Issues: (i) Whether the adjudicating authority was competent and whether the proceedings were vitiated by delay, vagueness of notice, or denial of cross-examination. (ii) Whether the contraventions under Sections 8(3), 8(4), 9(1)(b) and 64(2) of the Foreign Exchange Regulation Act, 1973 were established against the appellants.

Issue (i): Whether the adjudicating authority was competent and whether the proceedings were vitiated by delay, vagueness of notice, or denial of cross-examination.

Analysis: The authority was held to be duly empowered under the Central Government notification issued in exercise of powers under Section 5 of the Foreign Exchange Regulation Act, 1973. The notice was supported by detailed annexures and the investigation required collation of a large body of statements and records, so the delay in issuing the show cause notice was not treated as fatal. As the relied-upon documents were supplied and the appellants had an opportunity to respond, denial of cross-examination was found not to have caused prejudice.

Conclusion: The objections to competence, delay, vagueness, and denial of cross-examination were rejected.

Issue (ii): Whether the contraventions under Sections 8(3), 8(4), 9(1)(b) and 64(2) of the Foreign Exchange Regulation Act, 1973 were established against the appellants.

Analysis: The provisions were read as applying to a "person" and not only to the named importer, and the evidence showed that Shri R.K. Verma controlled the firms and the remittances. The statements of the noticees were found to be corroborated by bank records, customs material, and other independent evidence. The retracted statements of Shri R.A. Soni were treated as usable because they were supported by corroboration, and the evidence established his role in facilitating the remittances. The absence of proof of actual imports against the remittances further supported the finding of contravention.

Conclusion: The contraventions were proved against both appellants.

Final Conclusion: The appeals failed on merits, and the penalties and findings of contravention were sustained.

Ratio Decidendi: For contraventions under FERA provisions framed in terms of a "person", liability is not confined to the formal importer, and retracted statements may be relied upon when materially corroborated by independent evidence; where relied-upon documents are disclosed, denial of cross-examination does not vitiate the adjudication absent demonstrated prejudice.

Issues: Whether the appellant established that the alleged non-realisation of export proceeds did not amount to contravention of Section 18(2) of the Foreign Exchange Regulation Act, 1973 on the footing that exports were made only against fewer GR forms and the remaining GR forms were not acted upon.

Analysis: The record showed that 10 GR forms each had been issued in the names of the two firms, and the customs authorities had treated those GR forms as genuine. The certificate relied upon by the appellant was not supported by the official GR record, and the clearing agent identified in the export documentation was different from the person or entity cited by the appellant. No material was produced to show withdrawal of the unused GR forms from the customs or bonded area, and the appellant was unable to prove that the exports were limited to the reduced number of GR forms claimed. The evidence also supported the finding of non-realisation of export proceeds for the exports admitted by the appellant, with no adequate proof of reasonable recovery efforts.

Conclusion: The appellant failed to disprove contravention under Section 18(2) of the Foreign Exchange Regulation Act, 1973, and the penalty was sustained.

Ratio Decidendi: A party disputing liability for non-realisation of export proceeds must produce reliable record evidence to show that the relevant GR forms were never acted upon or were withdrawn, and mere unsupported assertions cannot displace the presumption arising from the customs and banking records.

Issues: Whether contravention of sections 18(2) and 18(3) read with section 64(2) of the Foreign Exchange Regulation Act, 1973 was established and, if so, whether the penalty imposed on the appellant was excessive and liable to be reduced.

Analysis: The appellant admitted preparation of export documents and the record showed his involvement in at least one shipment, while the export proceeds in respect of the consignments were not realised within the prescribed period. On that basis, a contravention of the export realisation provisions was made out. At the same time, the appellant's role was limited and the amount attributed to him was substantially less than the penalty imposed. The penalty was therefore examined on the touchstone of proportionality and found to be excessive in the facts of the case.

Conclusion: Contravention was established, but the penalty of Rs. 50 lakhs was reduced to Rs. 14 lakhs.

