FERA penalty cannot stand without proof of the specific prohibited payment or credit-related act alleged in the notice.

Penalty under FERA could not be sustained because the show cause notice did not allege, and the record did not prove, that the appellant made any payment to or for the credit of a person resident outside India or otherwise satisfied the ingredients of Section 9(1)(d). The adjudicating authority was bound by the allegations in the notice and could not travel beyond them to uphold contravention on a broader factual basis. As the appellant's role was confined to acting as a broker or intermediary and the principal transaction-holder had already been exonerated, the penalty order was set aside and the impugned adjudication quashed.

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Issues: Whether the penalty imposed on the appellant for an alleged contravention of the Foreign Exchange Regulation Act, 1973 was sustainable when the show cause notice did not allege that he made any payment or had knowledge of any foreign exchange distribution, and whether the ingredients of Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 were made out against him.

Analysis: The allegations against the appellant were confined to his acting as a broker or intermediary in the purchase of CD-ROMs and handing over export documents and cheques. The record did not show that he utilised any export benefit or DEPB incentive, or that he made any payment to or for the credit of a person resident outside India. The decision emphasised that the adjudicating authority cannot travel beyond the allegations in the show cause notice, and that a contravention under Section 9(1)(d) requires a person resident in India to make a payment to or for the credit of a person resident outside India. The reasoning also noted that the principal transaction-holder had already been exonerated, which reinforced the unsustainability of the penalty against the appellant.

Conclusion: The ingredients of Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 were not established against the appellant, and the penalty order was liable to be set aside.

Final Conclusion: The appeal succeeded and the impugned adjudication imposing penalty on the appellant was quashed.

Ratio Decidendi: An adjudication under FERA cannot sustain a penalty unless the specific ingredients alleged in the show cause notice are proved by evidence, and a person cannot be penalised under Section 9(1)(d) without proof of the prohibited payment or credit-related act.

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