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Violation of provisions of Foreign Exchange Regulation Act, 1973 (FERA) and justification of setting aside penalty by Tribunal. Analysis: The judgment revolves around the issue of whether the Tribunal was justified in setting aside the penalty levied by the Adjudication Officer after the respondent confessed to violating the provisions of FERA. The respondent, a proprietor of a company, had incriminating documents seized during a search of their premises which led to show-cause notices being issued. The Adjudication Officer found the respondent guilty of contravening FERA and imposed a penalty of Rs. 13,50,000 for making payments to residents outside India without permission. However, the Appellate Tribunal for Foreign Exchange set aside this order, prompting the appeal. The Tribunal, in its order, noted that the respondent was engaged in the indenting business and followed a normal method of accounting regularly inspected by RBI. Relying on a decision of the Madras High Court, the Tribunal found the respondent's accounting method to be universally accepted in such businesses. It also found that the respondent did not confess to violating FERA and the seized documents did not prove any contravention. The entries on the documents were explained as part of the running account maintained by the respondent as an agent of foreigners, and no evidence showed any advance to or from foreigners in violation of FERA. The High Court, after considering the facts and the Tribunal's findings, concluded that no question of law arose from the Tribunal's order. It was established that the accounting system followed by the respondent was universally accepted in the business, regularly inspected by RBI, and there was no evidence besides the seized documents to prove any violation of FERA. Therefore, the Court found no merit in the appeal and dismissed it accordingly.
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