2008 (12) TMI 847 - AT - FEMA

Tribunal Confirms Guilt in Foreign Currency Case, Reduces Penalty to Pre-Deposited Amount After Appeal.

Munilal H. Shah Versus Director, Enforcement Directorate

Munilal H. Shah Versus Director, Enforcement Directorate - TMI Issues:1. Appeal against Adjudication Order imposing penalty for contravention of Foreign Exchange Regulation Act.2. Allegations of contravention of FER Act against the appellant.3. Retraction of confessional statements by the appellant and co-noticee.4. Consideration of voluntariness of confessional statements.5. Corroboration of confessional statements and circumstantial evidence.6. Reliance on co-noticee's statement as substantive evidence.7. Burden of proof on the Department in quasi-judicial proceedings.8. Proof of guilt under sections 8(1) and 8(2) of FER Act.9. Quantum of penalty imposed and reduction of the same.Analysis:The appeal was filed against an Adjudication Order penalizing the appellant for contravening the provisions of the Foreign Exchange Regulation Act (FER Act). The appellant was charged with contraventions related to the purchase and sale of foreign currency. The case involved the appellant, Munilal H. Shah, and his association with individuals engaged in illegal foreign exchange activities. The Enforcement Officers seized Indian currency and documents from the appellant's residence, leading to allegations of unlawful transactions. The appellant's confessional statements, later retracted, were a crucial aspect of the case.The Tribunal examined the voluntariness of the confessional statements and the appellant's claim of coercion during their recording. The appellant failed to provide substantial evidence supporting the retraction due to alleged physical assault. The Tribunal cited legal precedents emphasizing the importance of voluntary statements and the need for corroboration to rely on retracted confessions. The appellant's inability to explain the seized amount and his association with co-noticee further incriminated him.The Tribunal considered the co-noticee's statement as substantive evidence against the appellant, rejecting the retraction as an afterthought. It highlighted the burden of proof on the Department in quasi-judicial proceedings and the standard of proof required under the FER Act. The Tribunal referenced legal principles to establish guilt under the Act and emphasized the need for a degree of probability rather than absolute certainty in proving charges.Ultimately, the Tribunal upheld the appellant's guilt under sections 8(1) and 8(2) of the FER Act. However, it deemed the penalty imposed excessive and reduced it to the amount already pre-deposited by the appellant. The decision aimed to achieve the ends of justice by adjusting the penalty amount. The appeal was partly allowed, and the pre-deposited penalty amount was to be appropriated accordingly.