Issues: (i) Whether contraventions relating to 25 export consignments exported during the FERA regime could be proceeded against after the sunset period under Section 49(3) of FEMA. (ii) Whether the Foreign Inward Remittance Certificate and allied material established realization of export proceeds for the two remaining consignments. (iii) Whether the penalty required reduction in the light of the findings on the above issues.

Issue (i): Whether contraventions relating to 25 export consignments exported during the FERA regime could be proceeded against after the sunset period under Section 49(3) of FEMA.

Analysis: The consignments in question were exported between 1994 and 1998, while FEMA came into force on 01.06.2000. Section 49(3) of FEMA permits notice of a contravention under the repealed Act only within two years from commencement of FEMA. The show-cause notice was issued in 2008, well beyond 31.05.2002. The saving provision in Section 49(4) preserves proceedings under the repealed Act only subject to Section 49(3). The continuing-offence theory could not override the statutory bar on taking notice after the sunset period.

Conclusion: The proceedings for the 25 pre-FEMA consignments were barred, and the penalty imposed on that count could not stand.

Issue (ii): Whether the Foreign Inward Remittance Certificate and allied material established realization of export proceeds for the two remaining consignments.

Analysis: The remittance documents showed advance-receipt terminology and did not conclusively establish that the sums were received as realization of the two impugned export bills. The entries in the certificate were not intrinsically clear, the handwritten invoice references were not part of the printed document, and the supporting message was treated as insufficient to prove realization. The Appellants also failed to show effective follow-up or convincing acceptance by the authorized dealer of the alleged realization.

Conclusion: The finding of contravention in relation to the two remaining consignments was sustained.

Issue (iii): Whether the penalty required reduction in the light of the findings on the above issues.

Analysis: Since the penalty order could not survive for the 25 consignments covered by the statutory bar, but survived for the two remaining consignments, the quantum had to be confined to the proved contraventions only. The individual appellant's liability was also maintained to the extent found sustainable against the company.

Conclusion: The penalties were reduced to Rs. 11,00,000/- for the company and Rs. 2,00,000/- for the individual appellant.

Final Conclusion: The appeal succeeded only to the extent of excluding the time-barred pre-FEMA consignments, while the remaining contraventions were upheld and the penalties were proportionately reduced.

Ratio Decidendi: Under FEMA, Section 49(3) creates a strict sunset bar on taking notice of contraventions under the repealed Act after the prescribed period, and the saving clause in Section 49(4) operates only subject to that bar; documentary proof must be clear and intrinsic to establish realization of export proceeds.

Issues: Whether the revisions calling for remand and fresh adjudication against the company and its directors were maintainable, and whether interference with the impugned adjudication order was warranted.

Analysis: The challenge was founded on the contention that the company through which the transactions were carried out had not been issued a show cause notice or impleaded in the adjudication proceedings, and that the directors could not be proceeded against in isolation. The record also showed that the company was stated to be incorporated at Dubai, the alleged contraventions were treated as having been committed in the individual capacity of the noticees, and the revision was brought long after the adjudication order. In addition, the seized currency had already been confiscated, and no basis was shown for reopening the matter to initiate a fresh round of proceedings against the company. The objection was therefore considered both procedurally unsustainable and meritless at the revisional stage.

Conclusion: The request for remand and fresh proceedings was rejected, and the revisions were dismissed.

Final Conclusion: The impugned adjudication was left undisturbed, with no further relief granted in revisional proceedings.

Ratio Decidendi: A belated revisional challenge seeking to cure non-impleadment of a company cannot succeed where no show cause notice or complaint was issued against that company and the proceedings otherwise do not justify reopening the adjudication.

Issues: Whether the penalty and confiscation orders passed for contravention of foreign exchange law were liable to be set aside on the ground that the appellants relied on retraction of statements and asserted that the seized currency belonged to legitimate business receipts.

