Natural justice governs auction of confiscated gold; restitution follows market value when redemption is later restored.

Customs authorities cannot auction confiscated gold without notice to the owner while statutory remedies remain pending, particularly where the governing circular requires notice and no urgency based on perishability or hazard exists; doing so breaches prescribed procedure and natural justice. Where a de novo order later permits redemption after the gold has already been disposed of, restitution is not confined to a tariff value fixed on transfer to SPMCIL. The fair basis is the prevailing market value of the gold on the date of the de novo redemption order, subject to deduction of redemption fine, duty and penalties lawfully recoverable.

---

---

Issues: (i) Whether the customs authorities could sell confiscated gold by auction without notice to the owners while their statutory remedies remained pending, and whether such sale violated the governing circular and principles of natural justice; (ii) whether, after a de novo order permitting redemption of the confiscated gold had been passed and the gold had already been disposed of, the petitioners were entitled to receive the value of the gold at the prevailing market rate on the date of the de novo order rather than the tariff value on the date of transfer to SPMCIL.

Issue (i): Whether the customs authorities could sell confiscated gold by auction without notice to the owners while their statutory remedies remained pending, and whether such sale violated the governing circular and principles of natural justice.

Analysis: The confiscated gold had been sold after seizure, but the owners had not exhausted their appellate and revisional remedies at the time of sale. The circular issued by the customs administration required notice to the owner even in respect of confiscated goods where legal remedies were still open. The gold was not perishable or hazardous, and no notification under the seizure-and-disposal mechanism justified immediate sale. The absence of notice deprived the petitioners of an opportunity to participate in the auction and constituted a breach of the prescribed procedure and natural justice.

Conclusion: The auction sale without notice was illegal and fatal to the respondents' stand.

Issue (ii): Whether, after a de novo order permitting redemption of the confiscated gold had been passed and the gold had already been disposed of, the petitioners were entitled to receive the value of the gold at the prevailing market rate on the date of the de novo order rather than the tariff value on the date of transfer to SPMCIL.

Analysis: Once the de novo order granted redemption, the petitioners became entitled to restitution of the confiscated commodity or its equivalent value. The administration could not rely on the 2022 instruction to limit payment to the tariff value on the date of transfer to SPMCIL when the earlier disposal had itself occurred without notice and contrary to the governing procedure. The Court balanced the equities between the parties and held that the petitioners should receive the value of the gold at 24K purity prevailing on the date of the de novo order, after deduction of redemption fine, duty, and penalties.

Conclusion: The petitioners were entitled to payment based on the prevailing value on 02.05.2025, less the amounts legally recoverable.

Final Conclusion: The impugned refund orders were set aside and the respondents were directed to pay the petitioners the equivalent value of the gold at the rate prevailing on the date of the de novo redemption order, after lawful deductions.

Ratio Decidendi: Where confiscated gold is sold without the mandatory notice while statutory remedies remain pending, and redemption is later granted, the owner is entitled to restitution on a fair market-value basis rather than a stale tariff-value basis fixed by the department.

---