1992 (10) TMI 279 - AT - FEMA

Summary

Issues:
1. Contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.
2. Ownership of the seized foreign exchange.
3. Burden of proof under section 71(3) of the Act.
4. Confiscation of the seized foreign exchange under section 63 of the Act.

Analysis:

1. The appeal was against an adjudication order imposing a penalty and confiscating seized foreign exchange for contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973. The appellant, found with foreign currencies, claimed they belonged to a visitor, Mr. Butler. The Adjudicating Officer found the appellant guilty and imposed a penalty along with confiscation of the foreign exchange.

2. The appellant contended that the seized foreign exchange belonged to Mr. Butler, who left it at the appellant's house. The appellant failed to prove lawful possession as required by section 71(3) of the Act. Despite presenting a letter from Mr. Butler, the appellant's explanation was deemed unconvincing. The foreign exchange was found in the appellant's steel almirah, not in a purse as claimed, weakening his defense.

3. Section 71(3) places the burden on a person found with foreign exchange to prove lawful possession. The appellant's reliance on a letter from Mr. Butler was insufficient to discharge this burden. The appellant's failure to provide evidence of when he received the letter and the location of the seized foreign exchange weakened his case.

4. The Adjudicating Officer, considering the appellant's export business and overseas visits, deemed the confiscation justified under section 63 of the Act. The officer highlighted the appellant's familiarity with foreign exchange regulations and the questionable nature of the appellant's explanations. The confiscation of the foreign currencies was upheld as appropriate.

In conclusion, the Appellate Tribunal upheld the adjudication order, confirming the penalty and confiscation of the seized foreign exchange. The appellant's failure to prove lawful possession and the questionable nature of his explanations led to the dismissal of the appeal.