2001 (7) TMI 1336 - AT - FEMA

Issues Involved:
1. Pre-deposit of penalty for appeal consideration.
2. Adequacy of appeal fee under the Foreign Exchange Management Act, 1999.
3. Legality of the seizure of foreign currencies and travelers cheques.
4. Compliance with the conditions of the full-fledged money-changer's license.
5. Validity of the charges against the appellants under the Foreign Exchange Regulation Act, 1973.
6. Sufficiency of evidence to support the charges.
7. Legality of the confiscation of seized foreign currency and travelers cheques.

Issue-wise Detailed Analysis:

1. Pre-deposit of penalty for appeal consideration:
The appellants deposited the penalty amount and did not seek dispensation of pre-deposit, requesting that the appeals be heard on merits.

2. Adequacy of appeal fee under the Foreign Exchange Management Act, 1999:
The appeal filed on 29-8-2000 required a fee of Rs. 10,000 due to the Foreign Exchange Management Act, 1999 coming into effect on 1-6-2000. Despite the appellant's contention of receiving the adjudication order belatedly, the Tribunal noted that the appeal must comply with the procedure in force at the time of filing, requiring the deposit of the appropriate fee.

3. Legality of the seizure of foreign currencies and travelers cheques:
The seizure occurred on 10-6-1997, involving US $10,000, other foreign currencies valued at Rs. 8,45,000, Indian currencies of Rs. 4,300, and travelers cheques for US $20,000. The respondents charged the appellants with contravening sections of the Foreign Exchange Regulation Act, 1973, related to unauthorized transfer and acquisition of foreign exchange.

4. Compliance with the conditions of the full-fledged money-changer's license:
The appellants argued that the seized currencies and travelers cheques were legally acquired and recorded by IMEC, a licensed money-changer. The Tribunal noted that the names of the employees involved were duly forwarded to the RBI, indicating compliance with the conditions of the money-changer's license.

5. Validity of the charges against the appellants under the Foreign Exchange Regulation Act, 1973:
The Tribunal found that the charges against the appellants were vague. The show-cause notice lacked specific allegations regarding which conditions or regulations were contravened. The finding that the appellant failed to exercise proper caution was not supported by specific allegations in the show-cause notice, rendering the impugned order vitiated.

6. Sufficiency of evidence to support the charges:
The Tribunal observed that there was no cogent evidence to show unauthorized sale attempts by the appellants. The mere interception in an area known for illegal currency trade was insufficient to prove the charges. The evidence fell short of legal requirements, and the explanation provided by the appellants regarding the circumstances of the countersigned travelers cheques was deemed plausible.

7. Legality of the confiscation of seized foreign currency and travelers cheques:
The Tribunal held that the confiscation was unjustified as the foreign exchange was handed over to authorized employees in connection with the business. The lack of specific conditions alleged to be contravened and the undue emphasis on the non-availability of certain documents further invalidated the confiscation.

Conclusion:
The Tribunal set aside the impugned order, allowed the appeals, and directed the return of the seized foreign currency and penalties deposited by the appellants. The appeals were accordingly allowed, emphasizing the lack of sufficient evidence and specific allegations to support the charges and confiscation.

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