Foreign exchange surrender period protects against Section 8(3) contravention when seizure occurs before time expires.

Unutilized foreign exchange could be surrendered within the period permitted by the governing notification after the holder knew it could not be used, so no contravention of Section 8(3) of the Foreign Exchange Regulation Act was made out where seizure occurred before that period expired. The tribunal found that the appellant returned from abroad with foreign currency, but the search and seizure took place within about 10 days of return, before the 90-day surrender period under the notification had run. The penalty was therefore unsustainable, the penalty order was set aside, and the amount deposited towards penalty was directed to be refunded.

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Issues: Whether the appellant committed a violation of Section 8(3) of the Foreign Exchange Regulation Act by not surrendering the foreign exchange within the prescribed period.

Analysis: The appellant was found in possession of foreign currency after return from abroad, and the adjudicating authority relied on Notification No. FERA/73/88-RB dated 27-02-1988, which permitted surrender of unutilized foreign exchange within 90 days from the date on which the person comes to know that such foreign exchange cannot be used. The search and seizure took place within about 10 days of the appellant's return, so the stipulated period had not expired when the foreign exchange was seized.

Conclusion: The appellant was not guilty of violation of Section 8(3) of the Foreign Exchange Regulation Act, and the penalty could not be sustained.

Final Conclusion: The penalty order was set aside and the amount deposited towards penalty was directed to be refunded.

Ratio Decidendi: Where the governing notification allows surrender of unutilized foreign exchange within a fixed period from knowledge of non-use, no contravention is made out if enforcement action occurs before that period expires.

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