District Collector Anshul Mishra said he had recommended to the state government to auction the granite and also to collect penalty from owners who had illegally qaurried granite.
The granite was seized from various quarries in Melur in August and September this year in raids by officials on a report from former Collector U Sagayam, which estimated that Rs 16,000 crore worth of revenue had been lost due to illegal quarrying.
On December 10, the Madurai Bench had quashed a non-bailable arrest warrant against Union Minister M K Alagiri's son Durai Dayanidhi and granted him anticipatory bail in connection with the alleged multi-crore illegal granite quarrying scam.
He and nine others are facing charges that firms owned by them had mined sand and granite in Melur without permission.
Officials said though the seized granite alone was estimated at Rs 4,000 crore, the amount of granite illegally quarried so far and sold by the firms was for Rs 10,000 crore.
Mishra said an inquiry report on grave violations detected in 86 quarries, causing Rs 10,000 crore loss to the exchequer, has been submitted to the state government.
The licences of 50 of the quarries have been temporarily suspended, he said.
He has also asked the quarry owners to appear before him for an inquiry.