1989 (12) TMI 364 - AT - FEMA

Summary

Issues Involved:
1. Alleged contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.
2. Alleged contravention of sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973.

Issue-wise Detailed Analysis:

1. Alleged contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973:

The appellant was charged under section 8(1) of the Foreign Exchange Regulation Act, 1973, for allegedly acquiring foreign exchange (US $1368) from an unauthorized dealer without the permission of RBI. The charge was based on the Panchnama dated 5-9-1984 and statements from various individuals, including the appellant and Shri Prakash Gandhi.

The appellant contended that the foreign exchange was kept in trust by Shri Prakash Gandhi and not acquired by him. The appellant argued that possession for safekeeping does not constitute acquisition under section 8(1). The Tribunal agreed, stating that "the phrase otherwise acquiring used in section 8(1) does not contemplate mere possession or custody of the foreign exchange." It emphasized that acquisition implies some proprietary interest, which was absent in this case. The Tribunal concluded that the appellant did not contravene section 8(1) as he merely kept the foreign exchange for safekeeping without any proprietary interest.

2. Alleged contravention of sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973:

The appellant was also charged under sections 9(1)(b) and 9(1)(d) for receiving payments of Rs. 87,000 and Rs. 2 lakhs from individuals in India on behalf of a person residing in Pakistan, and for making payments to Shri Khalid and Shri K.P. Yousuf on instructions from a non-resident person without RBI's permission.

The appellant initially admitted to these transactions in his statements dated 5-9-1984 and 6-9-1984 but later retracted these admissions. The Tribunal noted that the appellant's retraction was made at a late stage and lacked credibility. The statements of Shri Khalid and Shri Yousuf, despite their absence for cross-examination, were considered reliable. The Tribunal upheld the charge, stating that "there is ample evidence to show that the appellant had received payment of Rs. 87,000 in July 1984 and another Rs. 2 lakhs in September 1984 on instructions and on behalf of a non-resident person."

Conclusion:

The Tribunal partially allowed the appeal. It set aside the finding of the Adjudicating Officer regarding the first charge under section 8(1) and the corresponding penalty of Rs. 5,000. However, it upheld the second charge under sections 9(1)(b) and 9(1)(d) and maintained the penalty of Rs. 20,000. The appeal was thus decided with the appellant required to pay a total penalty of Rs. 20,000.