Retracted confession and circumstantial evidence sustained foreign exchange contravention, while penalty was reduced as excessive.

The Tribunal held that abetment of contravention of the foreign exchange restriction on making payments to or for the credit of persons resident outside India was proved, relying on the appellant's statement, corroborating employee evidence, and admissions by recipients of amounts routed through NRE accounts. It accepted the retracted confession because no proof of coercion was shown, applied circumstantial evidence principles, and drew adverse inference from matters within the appellant's special knowledge; the lack of cross-examination did not displace the evidence on these facts. The Tribunal also found the penalty excessive in light of the appellant's intermediary role and the transaction circumstances, and reduced it to the amount already pre-deposited.

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Issues: (i) Whether the appellant was proved to have abetted contravention of the restriction on making payments to or for the credit of persons resident outside India under the foreign exchange law. (ii) Whether the penalty imposed required reduction on the facts of the case.

Issue (i): Whether the appellant was proved to have abetted contravention of the restriction on making payments to or for the credit of persons resident outside India under the foreign exchange law.

Analysis: The material on record included the appellant's own statements, the statement of his employee, and statements of other recipients who admitted receipt of amounts against payment of premium through the relevant NRE accounts. The Tribunal treated the employee's statement as corroborative, held that the retraction of the appellant's confession was not supported by proof of coercion, and applied the principles governing circumstantial evidence and adverse inference where facts were within the special knowledge of the appellant. It also held that the absence of cross-examination did not nullify the evidence in the circumstances.

Conclusion: The charge of abetment of contravention under Section 9(1)(a) of the foreign exchange law was proved against the appellant.

Issue (ii): Whether the penalty imposed required reduction on the facts of the case.

Analysis: Although the contravention was upheld, the Tribunal considered the appellant's role as an intermediary and the overall circumstances of the transactions. On that basis, it concluded that the penalty imposed was excessive and that justice would be met by limiting the penalty to the amount already pre-deposited in the appeals.

Conclusion: The penalty was reduced to the amount already pre-deposited.

Final Conclusion: The appeals succeeded only to the extent of reduction of penalty, while the finding of contravention was affirmed.

Ratio Decidendi: A retracted confession may be relied upon when sufficiently corroborated by other evidence, and in proceedings involving clandestine financial transactions, adverse inference may be drawn from facts within the special knowledge of the appellant.

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