Failure to redeem confiscated goods is not attributable to an importer when Customs fails to quantify duty despite timely request.

The Petitioner was intercepted while travelling from Delhi to Chennai and was found carrying twelve gold bars weighing 1,200 grams, which were detained by Customs authorities.

By an Order-in-Original dated 18 November 2022, the Joint Commissioner of Customs ordered confiscation of the gold bars but permitted their redemption on payment of the applicable customs duty, a redemption fine of ₹50,000 and a penalty of ₹50,000.

The Petitioner was required to exercise the redemption option within 120 days. On 28 December 2022, within the stipulated period, he applied to the Respondents for quantification of the applicable duty so that he could redeem the goods.

The Department’s appeal against the Order-in-Original was dismissed on 3 August 2023 and the order attained finality.

The Respondents did not quantify or communicate the applicable duty. The Petitioner subsequently sought a refund, believing that the goods had been disposed of, but the request was rejected as premature on 30 April 2024.

During the writ proceedings, the Respondents confirmed that the gold bars remained in their possession.

Whether the Petitioner’s failure to redeem the confiscated gold within the stipulated 120-day period resulted in absolute confiscation under Sections 125 and 126 of the Customs Act, 1962, despite his having applied within time for quantification of the applicable duty?

Whether the Respondents were required to quantify and communicate the applicable duty and permit redemption of the gold bars upon payment of the duty, redemption fine, penalty and applicable interest?

The Court applied Sections 125 and 126 of the Customs Act, 1962. Section 125 permits redemption of confiscated goods on payment of a redemption fine and applicable duty, while Section 126 provides that confiscated goods vest in the Central Government once confiscation becomes absolute.

Relying on Gillette India Ltd. v. Commissioner of Customs & Ors., W.P.(C) 1735/2016, decided on 23 April 2019, the Court recognised that failure to exercise the redemption option within the stipulated period ordinarily makes the confiscation absolute, irrespective of whether the goods are prohibited or other goods.

The Court also applied the principle that taxing statutes must be strictly construed and that courts cannot add words to or rewrite statutory provisions, as stated in Bharat Sanchar Nigam Ltd. v. ACIT and the authorities cited therein.

However, the Court distinguished the operation of the rule in Gillette India where the failure to redeem could not fairly be attributed solely to the importer because the Department had failed to quantify the duty necessary for redemption.

Although the Petitioner had only 120 days from 18 November 2022 to exercise the redemption option, he approached the Respondents on 28 December 2022—within the prescribed period—for quantification of the applicable duty.

The Order-in-Original quantified the redemption fine and penalty but did not quantify the duty payable.

Since the Petitioner could not effectively redeem the goods without knowing the amount of duty to be deposited, and the Respondents admittedly failed to respond to his timely application, the Court held that the delay could not be treated as a default attributable solely to the Petitioner.

Consequently, the general rule in Gillette India concerning absolute confiscation upon expiry of the redemption period did not preclude relief in the present circumstances.

Upon such communication, the Petitioner was directed to deposit the applicable duty, the redemption fine and penalty, together with interest at 8% in accordance with the Order-in-Original dated 18 November 2022.

Upon receipt of the stipulated amount, the Respondents were directed to release the gold bars to the Petitioner.