Foreign exchange contravention upheld, but confiscation reduced on proportionality grounds in currency seizure dispute.

Contravention of foreign exchange restrictions was upheld where the appellant's statement admitted dealings in foreign exchange and the seized currency and supporting documents corroborated that conduct; the later retraction did not displace the evidence accepted by the adjudicating authority, so the penalty was maintained. Confiscation of the seized Indian currency was also examined on proportionality grounds, and complete confiscation was found excessive on the facts. The confiscatory order was therefore modified to permit only partial confiscation, with the balance directed to be returned after adjustment of the penalty.

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Issues: (i) whether the appellant's contravention of sections 8(1) and 8(2) read with section 64(2) of the Foreign Exchange Regulation Act, 1973 stood established; (ii) whether confiscation of the entire seized Indian currency was justified or whether only part of it could be confiscated.

Issue (i): whether the appellant's contravention of sections 8(1) and 8(2) read with section 64(2) of the Foreign Exchange Regulation Act, 1973 stood established.

Analysis: The appellant's statement under section 40 admitted dealing in foreign exchange and sending currency for conversion into Indian currency. The seizure of foreign currency and Indian currency from the appellant, coupled with the documents relied upon, supported the finding that the appellant had been dealing in foreign exchange. The later retraction and the attempt to explain the source of the seized amount did not displace the evidence accepted by the adjudicating officer.

Conclusion: The contravention under sections 8(1) and 8(2) read with section 64(2) was upheld and the penalty was maintained.

Issue (ii): whether confiscation of the entire seized Indian currency was justified or whether only part of it could be confiscated.

Analysis: The confiscation order was examined on the footing that confiscation of Indian and foreign currency lies within the adjudicating officer's discretion. On the facts, however, complete confiscation of the Indian currency was found to be excessive. The confiscatory order was therefore modified to reflect a partial confiscation while preserving the penalty already imposed.

Conclusion: Full confiscation was not justified and only Rs. 1,56,000 was directed to be confiscated, with the balance ordered to be returned after adjustment of the penalty.

Final Conclusion: The finding of contravention and the penalty were affirmed, but the confiscation order was substantially reduced, resulting in partial relief to the appellant.

Ratio Decidendi: Where contravention of foreign exchange restrictions is proved, the authority may sustain penalty, but the extent of confiscation remains a matter of discretionary proportionality on the facts of the case.

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