2002 (10) TMI 821 - AT - FEMA

Appeal Succeeds: Insufficient Evidence Voids FERA Violation Penalty; Rs. 15,000 Refund Ordered Within 3 Months.

S.K. Mittal Versus Director of Enforcement

S.K. Mittal Versus Director of Enforcement - TMI Issues:Violation of section 9(1)(d) and 9(1)(b) of FERA, 1973 - Guilt and penalties imposed on the appellant - Allegations of receiving payments from a person resident outside India - Involvement of employees in handling NRE accounts - Lack of evidence and corroboration in the case - Assessment based on statements without proper verification - Appeal against the order and penalty imposed.Analysis:The Appellate Tribunal for Foreign Exchange in New Delhi dealt with a case involving the violation of section 9(1)(d) and 9(1)(b) of FERA, 1973 by three individuals, including the appellant, who were found guilty and penalized. The specific focus of the appeal was on the appellant, who was directed to pay a penalty of Rs. 15,000, which he had already deposited. The other two individuals did not challenge the order. The case revolved around allegations that the appellant and another individual received a payment from a person resident outside India, which was considered a contravention of FERA provisions.The facts of the case revealed that a payment was made to the appellant by a third party on behalf of a person resident in Dubai. The appellant was accused of handling the accounts of the person resident outside India and receiving funds in violation of FERA regulations. The involvement of an employee in managing NRE accounts was also highlighted, with conflicting statements regarding the employee's role. The appellant denied the allegations and argued that there was insufficient evidence to support the charges.The Adjudicating Officer's findings were based on statements and documents that lacked proper verification and corroboration. The evidence against the appellant primarily relied on the identification of writings on vouchers related to the NRE accounts, along with a letter instructing payments from the NRI account. However, the appellant was not given an opportunity to address these documents during the investigation. The appellant's defense highlighted the lack of specific findings on the main charge against him.Upon review, the Tribunal found the evidence presented to be vague and insufficient to establish the specific charge against the appellant. The lack of a clear finding on the key allegation led to the appeal being allowed, the order being set aside, and the directed penalty to be returned to the appellant within three months. The decision emphasized the importance of establishing charges conclusively and ensuring proper verification of evidence in such cases.