1988 (7) TMI 75 - HC - Central Excise

Summary

Issues Involved:
1. Legality of the Tribunal's rejection of the petitioners' prayer to redeem confiscated gold on payment of redemption fine.
2. Validity of the penalty imposed on the petitioners.
3. Applicability of the Gold Control Act, 1968 to the confiscated gold.
4. Consideration of the Government Circular regarding redemption of confiscated gold.
5. Jurisdiction and appropriateness of the writ petition in light of pending reference application.

Issue-wise Detailed Analysis:

1. Legality of the Tribunal's Rejection of the Petitioners' Prayer to Redeem Confiscated Gold on Payment of Redemption Fine:
The petitioners challenged the Tribunal's order dated April 24, 1986, which rejected their prayer to redeem confiscated gold on payment of redemption fine. The Tribunal held that the violation of Section 8(1) of the Gold Control Act, 1968, was not a technical or nominal violation, as the primary gold was inherited by the first petitioner from his father, who was a gold dealer. The Tribunal concluded that it was not a fit case for granting the option to redeem the gold on payment of a fine. The High Court found this reasoning unsustainable, noting that the confiscated gold was neither smuggled nor of foreign origin and that the first petitioner had received the gold from his parents, which he did not declare under the Gold Control Act. The Court emphasized that the Tribunal did not consider the prevalent practice and the Government Circular, which allowed for redemption on payment of fine. The High Court set aside the Tribunal's order, directing the Collector of Central Excise to allow the petitioners to redeem the seized gold upon payment of redemption fine.

2. Validity of the Penalty Imposed on the Petitioners:
The Collector of Central Excise had imposed a penalty of Rs. 20,000 on both petitioners, which was later reduced to Rs. 5,000 by the Administrator, Gold Control. The Tribunal upheld this penalty. The High Court, however, did not specifically address the penalty issue in its final order, focusing instead on the redemption of the confiscated gold. The High Court's primary concern was the Tribunal's failure to consider the petitioners' prayer for redemption fine and the relevant Government Circular.

3. Applicability of the Gold Control Act, 1968 to the Confiscated Gold:
The petitioners argued that the confiscated gold was ancestral property and that the Gold Control Act, 1968, did not apply to it. The High Court noted that the father of the first petitioner died in 1930, before the enactment of the Gold Control Act, and there was no prohibition on the import of gold at that time. The Court found that the Tribunal's reliance on the petitioner's family background in the gold business was insufficient to justify the refusal of redemption. The High Court concluded that the Tribunal's finding that the charges under Section 8(1) could not be taken lightly was not sustainable.

4. Consideration of the Government Circular Regarding Redemption of Confiscated Gold:
The petitioners relied on a circular dated July 30, 1976, issued by the Administrator, Gold Control, which allowed for the redemption of primary gold on payment of fine, provided it was sold to a licensed dealer or converted into ornaments. The High Court observed that the Tribunal did not address this circular in its decision. The Court emphasized that the circular authorized adjudicating officers and appellate authorities to allow redemption on payment of fine, and the Tribunal's failure to consider this was a significant oversight. The High Court directed the Collector to determine the redemption fine based on the value of the gold at the time of seizure and to allow the petitioners to redeem the gold upon payment of this fine.

5. Jurisdiction and Appropriateness of the Writ Petition in Light of Pending Reference Application:
The respondents argued that the writ petition should not be entertained because a reference application filed by the petitioners was pending. The High Court acknowledged that the reference application had been filed but had not yet been heard. The Court found that the alternative remedy of the reference application was not efficacious and would only delay justice. The petitioners undertook not to pursue the reference application if the Court set aside the Tribunal's order. The High Court decided to proceed with the writ petition, setting aside the Tribunal's order and directing the Collector to allow the redemption of the confiscated gold.

Conclusion:
The High Court allowed the application, setting aside the orders of the Tribunal, Collector of Central Excise, and Administrator, Gold Control, insofar as they rejected the petitioners' prayer for redemption of the confiscated gold on payment of fine. The Court directed the Collector to pass an appropriate order within six weeks, allowing the petitioners to redeem the gold upon payment of redemption fine, determined based on the value of the gold at the time of seizure. The petitioners were required to produce a certificate from a certified goldsmith or licensed dealer within three weeks of the release of the gold.