1998 (1) TMI 539 - AT - FEMA

Summary

Issues:
1. Imposition of penalty under section 8(1) of the Foreign Exchange Regulation Act, 1973 for purchasing foreign currency.
2. Validity of penalty imposed for contravention of section 8(1) on acquiring foreign currency.

Analysis:
1. The appeals were filed against Adjudication Orders imposing penalties for contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973. In Appeal No. 287 of 1997, a penalty of Rs. 1,000 was imposed for purchasing US $1,100, while in Appeal No. 288 of 1997, a penalty of Rs. 5,000 was imposed for acquiring Saudi Riyals 5,500. The appellant in Appeal No. 288 had already paid the penalty from the seized amount. However, in Appeal No. 287, the appellant had not deposited the penalty due to financial hardship. The Chairman decided to waive off the pre-deposit requirement due to the small amount and the appellant's financial situation, as he was a resident of Hyderabad.

2. In Appeal No. 287 of 1997, the appellant's son was found with the foreign currency, leading to the penalty imposition. However, the appellant was not present during the seizure, and the only evidence against him was the disowned confessional statements of his son and himself. The lack of corroborative evidence led the Chairman to conclude that the finding of contravention of section 8(1) was not sustainable, and Appeal No. 287 was allowed.

3. In Appeal No. 288 of 1997, the appellant did not dispute the recovery of the foreign currency, claiming it was left by a relative. The explanation was deemed implausible as there was no evidence to support it, and the lawful owner did not come forward to claim the currency. Possession of foreign currency without the owner's presence in India was deemed impermissible. The Chairman upheld the penalty imposition in this case, dismissing Appeal No. 288.

4. The Chairman found no justification to interfere with the Adjudicating Officer's findings and considered the penalty quantum reasonable. Consequently, Appeal No. 287 of 1997 was allowed, setting aside the adjudication order, while Appeal No. 288 of 1997 was dismissed.