Delhi High Court directs customs to quantify duty and release confiscated gold on payment of dues
Background of the dispute
The matter before the Delhi High Court in Prikshith Jhaver Vs Commissioner of Customs arose from confiscation of gold bars at Indira Gandhi International Airport, New Delhi, and the subsequent dispute over the assessee’s right to redeem those bars under Section 125 of the Customs Act, 1962.
The assessee was travelling from Delhi to Chennai through Terminal-3 of Indira Gandhi International Airport when customs officers intercepted him and found twelve gold bars weighing 1,200 grams. These bars were detained and proceedings were initiated under the Customs Act, 1962.
An Order-in-Original dated 18.11.2022 was passed by the Joint Commissioner of Customs, Terminal-3. Under this order:
- The twelve gold bars were ordered to be confiscated.
- The assessee was given an option to redeem the confiscated gold bars.
- The conditions for redemption were:
- Payment of “applicable duty” (not quantified in the order), and
- Payment of redemption fine of Rs.50,000/-, and
- Payment of penalty of Rs.50,000/-.
Thus, while the adjudicating authority quantified the amounts for redemption fine and penalty, it did not specify the exact customs duty payable on the confiscated gold.
Redemption period and the assessee’s request
As noted by the High Court, the assessee had 120 days from 18.11.2022 to avail the redemption option granted under the Order-in-Original.
Within this window, on 28.12.2022, the assessee submitted a written application to the customs department requesting quantification of the “applicable duty” in respect of the confiscated gold bars. The purpose of this application was to enable him to make complete payment towards:
- Duty
- Redemption fine
- Penalty
and thereby exercise the redemption option under Section 125.
It was undisputed before the Court that:
- The application dated 28.12.2022 was duly received by the customs authorities; and
- No communication was sent in response; the duty amount was never quantified or informed to the assessee.
At the same time, the department itself challenged the Order-in-Original in appeal. That appeal was dismissed on 03.08.2023, and the dismissal order attained finality.
Subsequent refund application and rejection
Later, proceeding on the assumption that the confiscated gold bars might already have been disposed of by customs in the meantime, the assessee moved an application seeking refund.
This refund request was rejected by order dated 30.04.2024, on the reasoning that the application was premature.
It was in this background, after the department’s appeal had failed and the refund application had been turned down, that the assessee approached the Delhi High Court through a writ petition.
Reliefs sought in the writ petition
In the writ petition, the assessee requested two principal reliefs:
- Certiorari – to quash the communication/order dated 08.08.2024; and
- Mandamus – directing the customs authorities to:
- Quantify the applicable duty on the gold bars, and
- Enable him to deposit the duty along with the already quantified fine and penalty so as to exercise the redemption option.
When the matter was heard, counsel for the customs department accepted that the twelve confiscated gold bars were still in the department’s custody and had not been disposed of.
Stand of the customs department and reliance on Gillette India Ltd.
The respondents (customs authorities) relied heavily on the judgment of a three-judge bench of the Delhi High Court in Gillette India Ltd. v. Commissioner of Customs & Ors., W.P.(C) 1735/2016, decided on **23.04.2019`.
They particularly referred to paragraphs 20, 21, 24 and 30 of that decision, which explain the legal consequences of not paying redemption fine within the period specified by the adjudicating authority under Section 125, read with Section 126 of the Customs Act, 1962.
In Gillette India Ltd., the Court had summarised the legal position as follows: