2024 (12) TMI 1371 - HC - Customs

Court Upholds Gold Confiscation Under Customs Act; Orders Compensation for Disposal Violation If Appeal Succeeds.

The court addressed the legality of gold bar confiscation under the Customs Act, 1962, and the subsequent disposal of the seized gold by customs ... Confiscation of 3 Gold Bars found from the petitioner - HELD THAT:- It is difficult to understand as to how the respondent-authorities could have disposed of the gold in November, 2022 in breach of the interim-order passed by this Court which has continued to operate till date. Instead of calling upon the respondents to give explanation for breach of the order of this Court, in the interest of justice, we hereby direct the respondent-Authorities to pay the market price, prevailing at the relevant time, of the goods which was sold in violation of the order passed by this Court in case the petitioner succeeds in appeal or in revision, if any. Petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe legal judgment presented involves the following core legal questions:Whether the confiscation of gold bars from the petitioner by the customs authorities was lawful under the Customs Act, 1962.Whether the respondent authorities were justified in disposing of the seized gold bars despite the interim relief granted by the court.What remedies are available to the petitioner if the disposal of the gold bars is found to be in violation of the court's orderRs.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Legality of Confiscation under the Customs Act, 1962Relevant legal framework and precedents: The confiscation of goods under the Customs Act, 1962 is governed by Sections 110 and 110A. Section 110 pertains to the seizure of goods, while Section 110A allows for provisional release of seized goods.Court's interpretation and reasoning: The court noted that the petitioner failed to declare the gold at the airport, leading to its seizure. The petitioner was willing to pay the duty, suggesting a possibility for provisional release under Section 110A.Key evidence and findings: The petitioner arrived from Dubai with undeclared gold, which was seized by customs. The petitioner filed an appeal against the confiscation order, which was pending.Application of law to facts: The court considered the petitioner's willingness to comply with the duty requirements and the pending appeal as factors influencing the decision on interim relief.Treatment of competing arguments: The petitioner's argument centered on the lack of a show-cause notice or final order before disposal, while the respondents justified their actions under Section 150.Conclusions: The court allowed the interim relief to continue, permitting the petitioner to seek provisional release through the appellate process.Issue 2: Justification for Disposal of Seized GoldRelevant legal framework and precedents: Section 150 of the Customs Act allows for the disposal of goods not confiscated by public auction or tender, considering factors like perishability or depreciation.Court's interpretation and reasoning: The court found that the gold was neither perishable nor faced storage constraints, questioning the application of Section 110(1A) for depreciation.Key evidence and findings: The respondents disposed of the gold despite the court's interim order staying such actions.Application of law to facts: The court emphasized the breach of its order by the respondents, highlighting the need for compliance with judicial directions.Treatment of competing arguments: The respondents' actions were challenged based on the interim relief, while they relied on statutory provisions for disposal.Conclusions: The court directed the respondents to compensate the petitioner with the market price of the gold if the petitioner succeeds in appeal.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'Considering the above submissions, we fail to understand as to how the respondent-authorities could have disposed of the gold in November, 2022 in breach of the interim-order passed by this Court which has continued to operate till date.'Core principles established: The court underscored the importance of adhering to interim orders and the potential for compensation if judicial directions are violated.Final determinations on each issue: The petition was disposed of with directions for the respondents to compensate the petitioner with the market price of the gold if the appeal favors the petitioner.