1997 (10) TMI 421 - AT - FEMA

Summary

Issues Involved:

1. Contravention of Section 9(1)(d) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973.
2. Contravention of Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973.
3. Contravention of Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973.
4. Legality of the seizure of Indian currency by the police and Enforcement Directorate.
5. Admissibility and reliability of the appellant's confessional statement.

Issue-wise Detailed Analysis:

1. Contravention of Section 9(1)(d) read with Section 64(2):

The appellant was charged with abetting the distribution of Rs. 11 lakhs to various persons in India on instructions from individuals in Dubai. The Tribunal found that the charge of abetment was misconceived as the alleged distribution did not take place. The charge of abetment requires actual contravention, which was not established. The Tribunal noted, "the allegation of abetment itself is contrary to the admitted facts." Therefore, the penalty imposed for this charge was set aside.

2. Contravention of Section 9(1)(d):

The appellant was alleged to have made payments totaling Rs. 2,60,000 to individuals in India on behalf of persons in Dubai. The Tribunal scrutinized the evidence, including the appellant's confessional statement and statements from recipients like A.K. Kassim and Joseph Antony. The Tribunal found that the evidence was insufficient to establish the charge. The appellant's statement, not recorded under Section 40, lacked corroboration. The Tribunal observed, "the appellant's original statement is not sufficient to meet all the ingredients of the charge of contravention of section 9(1)(d)." Consequently, the charge and penalty for this contravention were set aside.

3. Contravention of Section 9(1)(b):

The appellant was charged with receiving Rs. 13,60,000 from local persons on behalf of individuals in Dubai. The Tribunal emphasized that the evidence must prove beyond reasonable doubt that the appellant received the payment from a person resident outside India. The appellant's statement, which was retracted and not recorded under Section 40, was the primary evidence. The Tribunal noted, "there is no corroborative evidence to show that the appellant received the said amount of Rs. 11 lakhs from a person who at the material time was resident outside India." The Tribunal concluded that the finding of contravention of Section 9(1)(b) could not be upheld and set aside the penalty.

4. Legality of the Seizure:

The appellant argued that the initial seizure by the police was illegal, making the subsequent seizure by the Enforcement Directorate illegal as well. The Tribunal found that the Enforcement Directorate had a reasonable belief that the seized amount was connected with compensatory payments. The Tribunal stated, "the seizure by the Enforcement authorities does not suffer from any illegality."

5. Admissibility and Reliability of the Appellant's Confessional Statement:

The appellant's confessional statement was retracted and not recorded under Section 40. The Tribunal found that the statement, recorded under prolonged custody, was not voluntary and lacked corroboration. The Tribunal noted, "the circumstances in which the statement was recorded are sufficient to raise the doubt that the statement was voluntary." The Tribunal concluded that the statement could not be relied upon to substantiate the charges.

Conclusion:

The Tribunal allowed the appeal, setting aside the adjudication order and directing the refund of Rs. 11 lakhs and the pre-deposit amount to the appellant within 45 days. The Tribunal found that the evidence was insufficient to establish the contraventions of Sections 9(1)(d) and 9(1)(b) and that the appellant's confessional statement was unreliable.