1996 (2) TMI 606 - AT - FEMA

Summary

Issues:
1. Appeal against observations in a previous order.
2. Release of seized amount and penalty imposition.
3. Justification for enhancing penalty amount.
4. Compliance with statutory provisions regarding penalty imposition.
5. Consideration of circumstances for penalty modification.

Analysis:
The matter before the Appellate Tribunal involved an appeal against the observations made in a previous order by the Board. The appellant's counsel argued that an amount seized in 1981 had not been released despite a previous order by the Board. The appellant had been penalized for contraventions under the Foreign Exchange Regulation Act, 1973, and the counsel sought a proportionate reduction in the penalty amount. The appellant had deposited the penalty amount before filing the appeal, and the counsel highlighted the appellant's cooperation with the legal process.

The respondent contended that the penalty amount was determined in consideration of an order of confiscation, which had been set aside. Therefore, the respondent argued for an enhancement of the penalty amount, citing statutory provisions allowing for penalties up to five times the contravened amount. The respondent proposed an increase in the penalty by the amount initially seized.

The Chairman of the Tribunal carefully considered both parties' submissions. He disagreed with the respondent's argument that only the quantum of enhanced penalty needed determination. The Chairman emphasized the need to assess whether the penalty should be enhanced at all, in accordance with statutory provisions requiring appellants to be heard before any prejudicial modification. He acknowledged that any penalty enhancement would prejudice the appellant and stressed the importance of considering the parties' arguments in deciding on penalty modification.

Ultimately, the Chairman sided with the appellant's arguments. He noted discrepancies in the contravened amount upheld and the penalty imposed, as well as the appellant's prolonged deprivation of the seized amount. Considering these factors, the Chairman found no sufficient justification for enhancing the penalty amount. He ordered the discharge of the notice for penalty enhancement and declared the existing penalty amount final. The respondent was directed to refund the seized amount to the appellant within a specified timeframe, bringing the matter to a conclusion.