Foreign exchange misdeclaration upheld, customs proceedings did not bar adjudication, and duplicate penalty on firm and partner was impermissible.

Misdeclaration in import documents was established where examination, laboratory testing and investigation showed that the imported goods differed in nature, quality, weight and value from what had been declared, and the foreign exchange remitted was therefore not used for the declared purpose. This attracted liability under the Foreign Exchange Management Act and the applicable Foreign Exchange Management Regulations. Pendency of customs proceedings did not require the foreign exchange proceedings to be kept in abeyance, because the two regimes operate independently. On penalty, the partnership firm and its partner could not both be penalised simultaneously for the same contravention. The firm's penalty was sustained, while the partner was absolved.

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Issues: Whether the appellants contravened the foreign exchange law by using remitted foreign exchange for goods different from those declared in the import documents; whether the pendency of customs proceedings required the foreign exchange proceedings to be kept in abeyance; and whether both the partnership firm and its partner could be penalised for the same contravention.

Analysis: The imported goods were found, on examination and laboratory testing, to differ in nature, quality, weight and value from what had been declared in the import documents. The evidence, including statements recorded during investigation and the laboratory report, established misdeclaration and non-use of foreign exchange for the declared purpose, attracting Section 10(6) of the Foreign Exchange Management Act, 1999 and Regulation 6(1) of the Foreign Exchange Management (Realisation and Surrender of Foreign Exchange) Regulations, 2000. The pendency of customs proceedings did not bar adjudication under the foreign exchange law because the two proceedings were independent in nature. On penalty, the partnership firm and its partner could not both be subjected to penalty for the same contravention simultaneously.

Conclusion: The contravention was upheld and the penalty against the firm was sustained, but the partner was absolved from penalty.

Final Conclusion: The common order was maintained in substance, with only the penalty liability of the partner being set aside and the rest of the adjudication remaining operative.

Ratio Decidendi: Proceedings under the foreign exchange law are independent of customs proceedings, and a partnership firm and its partner cannot both be penalised simultaneously for the same contravention where the liability is in substance that of the firm.

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