Documentary evidence and admissions establish foreign exchange contravention where no Reserve Bank permission was shown.

Documentary entries in audited accounts, supported by seized material and admissions, were treated as sufficient evidence of contravention where no Reserve Bank permission or prior intimation was shown. A foreign company's credit balance recorded in sundry creditors was not displaced by a unilateral write-off, so the entry was attributed to a sum placed to the credit of a person resident outside India. The material also established instructions for remittances and foreign exchange transfers abroad, including payments for personal benefit, and the agency explanation was rejected as unsupported. The penalty was therefore sustained and the foreign exchange contraventions were affirmed on the recorded material.

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Issues: (i) Whether the appellant placed a sum to the credit of a person resident outside India in contravention of section 9(1)(e) of the Foreign Exchange Regulation Act, 1973. (ii) Whether the appellant acquired and transferred foreign exchange in contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.

Issue (i): Whether the appellant placed a sum to the credit of a person resident outside India in contravention of section 9(1)(e) of the Foreign Exchange Regulation Act, 1973.

Analysis: The audited accounts and seized documents showed a substantial amount standing in the name of a foreign company under sundry creditors. The unilateral write-off relied upon by the appellant did not displace the documentary entry, and there was no evidence of permission from the Reserve Bank of India or of any prior intimation to it. On the material on record, the credit entry remained attributable to a sum placed to the credit of a person resident outside India.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Issue (ii): Whether the appellant acquired and transferred foreign exchange in contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.

Analysis: The seized documents and the appellant's own statements established instructions for remittances to persons and entities outside India, including payments for personal benefit. The explanation that the transactions were only in the capacity of an agent was found unacceptable in view of the admissions and surrounding circumstances. The evidence showed acquisition and transfer of foreign exchange without the previous permission required by law.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Final Conclusion: The impugned penalty order was sustained, and the appeals failed on merits.

Ratio Decidendi: Documentary entries in audited accounts, supported by seized material and admissions, are sufficient to establish contravention of foreign exchange restrictions where there is no RBI permission and the contrary explanation is not substantiated.

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