2008 (7) TMI 1107 - AT - FEMA

Issues Involved:
1. Legality of the penalty imposed under Section 9(1)(b) of the Foreign Exchange Regulation Act (FERA), 1973.
2. Validity of the confiscation of seized amount under Section 63 of FERA.
3. Admissibility and voluntariness of confessional statements.
4. Denial of cross-examination and principles of natural justice.
5. Burden of proof and standard of evidence required in economic offences.

Issue-wise Detailed Analysis:

1. Legality of the penalty imposed under Section 9(1)(b) of the Foreign Exchange Regulation Act (FERA), 1973:
The appellant was charged with receiving Rs. 20.50 lakhs from Prithviraj Sheth on instructions from a person resident outside India without RBI's permission, contravening Section 9(1)(b) of FERA. The provision restricts receiving payments in India on behalf of persons resident outside India unless through an authorized dealer. The appellant admitted in his confessional statement to receiving the amount, which was corroborated by documents and statements from co-noticees. The Tribunal found no force in the appellant's contention of discrepancies in the amounts mentioned, confirming the penalty's legality.

2. Validity of the confiscation of seized amount under Section 63 of FERA:
The Enforcement Directorate seized Rs. 11.50 lakhs from the appellant's residence and Rs. 1.5 lakhs from his business premises. These amounts were confiscated under Section 63 of FERA. The Tribunal upheld the confiscation, noting that the appellant failed to provide a legitimate source for the seized money. The substantial amount seized and corroborative statements from co-noticees supported the confiscation's validity.

3. Admissibility and voluntariness of confessional statements:
The appellant argued that his and Prithviraj Sheth's statements were forcibly obtained and retracted later. The Tribunal rejected this argument due to a lack of evidence supporting the claim of coercion. The retraction was deemed an afterthought without any basis. The Tribunal cited Supreme Court precedents, emphasizing that the burden of proving inducement or threat lies on the appellant, which he failed to discharge. The confessional statements, being detailed and corroborated by other evidence, were considered voluntary and admissible.

4. Denial of cross-examination and principles of natural justice:
The appellant claimed his right to natural justice was violated due to the denial of cross-examination. The Tribunal referred to the Supreme Court's ruling in Surjit Singh Chhabra v. UOI, stating that customs officials are not police officials, and cross-examination can be denied if no sufficient reason is provided. The Tribunal found that the nexus between the appellant and co-noticees was established, and the denial of cross-examination did not violate natural justice principles.

5. Burden of proof and standard of evidence required in economic offences:
The Tribunal noted that while the burden of proof lies on the prosecution, it does not require mathematical precision. Economic offences like those under FERA involve complex networks, and proof beyond reasonable doubt does not mean absolute certainty. The Tribunal cited the Supreme Court's observation in Collector of Customs, Madras v. Bhoormull, emphasizing that legal proof is about establishing a high degree of probability. The evidence, including physical seizure, corroborative statements, and documents, was sufficient to prove the charges against the appellant beyond reasonable doubt.

Conclusion:
The Tribunal concluded that the charges under Section 9(1)(b) of FERA were proved against the appellant. The penalty and confiscation were upheld, and the appeal was dismissed. The pre-deposited amount was appropriated towards the penalty, and the appellant was directed to pay the balance within 15 days.

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