2008 (7) TMI 1113 - AT - FEMA

Issues Involved:
1. Contravention of Section 8(1) and 8(2) read with 64(2) of the Foreign Exchange Regulation Act, 1973.
2. Validity of the statements and retraction by the appellant.
3. Delay in issuing the second Show Cause Notice (SCN).
4. Reliance on documents and statements of co-accused.
5. Definition and application of abetment under the Foreign Exchange Regulation Act, 1973.

Detailed Analysis:

1. Contravention of Section 8(1) and 8(2) read with 64(2) of the Foreign Exchange Regulation Act, 1973:
The appellants were charged with acquiring and converting Bangladesh Taka into Indian currency without the permission of the Reserve Bank of India (RBI), contravening Section 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973 (FERA). The first Show Cause Notice (SCN) dated 26.09.94 alleged that the appellants acquired Bangladesh Taka equivalent to Rs. 3,90,147, including a seized amount of Rs. 3 lakhs, and converted it at rates not prescribed by the RBI. The second SCN dated 04.05.02 alleged the acquisition of Bangladesh Taka equivalent to Rs. 22 lakhs and its conversion into Indian currency.

2. Validity of the Statements and Retraction by the Appellant:
The appellant S.N. Tambakuwala's statement was recorded under Section 40 of FERA, admitting involvement in the illegal currency transactions. He later retracted his statement, alleging coercion and threat. However, the Tribunal found the retraction unsubstantiated, noting that the appellant failed to link his injuries to the alleged coercion and did not follow up with any specific complaints. The Supreme Court's observations in KTMS Mohd v. UOI and K.I. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, Cochin, were cited, emphasizing that the burden of proving coercion lies on the appellant, which was not discharged in this case.

3. Delay in Issuing the Second Show Cause Notice (SCN):
The second SCN was issued after a delay of about 8 years. The Tribunal rejected the appellants' contention that the delay prejudiced their rights, noting that there is no bar of limitation for taking cognizance of such offences under FERA. The Tribunal cited the Supreme Court's observations in State of Haryana v. Chandra Mani, highlighting that delays by the State, due to bureaucratic processes, should not be equated with delays by individuals, particularly in cases involving national interest.

4. Reliance on Documents and Statements of Co-Accused:
The appellants argued that the loose sheets recovered from S.N. Tambakuwala's custody were not reliable evidence. The Tribunal dismissed this argument, noting that the transactions were shrouded in secrecy, and detailed accounts were not expected. The seized documents were corroborated by circumstantial evidence. The Tribunal also upheld the use of statements by co-accused, citing the Supreme Court's ruling in Naresh Sukhawani v. Union of India, which allows such statements as substantive evidence if they inculpate both the maker and another person.

5. Definition and Application of Abetment under the Foreign Exchange Regulation Act, 1973:
S.N. Tambakuwala was charged with abetting the contraventions committed by his maternal uncles, Surendra Kumar Sah and Shyam Sunder Sah. The Tribunal referred to Section 107 of the Indian Penal Code and the Supreme Court's observations in State of Madhya Pradesh v. Mukesh, explaining that abetment involves active complicity. The Tribunal found that S.N. Tambakuwala's actions facilitated the illegal transactions, thus constituting abetment. The Tribunal also referred to the Maharashtra Control for Organised Crime Act, 1999, to emphasize that assistance to organized crime syndicates constitutes abetment.

Conclusion:
The Tribunal confirmed the penalties imposed by the Adjudicating Officer, finding the appellants guilty of contravening the provisions of FERA. The appeals were dismissed, and the appellants were directed to deposit the balance penalty amount within 15 days. The Tribunal's decision was based on substantial evidence, including corroborated statements and seized documents, and it emphasized the importance of addressing economic offences to protect national interests.

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