2004 (8) TMI 781 - AT - FEMA

Penalty Reduced for FERA Violation: Limited Role in Unauthorized Forex Trading Leads to Rs. 50,000 Fine.

The appellant was penalized for violating FERA by trading foreign exchange without RBI authorization. Despite a retracted confession, the court reduced ... - Issues:1. Imposition of penalty for contravention of FERA provisions without RBI permission.2. Confession made by the appellant while in custody and subsequent retraction.3. Defence of lack of evidence and financial status of the appellant.4. Admissibility of confession under Indian Evidence Act.5. Burden of proof regarding inducement, threat, or promise.6. Reduction of penalty based on appellant's role as a carrier.Analysis:1. The appellant was penalized for contravening FERA provisions by acquiring and trading foreign exchange without RBI permission. The penalty was imposed based on the appellant's possession of seized foreign exchange and his admission of trading significant amounts without authorization.2. The appellant confessed to carrying and trading foreign exchange under instructions, but later retracted the confession before a Judicial Magistrate. The defense raised questions about the involvement of another individual and highlighted the appellant's status as a daily wage earner.3. The defense argued that the lack of evidence linking the appellant to the foreign exchange transactions and his financial circumstances warranted a reduction in the penalty. The appellant's role as a carrier was emphasized to mitigate the severity of the penalty.4. The judgment referred to Section 24 of the Indian Evidence Act regarding the admissibility of confessions made under inducement, threat, or promise. It was noted that the initial burden of proof regarding factors vitiating a confession lies with the appellant.5. The burden of proof regarding inducement, threat, or promise was discussed, citing a Supreme Court decision. The voluntary nature of statements made to authorities was highlighted, with an emphasis on the need to establish any improper means used to obtain a confession.6. Considering the appellant's role as a carrier and the lack of evidence of coercion, the penalty was reduced to Rs. 50,000 from the initial amount. The appellant was given 30 days to deposit the remaining penalty amount, failing which the respondent could recover it in accordance with the law.