The Gujarat High Court recently came down heavily on the Customs Department for “disposing of” 200 grams of gold seized from a man in 2021 at the Ahmedabad airport without intimating him.
A Division Bench of Justice AS Supehia and Justice Pranav Trivedi was hearing a petition by a man challenging the November 2022 disposal of 200 grams of two gold bars of 24 carat, 999 purity, then valued at around Rs 9.75 lakh. The Customs Department seized the gold from him upon his arrival in Ahmedabad from Abu Dhabi in October 2021.
In an oral order on January 30, the court directed the Customs Department to deposit an amount equal to the value of the seized gold as of November 29, 2022. The court also warned that it will be “constrained to impose a personal cost of Rs 2 lakhs upon the erring officer and to make an adverse opinion” in case of failure to comply with the direction.
The HC order also stated that the actual valuation of the gold will be decided after the department complies with the direction to deposit the initial value of the gold for November 2022.
‘Illegally and arbitrarily’
The petitioner contended that he should be compensated with either the current market value of the seized gold or equivalent gold of the same purity. Currently, the market price of 10 grams of 24-carat gold is approximately Rs 1.5 lakh.
The petitioner named the Customs Department’s deputy commissioner (Ahmedabad), the commissioner (Appeal), the principal commissioner, and the Union of India as respondents in the case. The petitioner contended that the Customs Department, “illegally and arbitrarily, pending the application”, disposed of the gold that was ordered to be released to the petitioner by the commissioner of Customs (Appeal) in January 2024.
In its order dated August 7, 2025, another division bench of the Gujarat HC had noted that the respondent authorities were not complying with the order of the commissioner of Customs (Appeal) dated January 2024, who ordered the release of the gold bars, on payment of redemption fine of Rs 2.25 lakh, in addition to the duty chargeable and other payable charges.
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That bench also noted that the petitioner had paid the Rs 1 lakh penalty levied by the appellate authority.
The January 30 order of the court referred to the affidavit-in-reply filed by the Customs Department and said, “…it is noticed by us that the gold, which was seized, has already been disposed of on November 29, 2022… (counsel for customs) has submitted that the petitioner is required to deposit penalty amount and also has to make an application for claiming equivalent amount of gold, which is disposed of as per the calculation…”
‘Authority is also kept in the dark’
The court considered the submissions of the petitioner’s advocate, Shubham Jhajharia, that his client “was never issued notice before disposing of the seized gold”. The order also noted the submission that “during the adjudication process before the appellate authority, the respondent authority (Customs) has also not informed about disposal”.
The court also noted that the order of the commissioner (Appeals), Ahmedabad, upheld that the petitioner “was the owner of the gold and not a carrier” and that the “absolute confiscation of impugned gold, leading to dispossession of the gold in the instant case, is therefore, harsh and not reasonable”.
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Accordingly, the appellate authority set aside the absolute confiscation of the gold, and imposed a penalty of Rs. 1 lakh on the petitioner.
The HC noted that the order-in-appeal does not record the disposal of the gold, and “it appears that the appellate authority is also kept in the dark by the concerned authority, who was holding the entire episode”.
The court said that the Customs Department’s submission that the value of the gold seized from the petitioner should be calculated in accordance with a September 2022 departmental instruction cannot be adopted in this case. “(Customs) were required to return the gold or to pay an equivalent amount of gold, which was not done despite having been paid the penalty and making a representation. It is pertinent to note that before disposing of the gold, no notice has been issued to the petitioner…”
The HC has posted the matter on priority next for February 6, when the respondent authorities have been further directed to file an affidavit “disclosing the name of the officer, who has disposed of the gold”.
‘Absolute confiscation of gold bars’
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Officers of the Air Intelligence Unit (Customs) intercepted the petitioner on October 13, 2021, upon his arrival in Ahmedabad from Abu Dhabi and found that he was carrying two bars of gold. The officers of the Customs Department seized 24-carat gold bars of 999 purity. A show-cause notice was issued to the petitioner on March 26, 2022.
On November 30, 2022, the deputy commissioner, Customs, Ahmedabad, ordered “absolute confiscation of the two gold bars, with a tariff value of Rs 8.47 lakhs and market value of Rs 9.75lakhs. A penalty was also imposed on the petitioner under the Customs Act.
In January 2024, the petitioner filed an appeal before the appellate authority, the commissioner (Appeals), Ahmedabad, who set aside the order-in-original of the department’s deputy commissioner and ordered the release of the seized gold bars on payment of the redemption fine and penalty.
Thereafter, the petitioner made several representations to the Customs Department, expressing his willingness to pay the redemption fine, penalty and duty and requested the release of the gold in accordance with the order of the commissioner (Appeals).