Analysis: The material on record showed that currency and documents were recovered during the search, and the statements recorded at the spot from the appellants and other persons described foreign exchange dealings and attempts to purchase and sell foreign currency. The seized writings were treated as contemporaneous business records of foreign exchange transactions. The challenge that the statement of one of the persons was unsigned or later retracted did not displace the other oral and documentary evidence, because the record was found to corroborate the search seizure, the recovered documents, and the admissions regarding currency exchange activity. The explanation that the seized Indian currency represented accounted business receipts was rejected as an afterthought in the face of the contemporaneous material.

Conclusion: The confiscation and penalties were upheld, and the challenge to the impugned adjudication order failed.

Final Conclusion: The appeals were dismissed because the evidence established contraventions of the foreign exchange law and the confiscation and penalty order was sustained.

Ratio Decidendi: A retracted statement does not lose evidentiary value where it is supported by contemporaneous oral and documentary material, and such corroborated evidence can sustain findings of foreign exchange contravention and confiscation.

Issues: (i) Whether the inordinate delay of 838 days in filing the appeal deserved condonation. (ii) Whether contravention of Section 9(1)(b) and Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was made out on the facts and material relied upon.

Issue (i): Whether the inordinate delay of 838 days in filing the appeal deserved condonation.

Analysis: The delay was substantial and the explanation offered was not found to be cogent. The Tribunal noted that Governmental delay by itself does not justify condonation where the delay remains unexplained and the matter also lacks merit.

Conclusion: The delay was not condoned.

Issue (ii): Whether contravention of Section 9(1)(b) and Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was made out on the facts and material relied upon.

Analysis: The Tribunal held that the essential ingredients of the alleged contravention were not established, as the appellant failed to show receipt of payment from or payment on behalf of a person resident outside India. It further held that the statement relied upon had already been discarded by the Supreme Court as having been recorded under coercion and duress, and no independent material was produced to sustain the penalty.

Conclusion: The alleged contravention was not proved and the penalty could not be sustained.

Final Conclusion: The appeal failed both on limitation and on merits, and the adjudication in favour of the respondent was left undisturbed.

Ratio Decidendi: A penalty for contravention of foreign exchange restrictions cannot be sustained unless the statutory ingredients are proved by reliable material, and a discarded confession obtained under coercion cannot by itself support liability.

Issues: Whether penalty under Section 68 of the Foreign Exchange Regulation Act, 1973 could be sustained against a person who was not in charge of, and responsible for, the company's business at the time of the alleged contravention and whose role was only that of a clerk or later a nominal director.

Analysis: Liability of an officer for a company's contravention under Section 68 depends on proof that, at the relevant time, the person was in charge of and responsible to the company for its business, or that the contravention occurred with his consent, connivance, or neglect. The record did not show that the appellant had any role in the import of machinery in 1994-95, in the subsequent export obligation, or in any decision-making connected with the contravention. His later appointment as director, long after the alleged default, did not establish responsibility for the past acts of the company. Mere holding of a designation was held insufficient to attract vicarious liability.

Conclusion: The penalty on the appellant could not be sustained and was set aside.

Ratio Decidendi: Vicarious liability for a company's contravention under Section 68 of the Foreign Exchange Regulation Act, 1973 arises only where the person was in charge of and responsible for the business at the relevant time, or where consent, connivance, or neglect is proved; mere designation as director is not enough.

Issues: (i) whether the appellant's statements recorded during investigation were voluntary and could be relied upon despite later retraction; (ii) whether denial of cross-examination of co-noticees and witnesses vitiated the adjudication; (iii) whether the charges of under-invoicing and other foreign exchange contraventions under FERA were proved, including the charge of abetment; and (iv) what relief, if any, followed in the two appeals.

Issue (i): Whether the appellant's statements recorded during investigation were voluntary and could be relied upon despite later retraction.

