2009 (1) TMI 953 - AT - FEMA

Issues Involved:
1. Contravention of sections 8(1) and 73(3) of the Foreign Exchange Regulation Act, 1973 (FERA).
2. Contravention of section 9(1)(a) read with sections 68(1) and 68(2) of FERA.
3. Determination of residential status under section 2(p) of FERA.
4. Validity of statements recorded under section 107 of the Customs Act.
5. Ignorance of law as a defense.
6. Imposition and quantum of penalty.

Issue-wise Detailed Analysis:

1. Contravention of sections 8(1) and 73(3) of FERA:
The appellants were charged with acquiring UAE Dhs. 1,22,900 as freight charges and failing to offer it for sale to an authorized dealer, and for purchasing an old engine for UAE Dhs. 30,000 and transferring the amount to M/s. Al Mymoon Ship & Boat Services, Dubai. The Tribunal found that the appellants had indeed contravened these provisions as they did not obtain the necessary permissions from the Reserve Bank of India (RBI).

2. Contravention of section 9(1)(a) read with sections 68(1) and 68(2) of FERA:
The Tribunal held that the appellants made payments to persons resident outside India without the required permissions. The statement by Hazi Ahemad Hazi Hasan Juneja, corroborated by OS Mamad Juneja, established that the transactions were conducted on behalf of Smt. Karimabai, thus contravening section 9(1)(a) read with sections 68(1) and 68(2) of FERA.

3. Determination of residential status under section 2(p) of FERA:
The appellant Smt. Karimabai argued that she was not a resident of India during the relevant period. However, the Tribunal rejected this contention, noting that she held an Indian passport, conducted business in India, and had a savings account in India. The Tribunal concluded that she did not provide sufficient evidence to prove her non-resident status.

4. Validity of statements recorded under section 107 of the Customs Act:
The appellants argued that the statements recorded under the Customs Act should not be admissible. However, the Tribunal cited Supreme Court judgments (Poolpandi v. Supdt. Central Excise and Naresh Sukhawani v. Union of India) to assert that statements made under the Customs Act are substantive evidence and can be used in proceedings under FERA.

5. Ignorance of law as a defense:
The appellants claimed ignorance of the requirement to obtain RBI permission. The Tribunal dismissed this defense, citing the legal maxim "Ignorantia juris non excusat" (ignorance of law is no excuse). The Tribunal emphasized that ignorance of the law cannot absolve the appellants from liability.

6. Imposition and quantum of penalty:
The Tribunal found that the penalties imposed were excessive given the circumstances and the age of the case. The penalties were reduced from Rs. 1,00,000 to Rs. 80,000 for Smt. Karimabai and from Rs. 50,000 to Rs. 30,000 for Haji Ahmed Haji Hasan Juneja. The Tribunal directed the appellants to pay the balance penalty within 15 days, failing which recovery actions could be initiated.

Conclusion:
The Tribunal partly allowed the appeals, reducing the penalties but upholding the findings of contraventions under FERA. The pre-deposited amounts were appropriated towards the penalties, and the appellants were instructed to pay the remaining amounts within the stipulated time.

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