1996 (2) TMI 607 - AT - FEMA

Issues Involved:

1. Confiscation of Indian currency of Rs. 1,98,000.
2. Contravention of Section 8(1) read with Section 8(2) of the Foreign Exchange Regulation Act, 1973.
3. Voluntariness of the appellant's confessional statement.
4. Nexus between seized Indian currency and alleged contravention.
5. Lawful possession and acquisition of foreign currency.

Issue-Wise Detailed Analysis:

1. Confiscation of Indian Currency of Rs. 1,98,000:
The appellant contested the confiscation of Rs. 1,98,000, claiming it was from his PCO-STD business. The tribunal found no evidence linking the seized Indian currency to the alleged contravention, noting that the only evidence was the appellant's retracted statement. The tribunal emphasized that the respondent did not verify the appellant's business records during the search. Consequently, the order of confiscation of the Indian currency was deemed unsustainable and set aside.

2. Contravention of Section 8(1) read with Section 8(2) of the Foreign Exchange Regulation Act, 1973:
The appellant was charged with purchasing foreign exchange of US $10,100 and selling US $6,000. The tribunal found no corroborative evidence of sale and purchase except the appellant's retracted statement. The tribunal modified the charge to "otherwise acquiring foreign exchange in violation of Section 8(1)" due to lack of evidence for sale and purchase. The finding of contravention of Section 8(2) was set aside.

3. Voluntariness of the Appellant's Confessional Statement:
The appellant argued that his statement was involuntary, recorded while in custody, and retracted at the first opportunity. The tribunal noted alterations in dates on the panchanama and the appellant's statement, supporting the claim of involuntariness. The tribunal held that an involuntary statement cannot be taken into evidence, thus undermining the basis for the alleged contraventions.

4. Nexus Between Seized Indian Currency and Alleged Contravention:
The appellant claimed the seized Indian currency was from his PCO-STD business, supported by account statements and computer printouts. The tribunal found no nexus between the seized Indian currency and the alleged contravention, as the respondent did not have any information about the alleged sale of US $6,000 at the time of seizure. The tribunal concluded that the confiscation of the Indian currency was unjustified.

5. Lawful Possession and Acquisition of Foreign Currency:
The appellant did not deny the recovery of foreign currency but claimed it was left by a customer for safe custody. The tribunal found the appellant's explanation unsubstantiated and noted that the foreign currency was concealed, adding to the appellant's culpability. The tribunal concluded that the appellant failed to establish lawful possession of the foreign currency, thus upholding the finding of contravention of Section 8(1) for otherwise acquiring foreign exchange.

Conclusion:
The tribunal partly allowed the appeal, setting aside the order of confiscation of Indian currency of Rs. 1,98,000 and the finding of contravention of Section 8(2). The finding of contravention of Section 8(1) was upheld, but modified to "otherwise acquiring foreign exchange in violation of Section 8(1)." The penalty of Rs. 32,000 was upheld, and the respondent was directed to refund the balance amount of Rs. 1,68,000 to the appellant within 45 days.

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