Tribunal Affirms Penalties for Foreign Exchange Violations; Company and Director Fined Rs. 12,00,000 and Rs. 2,00,000 Respectively.

H.M. Shah Versus Director, Enforcement Directorate

H.M. Shah Versus Director, Enforcement Directorate - TMI Issues Involved:
1. Contravention of section 9(1)(f)(i) read with section 68(1) of the Foreign Exchange Regulation Act, 1973.
2. Validity and voluntariness of admissional statements.
3. Burden of proof and standard of evidence required.
4. Appropriateness of the penalty imposed.

Issue-wise Detailed Analysis:

1. Contravention of section 9(1)(f)(i) read with section 68(1) of the Foreign Exchange Regulation Act, 1973:
The appellants were accused of over-invoicing four export consignments, resulting in the receipt of US dollars 64184 from a foreign buyer, M/s. Hezmans, Netherlands, and making a payment of Rs. 25,00,000 in return. The adjudicating authority imposed penalties of Rs. 12,00,000 on the appellant-company and Rs. 2,00,000 on the Director. The appellants argued that the prices in the invoices were correct and not over-invoiced, citing market conditions and negotiations conducted by a middleman, Rajesh Shroff. However, the tribunal found that the admissional statements of Rajesh Shroff and the appellant-Director provided clear evidence of over-invoicing and the subsequent return of the differential amount.

2. Validity and voluntariness of admissional statements:
The appellants claimed that their admissional statements were made under coercion and threat. However, the tribunal noted that there was no evidence to support these claims. The tribunal referred to several Supreme Court judgments, including K.T.M.S. Mohd. v. Union of India, Naresh J. Sukhwani v. Union of India, and State (NCT) Delhi v. Navjot Sandhu alias Afsan Guru, which emphasized that voluntary statements made to enforcement authorities are admissible unless proven to be obtained through coercion or threat. The tribunal concluded that the admissional statements were voluntary and true, as there was no proof of coercion.

3. Burden of proof and standard of evidence required:
The tribunal discussed the burden of proof in quasi-criminal proceedings, citing the Supreme Court judgment in Collector of Customs v. D. Bhoormull. It was noted that the burden of proof on the enforcement agency does not require mathematical precision but should establish a degree of probability that a prudent person may believe in the existence of the fact in issue. The tribunal found that the evidence presented, including the admissional statements and the circumstances of the case, met this standard.

4. Appropriateness of the penalty imposed:
The tribunal considered the amount involved in the contravention and concluded that the penalties imposed were not excessive or harsh. The tribunal referred to the Supreme Court judgment in Chairman, SEBI v. Sriram Mutual Fund, which emphasized the importance of imposing penalties to ensure strict compliance with the law. The tribunal upheld the penalties of Rs. 12,00,000 on the appellant-company and Rs. 2,00,000 on the Director, finding them appropriate given the nature and amount of the contravention.

Conclusion:
The tribunal dismissed the appeals, upholding the adjudication order and the penalties imposed. The appellants were directed to deposit the remaining penalty amounts within a week, failing which the respondent could recover the amounts in accordance with the law.