1995 (12) TMI 428 - AT - FEMA

Issues Involved:
1. Contravention of Section 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973.
2. Validity of the seizure of foreign and Indian currency.
3. Allegation of framing and false implication.
4. Violation of principles of natural justice.
5. Voluntariness and truthfulness of the appellant's statement.
6. Request for the return of seized articles.

Issue-wise Detailed Analysis:

1. Contravention of Section 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973:
The appellant was penalized for contravening sections 8(1) and 8(2) of the Act, which pertain to unauthorized dealings in foreign exchange. The department alleged that the appellant was involved in transactions of foreign exchange without authorization. However, the Board found that the evidence presented, including the appellant's statement and the panchnama, was insufficient to substantiate the allegations. The Board concluded that the charge of contravention could not be sustained due to lack of credible evidence.

2. Validity of the Seizure of Foreign and Indian Currency:
The department claimed to have seized US $47,500 and Rs. 4,104 from the appellant. However, the Board noted discrepancies and contradictions in the panchnama and police reports. The panchnama, witnessed by Mehedi Hussain and Syed Sarvath Hussain, was found to be unreliable as it contained implausible details and was not prepared by authorized personnel. The testimonies of the panch witnesses during cross-examination further discredited the department's case. Consequently, the Board concluded that the alleged seizure could not be substantiated.

3. Allegation of Framing and False Implication:
The appellant contended that he was falsely implicated and framed by the department. The Board found merit in this argument, noting that the search warrants were issued before the appellant allegedly provided information, indicating a premeditated action by the department. The Board also observed that the panchnama and other documents appeared fabricated. Thus, the Board accepted the appellant's contention of false implication.

4. Violation of Principles of Natural Justice:
The appellant argued that the adjudicating officer did not disclose all relevant documents and did not summon Dr. Meher Prasad, who examined the appellant for physical injuries. The Board agreed that the non-disclosure of documents and the refusal to summon the doctor constituted a violation of natural justice. However, it concluded that this did not result in a material miscarriage of justice as the primary evidence itself was unreliable.

5. Voluntariness and Truthfulness of the Appellant's Statement:
The appellant retracted his statement, alleging it was obtained under duress. The Board found that the circumstances under which the statement was recorded, including allegations of physical abuse and lack of summons under section 40, indicated that the statement was not voluntary. Moreover, the Board found the statement lacked credibility and could not be used as evidence.

6. Request for the Return of Seized Articles:
The appellant consistently denied ownership of the seized foreign and Indian currency. The Board noted that possession of foreign exchange is prohibited unless lawfully acquired. Since the appellant did not prove lawful acquisition or ownership, the Board rejected the request for the return of the seized articles. The Board also noted that the appellant's plea for return contradicted his defense that the articles were not seized from him.

Conclusion:
The appeal was partly allowed. The findings of contravention of sections 8(1) and 8(2) and the penalty imposed were set aside. However, the order of confiscation was upheld as the true owner of the foreign currency did not come forward to claim it lawfully. The Board concluded that the appellant's plea for the return of seized articles was misconceived.

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