Analysis: The statements were recorded in the appellant's own handwriting and in a language known to him, and they explained documents seized from his own and related premises. The subsequent retraction did not, by itself, dislodge their evidentiary value. The statements were corroborated by the seized documents and surrounding circumstances, and the Tribunal applied the settled principle that a retracted confession can be relied upon when supported by independent and cogent material.

Conclusion: The statements were held to be voluntary and admissible, and the appellant's retraction did not render them unusable.

Issue (ii): Whether denial of cross-examination of co-noticees and witnesses vitiated the adjudication.

Analysis: The Tribunal held that the documents relied upon were disclosed to the appellant through the show-cause notices and he had sufficient opportunity to rebut them. The Tribunal declined to rely on the statements of co-noticees, and the adjudication was supported by the appellant's own statements and seized material. In these circumstances, refusal of cross-examination caused no demonstrated prejudice and did not offend natural justice.

Conclusion: The denial of cross-examination was not treated as a ground to set aside the impugned orders.

Issue (iii): Whether the charges of under-invoicing and other foreign exchange contraventions under FERA were proved, including the charge of abetment.

Analysis: On the materials relating to the Centaur Chem consignments, the Tribunal accepted under-invoicing only to the extent admitted and corroborated by documents, and reduced the quantified contravention accordingly. It upheld the contraventions concerning payments routed abroad, use of the NRE account, and the attempted remittance to Switzerland where the record contained seized documents and admissions, but it did not sustain the abetment charge in relation to the bank officials because no evidence showed that the appellant aided or assisted those contraventions. In the separate appeal concerning imports in the names of Suru and Alcon, the Tribunal found the appellant's denials credible and held that the charge based on those imports was not established.

Conclusion: The Tribunal partly upheld the FERA contraventions, rejected the abetment charge, and set aside the finding relating to the later import allegations in the second appeal.

Issue (iv): What relief followed in the two appeals.

Analysis: The consolidated penalty in the first matter was reduced, the pre-deposit was directed to be adjusted, the confiscation of US$ 8200 was left undisturbed, and the second order was set aside to the extent it fastened liability on the appellant, with refund of the pre-deposit directed.

Conclusion: One appeal was allowed and the other was partly allowed, with consequential modification of penalty and refund directions.

Final Conclusion: The appellant obtained substantial but not complete relief: some foreign exchange contraventions were sustained with reduced monetary consequences, the abetment finding was set aside, and the later import-based allegations failed.

Ratio Decidendi: A retracted statement remains admissible when voluntarily made and independently corroborated, and denial of cross-examination does not vitiate adjudication where the affected party had disclosure of the material and no prejudice is shown.

Issues: (i) Whether the appellants' failure to realise and repatriate export proceeds attracted contravention under FEMA and the Export Regulations. (ii) Whether the resignation of the managing director after the relevant period absolved him of liability, and whether the penalties deserved reduction in view of the steps taken.

Issue (i): Whether the appellants' failure to realise and repatriate export proceeds attracted contravention under FEMA and the Export Regulations.

Analysis: The export proceeds remained unrealised for a substantial period, and although some efforts were shown to have been made, the material did not establish effective recovery action or timely write-off by the competent authority. The decision emphasised that exporters are expected to take serious and effective steps to recover unrealised foreign exchange and to place material showing such efforts. On the facts, the proceedings under FEMA were therefore justified.

Conclusion: The failure to repatriate the export proceeds constituted contravention.

Issue (ii): Whether the resignation of the managing director after the relevant period absolved him of liability, and whether the penalties deserved reduction in view of the steps taken.

Analysis: The managing director had been responsible for the conduct of the company's affairs during the period of default, and a later resignation did not erase responsibility for past contraventions. At the same time, the record showed some steps taken by the company and its responsible persons, which justified leniency in quantum. The penalty was therefore scaled down to match the pre-deposit already made.

Conclusion: The resignation did not absolve liability, but the penalties were reduced.

Final Conclusion: The appeals were allowed only to the extent of reduction of penalty, while the finding of contravention and the responsibility of the concerned officer were maintained.

