2008 (12) TMI 850 - AT - FEMA

Tribunal Reduces Penalty for FERA Violation from Rs. 3,74,500 to Rs. 2,00,000 Despite Appellant's Denial of Hawala Involvement.

Bhanubhai Paramanand Soni Versus Directorate of Enforcement

Bhanubhai Paramanand Soni Versus Directorate of Enforcement - TMI Issues: Appeal against penalty imposed for contravention of FERA provisions.Analysis:1. Background: The appeal was filed against an Adjudication Order imposing a penalty for contravention of FERA provisions regarding receipt and payment of foreign currency without RBI permission. The appellant had pre-deposited a sum as per High Court's order.2. Investigation: The case originated from the search of a business premises leading to seizure of foreign currencies and documents indicating hawala payments. Payments between the appellant and another individual were made under instructions from a person outside India.3. Appellant's Argument: The appellant, a broker in gold and silver trade, denied involvement in hawala transactions and claimed his association with the other party was limited to gold transactions. The appellant challenged the lack of independent evidence and argued against the impugned order.4. Legal Provisions: Section 9 of FERA prohibits individuals in India from receiving or making payments on behalf of persons outside India without authorization. The appellant's defense focused on the nature of transactions related to gold dealings.5. Decision: The tribunal rejected the appellant's contentions, noting the lack of evidence supporting his claims. The statements and documents seized from the other party implicated the appellant in hawala transactions, despite his denial of knowing the person from the USA.6. Burden of Proof: The tribunal highlighted the burden of proof on the prosecution and cited legal principles regarding establishing guilt in quasi-criminal proceedings. The tribunal found the appellant guilty of contravening FERA provisions.7. Penalty Imposition: While upholding the guilt, the tribunal reduced the penalty amount considering the commonality of the amounts involved in the transactions. The penalty was reduced from Rs. 3,74,500 to Rs. 2,00,000, with directions for payment within a specified timeframe.In conclusion, the tribunal partly allowed the appeal, reducing the penalty amount and directing the appellant to pay the revised penalty within a stipulated period. The decision was based on the evidence, legal provisions, and the appellant's failure to substantiate his defense against the charges of contravening FERA regulations.