Tribunal Upholds Penalties; Dismisses Claims of Improper Notices & Invalid Statements Under FER Act Violations.

Subhash Chandra Gadia Versus Director, Enforcement Directorate

Subhash Chandra Gadia Versus Director, Enforcement Directorate - TMI Issues Involved:

1. Contravention of Section 8(1) FER Act, 1973.
2. Contravention of Section 9(1)(a) and Section 19(1)(e) FER Act, 1973.
3. Contravention of Section 9(1)(f)(i) FER Act, 1973.
4. Principles of natural justice and service of Show Cause Notices.
5. Validity of retracted statements and their impact on the judgment.

Detailed Analysis:

1. Contravention of Section 8(1) FER Act, 1973:

The appellant was alleged to have "otherwise acquired and thereafter transferred US dollars 62,793" to the bank account of M/s Greenland Corporation, Japan, and failed to offer the same for sale within three months of his return to India in April 1984, violating Section 8(1) FER Act, 1973 (Show Cause Notice No. T-4/36-B/86-(SCN-IV)). Additionally, he was accused of maintaining an account with M/s Greenland Corporation where Japanese Yen 7236950 was debited without RBI's permission and failing to surrender Japanese Yen 7236950 and US dollars 20,000 within three months of his return to India (Show Cause Notice No. T-4/36-B/86-(SCN-V)).

2. Contravention of Section 9(1)(a) and Section 19(1)(e) FER Act, 1973:

The appellant was penalized for making payments of US dollars 99539.60 and Singapore dollar 762 to different persons without RBI's permission and for holding JCP bonds of US dollars 10000 even after acquiring the status of a person resident in India (Show Cause Notice No. T-4/36-B/86-(SCN-VIII)). This was seen as a contravention of Section 9(1)(a) and Section 19(1)(e) FER Act, 1973.

3. Contravention of Section 9(1)(f)(i) FER Act, 1973:

The appellant was found to have received Rs. 16,26,500 as consideration and in lieu of payment of US dollars 75000 and Singapore dollar 61663.40 from persons resident outside India, which was a violation of Section 9(1)(f)(i) FER Act, 1973 (Show Cause Notice No. T-4/36-B/86-(SCN-VII)).

4. Principles of Natural Justice and Service of Show Cause Notices:

The appellant argued that the Show Cause Notices were not served on him, violating principles of natural justice. However, the Tribunal found that the notices were sent to the address provided by the appellant, fulfilling the legal duty of the Enforcement Directorate. The service by affixation under Rule 10(c), Adjudication Proceedings and Appeal Rules, 1974, was deemed an accepted and recognized mode of service under the Foreign Exchange Regulation Act, 1973. Thus, the Tribunal dismissed the claim of violation of natural justice.

5. Validity of Retracted Statements and Their Impact on the Judgment:

The appellant's statements recorded by the Customs Department and the Enforcement Directorate were retracted. The Tribunal noted that retracted statements could still be considered if not proven to be made under threat or coercion. The Tribunal cited several judgments, including K.T.M.S. Mohd. v. UOI and K.I. Pavunny v. Assistant Collector (HQ), to emphasize that retracted confessions could be used as evidence if found voluntary and true. The Tribunal concluded that the appellant's statements were voluntary and true, and the retraction did not benefit the appellant. The burden of proof on the Enforcement Directorate under Section 59(2) FER Act was considered met without requiring mathematical precision, as per the observations in Collector of Customs, Madras v. D. Bhoormull.

Conclusion:

The Tribunal upheld the penalties imposed on the appellant for contraventions of various sections of the FER Act, 1973, dismissing the arguments regarding the appellant's residential status, principles of natural justice, and the validity of retracted statements. The appeal was disposed of on merits, affirming the adjudication order.