Foreign exchange contravention upheld on corroborative evidence, while one penalty was reduced for proportionality

In quasi-criminal foreign exchange adjudication, contravention was upheld where mutually corroborative statements, seized documents and admissions supported findings of under-invoiced export proceeds and unauthorised commission payments. The challenge that Customs clearance and denial of under-invoicing displaced the allegations was rejected because the evidence remained reliable and consistent. On penalty, the tribunal examined proportionality against the circumstances and reduced the penalty on one appellant to fifty per cent, while confirming the penalty on the other. The violations were therefore maintained, with only limited interference on quantum.

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Issues: (i) Whether the finding that the appellants contravened the foreign exchange provisions concerning under-invoiced export proceeds and commission payments was vitiated by absence of reliable evidence; (ii) whether the penalty imposed required interference on the ground of excessiveness.

Issue (i): Whether the finding that the appellants contravened the foreign exchange provisions concerning under-invoiced export proceeds and commission payments was vitiated by absence of reliable evidence.

Analysis: The proceedings were treated as quasi-criminal, requiring the allegations to be established on reliable evidence. The record contained the statements of the concerned persons, which were mutually corroborative, along with documents seized from the residence of the intermediary, and these materials supported the conclusion that part of the amount represented the difference between actual and under-invoiced export value and that commission payments were made to Bangladeshi indentors in an unauthorised manner. The challenge based on clearance by Customs and denial of under-invoicing was not accepted in view of the corroborated materials and admissions relied upon in the adjudication.

Conclusion: The finding of contravention was upheld against the appellants.

Issue (ii): Whether the penalty imposed required interference on the ground of excessiveness.

Analysis: The quantum of penalty was examined with reference to the amounts involved and the relevant circumstances. While the violations were sustained, the penalty imposed on one appellant was considered capable of reduction to a more proportionate level. No similar interference was found necessary in respect of the other appellant.

Conclusion: The penalty on Teja Singh was reduced to fifty per cent and the penalty on Dilip Kundu was confirmed.

Final Conclusion: The appeals succeeded only to the limited extent of reduction in penalty for one appellant, while the findings of violation and the remaining penalty orders were maintained.

Ratio Decidendi: In quasi-criminal adjudication under foreign exchange law, contravention may be sustained on the basis of mutually corroborative statements and seized documents, and penalty may be moderated where the quantum is found disproportionate to the circumstances.

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