Valid service at last known address and statutory burden of proof justified remand for fresh consideration

Service of a show-cause notice at the last known address was treated as valid where the appellant had not informed the authorities of the change of address, and Rule 3 of the Foreign Exchange Regulation Rules, 1974 was held to permit service by recognised modes beyond the registered office. The dispute also turned on whether foreign exchange obtained for imports was properly utilised, with the statutory burden under Section 71(2) of the Foreign Exchange Regulation Act, 1973 resting on the appellant. In the interest of natural justice, the appellant was to be given one further opportunity to produce the bill of entry, and the matter was remanded for fresh consideration, with costs imposed for failure to notify the address change.

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Issues: Whether the impugned penalty order should be sustained when the show-cause notice was served at the old address and whether the appellant should be afforded an opportunity to produce the bill of entry and discharge the statutory burden.

Analysis: Rule 3 of the Foreign Exchange Regulation Rules, 1974 permits service by delivery, registered post to the last known address, or affixation where necessary; it does not confine service only to the registered office. The notice was sent to the address available with the authorities, and the record indicated that the appellant had not intimated the change of address. At the same time, the dispute turned on whether the foreign exchange obtained for imports was in fact utilised for the permitted purpose. Under Section 71(2) of the Foreign Exchange Regulation Act, 1973, the burden to prove proper utilisation lay on the appellant. In the interest of justice, the appellant was to be given one further opportunity to produce the bill of entry and the matter was therefore fit to be sent back for fresh consideration, with costs imposed for the failure to notify the address change.

Conclusion: The appeal was partly allowed and the matter was remanded to the Director of Enforcement for fresh decision after granting the appellant an opportunity to furnish the required documents.

Final Conclusion: The penalty order did not attain finality and the controversy was restored for reconsideration on merits after compliance with the directions issued by the Tribunal.

Ratio Decidendi: Where service is effected in accordance with the prescribed modes at the last known address, but the controversy requires a fair opportunity to discharge a statutory burden of proof, the proper course may be remand for de novo consideration in aid of natural justice.

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