2009 (8) TMI 1295 - AT - FEMA

Summary

Issues:
Violation of section 9(1)(a) of the Foreign Exchange Regulation Act, 1973.

Analysis:

1. The appeal was filed against an Adjudication Order imposing a penalty for contravention of section 9(1)(a) of the FERA, 1973. The appellant had made partial payment of the penalty amount. The main argument was that the payment made was not to a person resident outside India but to a Chartered Accountant, thus falling under a different section of the Act.

2. The Show-Cause Notice alleged that the appellant made a payment to a person resident outside India without permission, which violated section 9(1)(a) of the FERA. The appellant argued that the payment was made to a Chartered Accountant for the original amount, not directly to a foreign resident. It was contended that the offense, if any, should fall under a different section of the Act, not 9(1)(a).

3. Section 9(1)(a) of the FERA, 1973, prohibits making payments to or for the credit of any person resident outside India without permission from the RBI. The statutory scheme under this section is clear that such payments require authorization.

4. The appellant admitted to receiving a demand draft from a foreign resident's NRE account and making a payment through a Chartered Accountant. Statements from the Chartered Accountant and another individual corroborated the appellant's admission. The evidence supported the charge under section 9(1)(a) of the FERA.

5. The appellant retracted his confession, alleging coercion, but failed to provide evidence to support this claim. Legal precedents were cited to establish that a retracted confession can be valid if proven voluntary and corroborated by other evidence, which was the case here.

6. The Tribunal found that the ingredients of section 9(1)(a) were proven, and the appellant was rightly held guilty. However, considering the circumstances, the penalty amount was deemed excessive, and it was reduced to the amount already deposited by the appellant. The appeal was partly allowed, and the pre-deposited amount was to be appropriated towards the penalty.