2016 (9) TMI 879 - MADRAS HIGH COURT

Redemption of gold seized on payment of redemption fine - Section 125 of the Customs Act 1962 - provisional release of goods under Section 111(d) of the Customs Act, 1962 - prohibited goods - discretionery power of competent authority in taking a decision - whether the competent authority correct in denying the release of goods, thereby imposing absolute confiscation in exercise of its discretionery power?

Held that: - The power conferred on the authority without any guidelines may likely to be abused or arbitrarily exercised and in such circumstances, the guidance and the control of exercise of such power has to be gathered from the object of conferment of such power. Non-consideration or non-application of mind to the relevant factors, renders exercise of discretion manifestly erroneous and it cause for judicial interference. The case of Global Energy Limited and another v. Central Electricity Regulatory Commission [2009 (5) TMI 904 - SUPREME COURT] referred where it was held that the exercise of discretion has to be in conformity with the purpose for which, it is conferred, object sought to be achieved and reasons to be recorded.

When discretion is exercised under Section 125 and if any challenge is made under Article 226 of the Constitution of India, the twin test, to be satisfied is "relevance and reason". In the light of the judgments of the Hon'ble Apex Court and applying the same to the facts of this case and testing the discretion exercised by the authority, on both subjective and objective satisfaction, as to why, the goods seized, cannot be released, when smuggling is alleged and on the materials on record, it is held that the discretion exercised by the competent authority, to deny release, is in accordance with law.

Decided in favor of revenue.