Ratio Decidendi: In cases of unrealised export proceeds, an exporter must take serious and effective steps to recover and repatriate the foreign exchange, and a subsequent resignation does not absolve a person who was responsible for the company's affairs during the period of contravention.

Issues: (i) Whether notice of the alleged contravention was taken within the period permitted under the transitional limitation provision of the Foreign Exchange Management Act, 1999. (ii) Whether the adjudication was vitiated for breach of natural justice for want of cross-examination of bank officials and for reliance on the bank clarification. (iii) Whether failure to furnish the Exchange Control Copy of the Bill of Entry was only a technical breach and whether the liability of the company and its directors stood established.

Issue (i): Whether notice of the alleged contravention was taken within the period permitted under the transitional limitation provision of the Foreign Exchange Management Act, 1999.

Analysis: The relevant show-cause notice was signed on 31.05.2002, and the new statutory regime commenced on 01.06.2000. The limitation bar applies only if the adjudicating authority takes notice after expiry of two years from commencement. On the facts found, the notice was issued within the statutory period, and the allegation of ante-dating was unsupported.

Conclusion: The limitation objection failed and is against the appellants.

Issue (ii): Whether the adjudication was vitiated for breach of natural justice for want of cross-examination of bank officials and for reliance on the bank clarification.

Analysis: The bank clarification was obtained in the course of adjudication to verify whether the Exchange Control Copies had in fact been furnished. The clarification reduced the quantified liability by accepting some bills of entry in part or in full, and therefore did not prejudice the appellants. Refusal to treat the absence of cross-examination as fatal did not warrant a de novo enquiry on the facts found.

Conclusion: No violation of natural justice was established and this issue is against the appellants.

Issue (iii): Whether failure to furnish the Exchange Control Copy of the Bill of Entry was only a technical breach and whether the liability of the company and its directors stood established.

Analysis: The statutory framework made it obligatory for the importer to submit the Exchange Control Copy of the Bill of Entry to the authorised dealer, and the foreign exchange acquisition carried a presumption that the goods imported corresponded with the declaration. The affidavits and accountant's certificate did not satisfy the legal requirement, and the company failed to establish that the imports were proved for the majority of the remittances. The directors were shown to be in charge of and responsible for the conduct of business at the relevant time, and no material was shown to bring the matter within the statutory exception.

Conclusion: The contravention was held established against the company and the directors, and the plea of technical breach failed.

Final Conclusion: The penalties were sustained and the appeals were rejected on all substantive grounds.

Ratio Decidendi: Where the statutory scheme requires production of the Exchange Control Copy of the Bill of Entry to verify the use of remitted foreign exchange, non-production is not a mere technical breach, and directors in charge at the time of contravention remain liable unless they prove lack of knowledge or due diligence.

Issues: Whether penalty could be sustained for alleged contravention of sections 8(3) and 8(4) of the Foreign Exchange Regulation Act, 1973 on the ground that the appellant had not produced the exchange control copy of the bill of entry, despite other documentary evidence showing actual import and remittance.

Analysis: The documentary record, including photocopies of the bill of entry, revised bill of entry, bill of lading, invoice, and the bank communication, was found sufficient to correlate the remittance with the imported consignment. The absence of the original exchange control copy was treated as not fatal where the import itself stood proved. The decision also applied the principle that penalty is not to be imposed for a mere technical or venial lapse when the underlying transaction is genuine and the breach is not deliberate or contumacious.

Conclusion: The alleged contravention was not established so as to justify the penalty, and the appellant succeeded.

Issues: (i) Whether receipt of money in Indian rupees from an NRE account funded with foreign exchange amounted to contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973. (ii) Whether denial of cross-examination of the non-resident account holder vitiated the adjudication order. (iii) Whether the appellants' acquittal in the criminal case required setting aside the penalty order.

Issue (i): Whether receipt of money in Indian rupees from an NRE account funded with foreign exchange amounted to contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973.

