Vague show cause notice defeats FERA penalty where the department cannot prove contravention beyond reasonable doubt.

In FERA penalty proceedings, a vague show cause notice and insufficient particulars prevented the department from proving the alleged remittance and contravention beyond reasonable doubt. The record showed that the appellant could not trace the transaction from the notice materials, and the departmental identification of remittances was found unreliable, including duplication in the transaction list. Because quasi-criminal enforcement under FERA requires the department to establish the violation clearly, no effective burden shifted to the appellant. The penalty was therefore not sustainable, and the impugned order was set aside.

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Issues: Whether the penalty for contravention of Section 8(3) and Section 8(4) of the Foreign Exchange Regulation Act, 1973 could be sustained when the show cause notice and supporting particulars were vague and the department failed to establish the alleged remittance beyond reasonable doubt.

Analysis: The penalty proceedings arose from an alleged remittance of DM 16,000 said to relate to import transactions, but the particulars furnished in the show cause notice were found to be vague and insufficient to enable the appellant to trace the transaction from its records. The materials also showed that the department had proceeded with some laxity in identifying the remittances, including repetition of entries in the list of seven transactions. In quasi-criminal proceedings under FERA, the burden remained on the department to establish the violation, and the absence of clear and reliable particulars prevented the shifting of any effective burden to the appellant. The record did not establish the alleged contravention beyond reasonable doubt.

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

Final Conclusion: The appeal succeeded, the impugned penalty order was quashed, and the appellant obtained complete relief.

Ratio Decidendi: In quasi-criminal enforcement proceedings, a vague show cause notice and an unsubstantiated allegation do not discharge the department's burden to prove contravention beyond reasonable doubt.

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