Redemption fine for confiscated gold allowed where absolute confiscation was based on irrelevant considerations and no smuggling was shown.

Absolute confiscation of primary gold was found unsustainable where the contravention was a failure to make the required declaration, but the gold was not shown to be smuggled or of foreign origin and the governing circular permitted release on redemption fine. The refusal to allow redemption was set aside because relevant factors, including departmental practice and the undertaking to convert the gold into ornaments through a licensed dealer, had not been properly considered. The writ petition was held maintainable despite a pending reference application, as that remedy was not efficacious in the circumstances and would cause further delay.

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Issues: (i) Whether the confiscated gold could be released on payment of redemption fine instead of being absolutely confiscated. (ii) Whether the writ petition was maintainable despite the pendency of a reference application.

Issue (i): Whether the confiscated gold could be released on payment of redemption fine instead of being absolutely confiscated.

Analysis: The petitioner's failure to make the declaration required for primary gold established contravention, but that contravention did not automatically justify absolute confiscation. The gold was not shown to be smuggled or of foreign origin, and the proceedings under the Customs law had failed. The Tribunal also failed to consider the circular issued under the Gold Control Act authorising release with or without fine in lieu of confiscation, the prevailing departmental practice of allowing redemption, and the undertaking to convert the primary gold into ornaments through a licensed dealer. The rejection of redemption was therefore based on irrelevant considerations and was unreasonable.

Conclusion: The refusal to grant an option to redeem the gold on payment of fine was not sustainable and was set aside in favour of the petitioner.

Issue (ii): Whether the writ petition was maintainable despite the pendency of a reference application.

Analysis: The pending reference remedy was not an efficacious alternative in the circumstances, as it would involve further delay and the petitioner undertook not to pursue it if relief was granted in writ jurisdiction.

Conclusion: The writ petition was maintainable and the objection based on alternative remedy was rejected.

Final Conclusion: The impugned orders were quashed to the extent they directed absolute confiscation and denied redemption, and directions were issued for release of the gold on payment of redemption fine to be determined on the basis of its value on the date of seizure.

Ratio Decidendi: Where confiscation is not based on smuggling or foreign origin and the statute or governing circular permits release on redemption fine, the authority must exercise the power to allow redemption reasonably and on relevant considerations; refusal on irrelevant or mechanical grounds is unsustainable.

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