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Issues:
1. Imposition of penalties under the Foreign Exchange Regulation Act, 1973. 2. Allegations of contravention of section 16(1)(b) of the Act. 3. Justification for penalties imposed on the appellants. 4. Consideration of mitigating circumstances for penalty reduction. 5. Application of sections 16 and 68 of the Act in penalty imposition. Analysis: The judgment by the Appellate Tribunal of the Foreign Exchange Regulation Appellate Board deals with two appeals challenging penalties imposed under the Foreign Exchange Regulation Act, 1973. The first issue revolves around the contravention of section 16(1)(b) of the Act, where penalties of Rs. 15,000 and Rs. 10,000 were imposed on the appellants. The appellants sought a hearing in Calcutta due to financial constraints. The Tribunal, after reviewing the applications and grounds of appeal, found justification to reduce the penalties, waiving the requirement of pre-deposit due to small penalty amounts and impracticality of holding a hearing in Calcutta. The second issue involves the specific charge of contravention of section 16(1)(b) based on allegations in the Memorandum of show cause. The first appellant was alleged to have a right to receive foreign exchange as commission from two foreign entities. The Tribunal analyzed the circumstances of non-receipt of the commission and the arguments presented by both parties, emphasizing the obligation to report such matters to the RBI as per section 16(2) of the Act. Regarding the third issue, the Tribunal acknowledged the validity of the commission amounts due to the appellants but highlighted the necessity of reporting the non-receipt to the RBI despite commercial considerations. The judgment differentiated between the lack of legal action feasibility and the charge of contravention, ultimately concluding that contravention occurred only in specific instances. Mitigating circumstances were considered for penalty reduction, leading to the decision to reduce the penalty on the first appellant to Rs. 7,500. The fourth issue addressed the quantum of penalties imposed, taking into account the findings on contravention for each invoice and the absence of evidence supporting penalties on the second appellant under section 68(1) and (2) of the Act. In the final issue, the Tribunal partially allowed Appeal No. 349 of 1995 by reducing the penalty and set aside the impugned order against the second appellant in Appeal No. 348 of 1995. The first appellant was directed to pay the reduced penalty within 30 days, failing which the respondent could recover the amount legally. The judgment provides a comprehensive analysis of the legal and factual aspects surrounding the imposition and reduction of penalties under the Foreign Exchange Regulation Act, 1973.
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