Foreign exchange contravention upheld on admissions and documents, but penalty reduced on leniency and mens rea considerations.

Contravention of foreign exchange law was established where a resident in India received sale proceeds for imported cars on behalf of a non-resident without inward remittance through authorised dealers and without RBI exemption. The Tribunal relied on admissions, corroborative witness statements and seized documents, and did not accept the retraction argument because the record sufficiently supported the transaction pattern and the appellant's involvement. While upholding the violation, the Tribunal moderated the penalty on a lenient view and in light of mens rea, reducing it from Rs. 3,00,000 to Rs. 1,50,000.

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Issues: (i) Whether the appellant had contravened section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 by receiving sale proceeds of imported cars through persons in India otherwise than through authorised dealers in foreign exchange; (ii) Whether the penalty imposed required reduction.

Issue (i): Whether the appellant had contravened section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 by receiving sale proceeds of imported cars through persons in India otherwise than through authorised dealers in foreign exchange.

Analysis: The materials relied upon by the adjudicating authority included witness statements, the appellant's own admissions, and seized documents relating to the import and sale of the cars. These materials supported the conclusion that the appellant, a resident in India, had received payments on behalf of his brother-in-law residing abroad without any exemption from the Reserve Bank of India and without inward remittance through authorised dealers. The plea that the statements were retracted and therefore unreliable was not accepted, as the record furnished sufficient corroboration of the transaction pattern and the appellant's involvement.

Conclusion: The contravention of section 9(1)(b) was established and the finding of guilt was sustained.

Issue (ii): Whether the penalty imposed required reduction.

Analysis: While affirming the finding of contravention, the Tribunal took a lenient view on the quantum of penalty and considered the aspect of mens rea. On that basis, the penalty was found liable to be moderated.

Conclusion: The penalty was reduced from Rs. 3,00,000 to Rs. 1,50,000.

Final Conclusion: The finding of violation was upheld, but the monetary penalty was scaled down, resulting in a partial relief to the appellant.

Ratio Decidendi: Contravention under foreign exchange law can be established on the basis of admissions, corroborative witness statements and seized documents even where statements are later retracted, and the quantum of penalty may be moderated on considerations of leniency and mens rea.

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