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This really depends... If there is a traffic coming on the 404 pages and have a good link value in that case I would highly recommend redirecting 404 page to similar pages or home page but if the link value is not up to the mark then in that case I would recommend to create a sexy 404 page and let ht people land their and then manually move to any other part of the website... A sexy 404 page will allow you to cater some natural links which might help you in the longer run!

Thanks guys

Thanks Adam

Thanks guys!