2009 (11) TMI 1035 - AT - FEMA

Summary

Issues Involved:
1. Contravention of Section 9(1)(a) of FER Act, 1973.
2. Admissibility and reliability of evidence.
3. Immunity under Foreign Exchange Bonds (Immunities and Exemption) Act, 1991.
4. Burden of proof and circumstantial evidence.
5. Quantum of penalty.

Detailed Analysis:

1. Contravention of Section 9(1)(a) of FER Act, 1973:
The appellant was penalized for receiving payments in India under the instruction of a person resident outside India, violating Section 9(1)(a) of the FER Act, 1973. The appellant argued that the cheques were gifts from NRE accounts of NRIs, thus not constituting foreign exchange. However, the Tribunal found no evidence of a genuine relationship or reason for such substantial gifts, leading to the conclusion that compensatory payments were made, thus establishing the contravention.

2. Admissibility and Reliability of Evidence:
The appellant challenged the admissibility of documents received from Mrs. Meera Bhardwaj, arguing they violated Section 72 of the Foreign Exchange (Authentication of Documents) Rules. The Tribunal upheld the admissibility, noting the documents were received through official channels. Additionally, the Tribunal referenced Supreme Court judgments to assert that retracted confessional statements can be reliable if voluntary and corroborated by other evidence.

3. Immunity under Foreign Exchange Bonds (Immunities and Exemption) Act, 1991:
The appellant claimed immunity under the Foreign Exchange Bonds (Immunities and Exemption) Act, 1991. The Tribunal clarified that the Act only grants immunity against receiving foreign exchange payments but not for making payments to non-residents. Thus, the appellant's transactions did not qualify for immunity under the Act.

4. Burden of Proof and Circumstantial Evidence:
The Tribunal emphasized that circumstantial evidence can suffice to establish guilt. It cited Supreme Court rulings, including Trimukh Maroti Kirkan v. State of Maharashtra, to assert that in cases where direct evidence is unavailable, the burden shifts to the accused to explain the circumstances. The appellant failed to provide a satisfactory explanation for the substantial gifts, leading to an adverse inference.

5. Quantum of Penalty:
The Tribunal found the penalty of Rs. 10,50,000 proportionate to the contravention and not excessive. Given the severity of the violation, the Tribunal deemed the penalty appropriate and dismissed the appeal for lack of merit.

Conclusion:
The appeal was dismissed, upholding the penalty for contravention of Section 9(1)(a) of the FER Act, 1973. The Tribunal found the evidence admissible and reliable, rejected the claim of immunity under the Foreign Exchange Bonds (Immunities and Exemption) Act, 1991, and determined that the burden of proof was not met by the appellant. The penalty imposed was deemed appropriate and not excessive.