2009 (10) TMI 1003 - AT - FEMA

Tribunal Upholds Penalty for Unauthorized Foreign Payments, Emphasizes Compliance with FERA to Deter Economic Offenses.

The Appellate Tribunal for Foreign Exchange upheld the penalty imposed on the appellant for violating Section 9(1)(a) and 9(1)(d) of the PER Act, 1973, by ... - Issues:- Appeal against penalty imposed for contravention of provisions of PER Act, 1973- Allegations of making payments to persons outside India without RBI permission- Dispute regarding appellant's role in transactions on behalf of the firm- Legal interpretation of FERA, 1973 provisions- Burden of proof on the appellant regarding coercion in confessional statement- Corroboration of evidence in support of confessional statement- Consideration of penalty amount based on gravity of the offenseAnalysis:The judgment delivered by Km. Vijay Laxmi, Member of the Appellate Tribunal for Foreign Exchange, pertains to an appeal filed against a penalty imposed on the appellant for contravening the provisions of Section 9(1)(a) & 9(1)(d) of the PER Act, 1973. The appellant, a Manager of a firm, was charged with making payments to individuals in India and to a person in Saudi Arabia without RBI permission. The appellant denied the charges, claiming coercion in his confessional statement, which was later retracted. However, the tribunal found the charges proved based on the appellant's admissions and corroborating evidence, dismissing the appellant's defense of being merely an employee acting on instructions. The tribunal emphasized the importance of regulatory mechanisms under FERA, 1973 to prevent economic offenses.The judgment highlighted the burden of proof on the appellant to establish coercion in the confessional statement, citing legal precedents. Despite the retraction, the tribunal found the confessional statement corroborated by documentary and circumstantial evidence, leading to the conclusion that the appellant was responsible for the transactions. The tribunal rejected the appellant's argument of being a poor individual, emphasizing the gravity of economic offenses and the need to uphold penalties commensurate with the offense. Ultimately, the tribunal upheld the penalty imposed, directing the appellant to pay within a specified timeframe, failing which legal action would be taken for recovery.In conclusion, the judgment underscores the importance of abiding by regulatory provisions to prevent economic offenses, holding individuals accountable for their actions even in cases of retracted confessional statements. The tribunal's decision to uphold the penalty serves as a deterrent against financial misconduct, emphasizing the need for strict adherence to legal frameworks governing foreign exchange transactions.