2001 (6) TMI 837 - AT - FEMA

Summary

Issues:
- Penalty imposed for contravening provisions of section 9(1)(c) of the Foreign Exchange Regulation Act, 1973.
- Examination of legality and propriety of the impugned order.
- Allegation of acknowledging debt by the Appellant.
- Proper declaration of gift items to customs authorities and payment of custom duty.
- Appellant's innocence and belief in not committing any contravention of law.

Analysis:

The appeal before the Appellate Tribunal was against the imposition of a penalty of Rs. 5,000 on the Appellant for contravening section 9(1)(c) of the Foreign Exchange Regulation Act, 1973. The Appellant had already deposited the penalty amount. The Tribunal noted that the Appellant visited Singapore and received gifts from his brother-in-law, including clothes, VCRs, and a camera. The Appellant paid custom duties on these items upon returning to India, making a proper declaration to the customs authorities and paying a substantial amount as custom duty. The Tribunal observed that there was no acknowledgment of debt by the Appellant, as alleged by the Respondent. The Appellant's statement expressing an inclination to reciprocate the gifts could not be construed as an acknowledgment of debt. The Tribunal found no overt act on the part of the Appellant that could be considered as acknowledging a debt, and the disclosure in the statement was deemed insufficient to sustain the allegation of contravention of section 9(1)(c).

The Tribunal further analyzed the Appellant's conduct in making a proper declaration of the gifts to customs authorities and paying a significant custom duty amount. Despite being able to pay the penalty and settle the matter, the Appellant believed in his innocence and filed the appeal to clear his name. The Tribunal agreed with the Appellant's stance, stating that there was no debt to acknowledge and, therefore, no basis for invoking section 9(1)(c). Consequently, the Tribunal found the impugned order improper and set it aside. The Respondents were directed to refund the penalty amount deposited by the Appellant within two months from the date of the Tribunal's order. The Tribunal's decision was based on the lack of evidence supporting the allegation of acknowledging debt and the Appellant's proper declaration and payment of duties upon receiving the gifts.