2008 (10) TMI 738 - AT - FEMA

Tribunal Upholds Penalty for FEMA Violation; Retracted Confession and Notebook Evidence Deemed Admissible.

The Appellate Tribunal for Foreign Exchange dismissed the appeal against the penalty imposed for contravening the FEM Act, 1999. The Tribunal upheld the ... - Issues:Appeal against penalty imposed for contravention of FEM Act, 1999 based on receiving payment in India under instructions from abroad. Admissibility of retracted confessional statement and evidence from a note book. Examination of credibility of confessional statement and corroboration required for its validity. Applicability of Indian Evidence Act in FEMA proceedings and the admissibility of evidence. Assessment of evidence in a non-criminal enquiry. Quantum of penalty imposed and its justification.Analysis:The judgment by the Appellate Tribunal for Foreign Exchange involved an appeal against a penalty imposed for contravening the FEM Act, 1999 by receiving payments in India under instructions from abroad. The appellant contested the penalty, arguing that the order was solely based on a retracted confessional statement and evidence from a note book, which they claimed did not contain incriminating documents. The appellant further contended that there was no substantial evidence linking them to the alleged transactions, urging for the order to be set aside.In contrast, the respondent supported the penalty, citing the appellant's confessional statements admitting to receiving and distributing substantial amounts of money under instructions from a person in Abu Dhabi. The respondent argued that the examination of recipients and documentary evidence corroborated the transactions, establishing the contravention conclusively.The appellant's counsel raised the issue of the admissibility of the retracted confessional statement, citing legal principles regarding confessions and their evidentiary value. The counsel referred to the Supreme Court's decision emphasizing the voluntary nature of confessions and the need for corroboration to establish their truthfulness. The Tribunal noted that the appellant failed to demonstrate any coercion or vitiating factors in making the statement, and the retraction lacked a timely explanation.Regarding the evidence from the note book, the appellant's counsel contended that it did not qualify as a book of accounts under the Indian Evidence Act, challenging its admissibility. However, the Tribunal referenced a Supreme Court decision indicating that the provisions of the Evidence Act might not apply in FEMA proceedings, suggesting a different standard for evidence evaluation.The Tribunal also considered the applicability of evidence rules in non-criminal inquiries, highlighting the wide powers of adjudicating authorities to consider evidence without strict adherence to the Evidence Act. The Tribunal emphasized the importance of fairness in domestic inquiries and the permissibility of acting on circumstantial and confessional evidence.Ultimately, the Tribunal upheld the impugned order, finding merit in the respondent's arguments and concluding that the penalty imposed was not excessive given the contravention. The appeal was dismissed, directing the appellant to pay the remaining penalty amount within a specified timeframe, failing which the Enforcement Directorate would enforce the payment in accordance with the law.