2025 (4) TMI 466 - HC - Customs

Seeking issuance of appropriate directions to the Respondent-Department to either return the gold to the Petitioner or refund the value of the said gold - HELD THAT - The entire journey of 10 years has still not culminated in either redemption or refund being issued to the Petitioner. Clearly the Customs Authorities ought to have initially given effect to the order of Commissioner (Appeals) and accordingly should have determined the duty and allowed the Petitioner to avail release of the gold which did not happen. Gold prices have also increased considerably during this period. Considering this position the Court is inclined to direct the Adjudicating Authority Assistant/Deputy Commissioner (Refunds) to pass the refund order within a period of one month from today. List for reporting compliance on 15th July 2025.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

1. Whether the Petitioner is entitled to the return of the confiscated gold or a refund of its value in accordance with the Order-in-Appeal dated 17th June, 2020.

2. Whether the disposal of the gold by the Respondent-Department without prior intimation to the Petitioner was lawful.

3. Whether the Petitioner is entitled to any interest on the refund amount, considering the delay in processing the refund.

ISSUE-WISE DETAILED ANALYSIS

1. Entitlement to Return or Refund of Gold

Relevant Legal Framework and Precedents: The Customs Act, 1962, particularly Sections 111, 112, 114AA, and 125, governs the confiscation and redemption of goods. Section 125 provides for the option to redeem confiscated goods upon payment of a fine.

Court's Interpretation and Reasoning: The Court noted that the Petitioner was initially allowed to redeem the confiscated gold upon payment of a redemption fine and applicable duties. Despite the Petitioner's attempts to comply, the specific duty amount was not communicated by the Adjudicating Authority, resulting in a failure to exercise the redemption option.

Key Evidence and Findings: The Petitioner had consistently followed up with the authorities, as evidenced by letters dated 30th May 2016 and 8th August 2016, indicating an intention to redeem the gold.

Application of Law to Facts: The Court recognized that the Petitioner's right to redeem the gold was impeded by the Respondent's failure to communicate the duty amount, thus necessitating a refund of the sale proceeds of the disposed gold.

Treatment of Competing Arguments: The Respondent's argument that the refund claim was time-barred under Section 27 of the Customs Act was dismissed, as the refund related to sale proceeds, not duty.

Conclusions: The Court directed the Adjudicating Authority to pass a refund order, considering whether the Petitioner was informed prior to the gold's disposal and determining the amount recovered from the sale.

2. Legality of Gold Disposal Without Intimation

Relevant Legal Framework: Principles of natural justice and procedural fairness require that affected parties be informed of significant actions affecting their rights.

Court's Interpretation and Reasoning: The Court observed that if the gold was disposed of without notifying the Petitioner, it would contravene legal standards.

Key Evidence and Findings: The Petitioner's assertion of not receiving intimation prior to disposal was not contested by the Respondent.

Application of Law to Facts: The Court emphasized the need for the Respondent to establish whether proper intimation was given before disposal.

Conclusions: The Court instructed the Adjudicating Authority to verify if the Petitioner was notified before the gold's disposal and to include this in the refund order considerations.

3. Entitlement to Interest on Refund

Relevant Legal Framework: The Customs Act and applicable case law provide for interest on delayed refunds under certain circumstances.

Court's Interpretation and Reasoning: The Court acknowledged the significant delay in processing the refund and the potential entitlement to interest.

Key Evidence and Findings: The Petitioner's persistent follow-ups and the prolonged inaction by the Respondent were noted.

Application of Law to Facts: The Court instructed the Adjudicating Authority to assess the Petitioner's eligibility for interest on the refund amount.

Conclusions: The refund order must address the issue of interest, considering the delay and applicable legal standards.

SIGNIFICANT HOLDINGS

The Court emphasized the necessity of adhering to procedural fairness and ensuring that parties are informed of actions affecting their rights. It reinforced the principle that failure to communicate essential information, such as duty amounts for redemption, can impede the exercise of legal rights. The Court also highlighted the importance of addressing delays in administrative processes and the potential entitlement to interest on refunds.

Final Determinations on Each Issue

1. The Adjudicating Authority is directed to pass a refund order within one month, considering whether the Petitioner was notified before the gold's disposal, the amount recovered from the sale, and the Petitioner's entitlement to interest.

2. The legality of the gold's disposal without intimation is to be examined, and appropriate findings should be included in the refund order.

3. The issue of interest on the refund is to be determined based on the delay and relevant legal provisions.