2011 (1) TMI 1237 - AT - FEMA

Summary

Issues:
1. Violation of Section 9(1)(a) of FERA.
2. Opportunity for cross-examination in FERA proceedings.
3. Nature of proceedings under FERA - civil or criminal.
4. Imposition of penalty based on preponderance of probabilities.

Detailed Analysis:
1. The appeals were filed against an Adjudication Order imposing a penalty for violating Section 9(1)(a) of FERA. The case involved misuse of provisions related to remittances of foreign exchange, where individuals were accused of depositing black market foreign exchange into NRE Accounts. The appellants admitted receiving cheques without RBI permission, leading to the penalty imposition by the Adjudicating Authority.

2. The issue of the right to cross-examine witnesses was raised, alleging a violation of natural justice. While the appellants contended for this right, the Tribunal noted that they had admitted receiving the cheques and had opportunities for personal hearings but chose not to cross-examine witnesses. Citing precedents, the Tribunal concluded that by not attending the personal hearing, the appellants waived their right to cross-examination.

3. The nature of FERA proceedings was debated, with one party arguing for quasi-criminal status based on a Supreme Court judgment. However, the Tribunal referenced various judgments, including Director of Enforcement v. MCTM Corporation Pvt. Ltd., to establish that FERA proceedings are civil in nature. The Tribunal emphasized that penalties are imposed for civil breaches, not criminal offenses, based on preponderance of probabilities.

4. Considering the lack of evidence regarding a relationship between the appellants and the individual issuing the gift cheques, the Tribunal inferred that the appellants likely made payments to convert black money into white. The Tribunal held that without a plausible relationship, the appellants violated Section 9(1)(a) of FERA by receiving gifts, leading to the dismissal of all appeals and upholding the penalty imposition.