Foreign exchange penalty survives only where the record clearly proves the statutory breach; cursory findings are insufficient.

A penalty for breach of the export payment rule was set aside because the record did not show the prescribed manner of payment or a clear factual basis for the alleged contravention; a bare recital of non-repatriation was insufficient. By contrast, the penalty for diversion of goods from the declared export destination was sustained because the evidence showed the goods were routed to other countries with the appellant's knowledge, supporting the finding that foreign exchange became unrecoverable. Delay and non-supply of seized document copies did not establish denial of natural justice, since inspection was permitted and no request for copies was shown.

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Issues: (i) Whether the penalty under section 12(2)(b) of the Foreign Exchange Regulation Act, 1973 was sustainable on the material on record; (ii) Whether the penalty under section 10(1)(b) of the Foreign Exchange Regulation Act, 1973 was liable to be interfered with; (iii) Whether delay and non-supply of copies of seized documents amounted to denial of natural justice.

Issue (i): Whether the penalty under section 12(2)(b) of the Foreign Exchange Regulation Act, 1973 was sustainable on the material on record.

Analysis: Section 12(2)(b) is directed to payment for exported goods in the prescribed manner. A contravention requires material showing that payment was made otherwise than in that manner. The order below contained only a cursory reference to failure to repatriate export proceeds and did not disclose how the statutory requirement was breached. The record also did not establish the prescribed manner or the factual basis for holding that payment had been received otherwise than as prescribed.

Conclusion: The penalty for contravention of section 12(2)(b) was unsustainable and was set aside.

Issue (ii): Whether the penalty under section 10(1)(b) of the Foreign Exchange Regulation Act, 1973 was liable to be interfered with.

Analysis: The evidence accepted by the authorities showed that the goods, though ostensibly exported to East European destinations, were in fact diverted to West European countries, and the appellant had knowledge of that arrangement. On that material, the conclusion that the appellant had done an act resulting in foreign exchange becoming unrecoverable was supported by evidence.

Conclusion: The penalty for contravention of section 10(1)(b) was rightly sustained and confirmed.

Issue (iii): Whether delay and non-supply of copies of seized documents amounted to denial of natural justice.

Analysis: The appellant had been permitted to inspect the documents, and no application for copies was shown to have been made. Mere delay in completing the proceedings, without more, did not establish denial of natural justice or furnish a ground to interfere with the adjudication.

Conclusion: No interference was warranted on the ground of natural justice.

Final Conclusion: The penalties were sustained only to the extent of the contravention under section 10(1)(b), while the penalty based on section 12(2)(b) was annulled, resulting in a partial relief to the appellant.

Ratio Decidendi: A penalty for contravention of a penal provision cannot stand unless the record contains clear, substantive material establishing the precise statutory breach; a bare or cursory recital is insufficient.

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