Analysis: The NRE account was shown to have received foreign currency deposits and thereafter withdrawals were made by cheques in favour of the appellants. The statutory prohibition under Section 8(1) extends to dealing with foreign exchange without prior permission, and the explanation treats deposit of foreign exchange or opening of an account in foreign exchange as lending foreign exchange. The transfer from an NRE account funded by foreign exchange was therefore within the mischief of the provision, even though the appellants received Indian currency.

Conclusion: The issue was decided against the appellants and in favour of the Revenue.

Issue (ii): Whether denial of cross-examination of the non-resident account holder vitiated the adjudication order.

Analysis: The proceedings were summary and quasi-judicial in nature. The person whose cross-examination was sought had not been examined before the authority and his presence could not be secured despite efforts. The adjudication was supported by bank records and the appellants' own statements, so the absence of cross-examination did not cause fatal prejudice.

Conclusion: The issue was decided against the appellants and in favour of the Revenue.

Issue (iii): Whether the appellants' acquittal in the criminal case required setting aside the penalty order.

Analysis: Adjudication proceedings and criminal prosecution are independent, and the outcome of one does not automatically govern the other. The acquittal was based on the evidence before the criminal court, whereas the tribunal had sufficient documentary material and admissions to sustain the adjudication finding. The differing standards of proof also mattered.

Conclusion: The issue was decided against the appellants and in favour of the Revenue.

Final Conclusion: The penalty findings were upheld, and no ground was made out to interfere with the adjudication on either legality or merits.

Ratio Decidendi: Receipt of funds from an NRE account funded with foreign exchange constitutes dealing in foreign exchange for the purposes of Section 8(1) of the Foreign Exchange Regulation Act, 1973, and in summary adjudication proceedings the absence of cross-examination or a later criminal acquittal does not invalidate a finding otherwise supported by documentary evidence and admissions.

Issues: (i) whether payment routed through bank drafts and credited through non-resident accounts amounted to contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973 and attracted liability of the company and its officers under Section 68(1); (ii) whether settlement of the service charges created an acknowledgment of debt so as to constitute contravention of Section 9(1)(c) of the Foreign Exchange Regulation Act, 1973 and corresponding liability of the officers under Section 68(1); (iii) whether the charge of abetment under Section 64(2) read with Section 8(1) of the Foreign Exchange Regulation Act, 1973 was made out, and whether the related penalties could be sustained.

Issue (i): whether payment routed through bank drafts and credited through non-resident accounts amounted to contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973 and attracted liability of the company and its officers under Section 68(1)

Analysis: The payment was arranged through bank drafts purchased in India, made payable at Madras branches, and ultimately credited through a foreign bank account without Reserve Bank permission. The arrangement was not a mere banking formality but a deliberate mode of effecting payment to a foreign company resident in the United Kingdom. The conduct of the company and its officers showed participation in the transaction, and the statutory presumption regarding mental state was not rebutted.

Conclusion: The contravention under Section 9(1)(a) stands proved against the company, and the officers are liable under Section 68(1).

Issue (ii): whether settlement of the service charges created an acknowledgment of debt so as to constitute contravention of Section 9(1)(c) of the Foreign Exchange Regulation Act, 1973 and corresponding liability of the officers under Section 68(1)

Analysis: The record showed a settlement of liability for service charges due to the foreign company, and the payment was made in acknowledgement of the outstanding debt. Such acknowledgment created a right to receive payment in favour of a person resident outside India, which fell within the statutory prohibition. The officers were directly involved in the settlement and payment arrangement, and their responsibility for the company's conduct of business was established.

Conclusion: The contravention under Section 9(1)(c) stands proved against the company, and the officers are liable under Section 68(1).

Issue (iii): whether the charge of abetment under Section 64(2) read with Section 8(1) of the Foreign Exchange Regulation Act, 1973 was made out, and whether the related penalties could be sustained

Analysis: The evidence showed direct participation by the appellants in the payment mechanism, but not merely assistance to the foreign company in acquiring foreign exchange. The charge as framed under Section 64(2) for abetment of the foreign company's contravention under Section 8(1) was not made out on the same footing as the direct contravention by the appellants. The penalties imposed for the Section 8(1) charge were therefore not sustainable.

