2001 (9) TMI 626 - HC - FEMA

Summary

Issues:
1. Appeal under Section 52(2) of the Foreign Exchange Regulation Act, 1973.
2. Imposition of penalty for contravention of Section 18(2) read with Section 18(3) of the Act.
3. Appellant's efforts to secure realisation of the amount and alleged excessive penalty.
4. Interpretation of Section 54 and Rule 8 of the Foreign Exchange Regulation Rules, 1974.
5. Lack of wilfulness in contravention and legal presumption under Section 18(3).
6. Application of mens rea in penalty imposition under the Act.
7. Judicial precedents regarding mens rea in penalty provisions.
8. Consideration of penalty quantum under Section 54 appeal.

Analysis:
1. The case involves an appeal under Section 52(2) of the Foreign Exchange Regulation Act, 1973, where the Foreign Exchange Regulation Appellate Board modified the penalty imposed on the appellant for contravention of Section 18(2) read with Section 18(3) of the Act. The appellant exported goods but failed to repatriate the foreign exchange, leading to the penalty imposition.

2. The appellant argued that despite efforts to secure realisation of the amount and showing bona fides, the penalty was excessive and disproportionate. However, the respondent contended that the contravention was clear as per Rule 8 of the Foreign Exchange Regulation Rules, 1974, which mandates realisation of export value within a specified period.

3. The court noted that the contravention was established by the non-realisation of foreign exchange within the stipulated time, even though the appellant made belated attempts to address the issue. The legal presumption under Section 18(3) supported the contravention finding, irrespective of the appellant's subsequent actions.

4. The judgment referred to the application of mens rea in penalty provisions under the Act, citing relevant precedents that established contravention upon the mere act or omission without requiring proof of intent. The court differentiated cases requiring wilful omission, emphasizing that mens rea was not a prerequisite for penalty imposition under Sections 18(2) and 18(3) of the Act.

5. Regarding the quantum of penalty, the court held that the appellate board's decision could not be challenged on the grounds of excessiveness in the absence of a legal question. The penalty imposition was deemed justified based on the breach of civil obligation to repatriate foreign exchange as required by the Act.

6. Ultimately, the court dismissed the appeal, emphasizing that no legal grounds existed to interfere with the appellate board's order. The judgment underscored the strict liability nature of contraventions under the Foreign Exchange Regulation Act, highlighting the importance of compliance with the statutory provisions to avoid penalties.