusion: The assessee was entitled to the sale proceeds after deduction only of redemption fine and penalty, without deduction of customs duty, and with interest.

Final Conclusion: The petition succeeded to the extent that the sale proceeds had to be refunded after deducting only the fine and penalty, with interest, and not customs duty.

Ratio Decidendi: Where confiscated goods are sold during the pendency of an appeal, the sale proceeds on eventual redemption are refundable without deduction of customs duty, because duty is attracted only on actual redemption of the goods themselves, though lawful redemption fine and penalty may still be deducted.

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