Conclusion: The abetment charge under Section 64(2) read with Section 8(1) fails, and the corresponding penalties are set aside.

Final Conclusion: The liability for contraventions under Sections 9(1)(a) and 9(1)(c) was maintained, but the separate abetment-based penalty relating to Section 8(1) was deleted, resulting in a partial allowance of the appeals and reduction of the total penalties to the pre-deposit amounts adjusted under the order.

Ratio Decidendi: A payment to a foreign resident through a structured banking route without Reserve Bank permission, and a settlement creating a debt in favour of a foreign resident, both amount to contraventions of Section 9 of the Foreign Exchange Regulation Act, 1973, and responsible officers are liable where they actively participate and fail to rebut the statutory presumption of culpable mental state.

Issues: (i) Whether the diversion of export consignments from Moscow to Dubai and the realisation of payment under the Rupee Credit Scheme constituted contravention of the foreign exchange regulatory framework and the RBI circular governing exports to the Russian Federation; (ii) Whether the director of the exporting company was liable for penalty under the deeming provision governing company contraventions.

Issue (i): Whether the diversion of export consignments from Moscow to Dubai and the realisation of payment under the Rupee Credit Scheme constituted contravention of the foreign exchange regulatory framework and the RBI circular governing exports to the Russian Federation.

Analysis: The record showed that the disputed consignments, though booked for Moscow, were in fact diverted to Dubai, a hard currency area, and there was no evidence that the goods were thereafter sent to any destination in the Russian Federation. Payment was nevertheless drawn from the Rupee Credit Scheme, which was meant only for exports to the Russian Federation. The finding that the exporter had issued fresh instructions for diversion, and the inability to produce contract records and related export documents, strengthened the conclusion that the scheme was misused and the regulatory conditions were not satisfied.

Conclusion: The diversion and realisation of payment amounted to contravention of the relevant foreign exchange restrictions, and the company was liable to penalty.

Issue (ii): Whether the director of the exporting company was liable for penalty under the deeming provision governing company contraventions.

Analysis: The director was shown to be in charge of and responsible for the conduct of the company's business at the relevant time, and no material was produced to establish absence of knowledge, due diligence, or a role separable from the company's export decisions. Once the company's contravention was established, liability followed under the statutory deeming mechanism applicable to officers in charge of the company's affairs.

Conclusion: The director was also liable for penalty along with the company.

Final Conclusion: The penalties imposed on the exporting company and its director were sustained, and both appeals failed.

Ratio Decidendi: Where export proceeds are drawn under a restricted credit scheme for goods ultimately diverted to a non-permitted destination, the exporter incurs liability for contravention, and a director in charge of the company's affairs is liable under the statutory deeming provision unless absence of knowledge or due diligence is proved.

Issues: Whether the penalty for contravention of section 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973 could be sustained when the finding against the appellant rested solely on a retracted statement of a co-noticee and the appellant was denied cross-examination.

Analysis: The order against the appellant referred only to the statement of Sudhir Kapadia to connect the appellant with the alleged remittance transaction. That statement had been retracted, and no independent corroborative material was shown to establish the appellant's involvement. The appellant had specifically sought cross-examination of the maker of the statement, but the request was refused. In the absence of supporting evidence and in view of denial of cross-examination, the evidentiary basis for the finding of contravention was found insufficient.

Conclusion: The penalty could not be sustained; the impugned order was liable to be set aside in favour of the appellant.

Final Conclusion: The appeal succeeded and the adjudication order, insofar as it related to the appellant, was annulled for want of reliable evidence and breach of fair procedure.

Ratio Decidendi: A retracted statement, without corroboration and without affording cross-examination to the affected person, is insufficient to sustain a penal finding.