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Issues:
- Appeal against modification of penalty and confiscation under the Foreign Exchange Regulation Act, 1973. - Discretion of the Appellate Board in setting aside confiscation while increasing penalty. - Interpretation of sections 9(1)(b), 50, 51, and 63 of the Act. - Consideration of retraction of statement by respondent. - Comparison with precedent cases involving confiscation and penalty. Analysis: The case involved an appeal under section 54 of the Foreign Exchange Regulation Act, 1973 against the modification of penalty and confiscation orders by the Appellate Board. The primary contravention under consideration was under section 9(1)(b) of the Act. The first authority had imposed a penalty of Rs. 5,000 and confiscated Rs. 50,000 seized in the contravention. However, the Appellate Board increased the penalty to Rs. 20,000 but set aside the confiscation order, leading to the appeal. The key legal provisions in question were sections 9(1)(b), 50, 51, and 63 of the Act. Section 9(1)(b) prohibits the receipt of payments from persons outside India except through authorized channels. Section 50 allows penalties up to five times the amount involved or Rs. 5,000, whichever is more for contraventions. Section 51 mandates an inquiry for adjudging penalties, and section 63 permits confiscation in addition to penalties. The respondent had initially admitted to receiving the seized amount but later retracted the statement, alleging coercion. However, subsequent communications reaffirmed the original admission, albeit with claims of coercion. The appellant argued that the confiscation should not have been set aside, citing precedent cases emphasizing the importance of preventing illegal gains. The court referred to a previous judgment where confiscation was upheld to prevent nominal penalties and illegal gains. In the present case, the substantial increase in penalty justified the Appellate Board's decision to set aside confiscation. The court found no grounds for interference under section 54 of the Act, as the penalty increase was significant and not nominal. Additionally, a Supreme Court case was cited to highlight the distinction between jurisdictional issues in confiscation orders. In the present case, the focus was on the justification for setting aside confiscation, not on jurisdictional competence. Therefore, the Supreme Court precedent was deemed inapplicable to the current scenario. Ultimately, the court dismissed the appeal, upholding the Appellate Board's decision within the legal framework of the Act. No costs were awarded in the circumstances of the case.
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