2008 (8) TMI 1040 - AT - FEMA

Issues Involved:
1. Contravention of sections 9(1)(d), 8(3), and 8(4) read with section 64(2) of the Foreign Exchange Regulation Act, 1973.
2. Validity of confessional statements and their retraction.
3. Status of Rajnikant Kedia as a non-resident.
4. Abetment in mis-declaration of imported goods.
5. Quantum of penalty imposed.

Issue-wise Detailed Analysis:

1. Contravention of sections 9(1)(d), 8(3), and 8(4) read with section 64(2) of the Foreign Exchange Regulation Act, 1973:
The appellant was held guilty of making a payment of Rs. 36,00,000 to D.C. Shah on behalf of Rajnikant Kedia, a non-resident, without the permission of the RBI, thus violating section 9(1)(d). Additionally, the appellant was found to have abetted M/s. Varun International Trading Corporation in mis-declaring goods under sections 8(3) and 8(4) read with section 64(2). The mis-declaration involved under-invoicing the value, quantity, and quality of imported dyes.

2. Validity of Confessional Statements and Their Retraction:
The appellant argued that his confessional statement was involuntary, given under coercion, and promptly retracted. However, the Tribunal found no evidence supporting the claim of coercion. The retraction was deemed an afterthought, unsupported by documentary evidence. The Tribunal cited Supreme Court precedents, asserting that retracted confessional statements could be used as substantive evidence if corroborated by other evidence. In this case, the appellant's retracted statement was corroborated by statements from co-noticees and documentary evidence, thus deemed valid.

3. Status of Rajnikant Kedia as a Non-Resident:
The appellant contended that Rajnikant Kedia was not a non-resident during the relevant period. However, the Tribunal found that Kedia had an NRE account, which can only be maintained by a person resident outside India. There was no evidence that Kedia had applied to redesignate his NRE account as a resident account. Thus, the Tribunal concluded that Kedia was a non-resident during the relevant period.

4. Abetment in Mis-Declaration of Imported Goods:
The appellant was charged with abetting M/s. Varun International and others in mis-declaring the imported goods. The Tribunal referred to the definition of 'abetment' under section 107 of the Indian Penal Code, which includes instigation, conspiracy, or intentional aid. The Tribunal found that the appellant had actively facilitated the mis-declaration by making payments and purchasing the goods, knowing the nature of the deal. This active complicity established the charge of abetment.

5. Quantum of Penalty Imposed:
The Tribunal found the penalty of Rs. 1,89,000 commensurate with the gravity of the offense. The appellant's argument that the burden of proof was not met was dismissed. The Tribunal emphasized that in economic offenses, the burden of proof need not reach mathematical precision. The evidence provided established a high degree of probability that justified the penalty. The pre-deposited amount was ordered to be appropriated towards the penalty.

Conclusion:
The Tribunal confirmed and upheld the adjudication order, finding the charges under sections 9(1)(d), 8(3), and 8(4) read with section 64(2) of the Foreign Exchange Regulation Act, 1973, fully proved against the appellant. The appeal was dismissed, and the penalty was deemed appropriate for the offense.

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