Confiscation and preservation of seized gold jewellery: court orders market-value compensation where statutory procedure was breached

Confiscation of seized goods without issuance of statutorily required notices and without following seizure, inventory and disposal procedure violated procedural and constitutional protections; the State must preserve seized property intact pending final adjudication and appellate remedies, acting as bailee, and return it if no legal basis for retention is found. Where seized gold was sent to the mint and re-export became impossible, the appellate order permitting redemption or re-export cannot be implemented and the owner is entitled to compensation equal to present market value. Petition was allowed on these grounds.

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Issues: Whether the confiscation, disposal and imposition of redemption fine and penalties in respect of the petitioner's detained gold jewellery were lawful having regard to the requirements of Sections 80, 110, 111, 124 and 125 of the Customs Act, 1962 and constitutional protections.

Analysis: The Court examined the statutory scheme governing temporary detention (Section 80), seizure (Section 110), confiscation (Section 111), the mandatory issue of a show-cause notice prior to confiscation (Section 124) and the option to pay a fine in lieu of confiscation (Section 125). The Court analysed whether the procedural safeguards in Sections 110 and 124 were complied with before confiscation and before disposal of seized gold, and considered constitutional protections under Article 14 and Article 300A regarding preservation and deprivation of property. The Court found that the authorities failed to follow the statutory procedure: no show-cause notice as required by Section 124 was issued within the statutory period, the safeguards and magistrate/Commissioner (Appeals) steps under Section 110(1A)-(1D) were not complied with for valuable non-perishable goods, and the seized gold was sent to the mint and disposed of while appeal/revision proceedings were pending. Prior case-law and Board instructions requiring notice and fair procedure before disposal of seized/confiscated goods were applied to the facts, and the Court held that the department had an obligation to preserve seized property and could not lawfully dispose of it in the absence of cogent reasons and compliance with the statutory and constitutional requirements.

Conclusion: The confiscation and subsequent disposal/sale of the petitioner's gold jewellery and the imposition of redemption fine and penalties without following the statutory procedure were unlawful; the petition is allowed and the respondents are directed to restore to the petitioner equivalent quantity of gold (373.700 grams) or compensate the petitioner by payment of the market value of that quantity as on date within three weeks.

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