Foreign exchange penalties fail where unrelied statements do not prove contravention, but confiscation may stand on supporting evidence.

Penalties for alleged contravention of section 9(1)(b) and section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 were set aside because the relied-upon material did not independently establish the alleged receipt and disbursement of foreign exchange, and the finding depended materially on statements not included in the show-cause notice record. The penalty of Rs. 50,000 and confiscation of the seized currency under section 9(1)(d) read with section 64(2) were sustained because the seizure was undisputed, the explanation was inconsistent and unsupported, and quasi-judicial adjudication does not require proof beyond reasonable doubt.

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Issues: (i) Whether the penalties imposed for contravention of section 9(1)(b) and section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 were sustainable; (ii) Whether the penalty of Rs. 50,000 and confiscation of the seized amount were sustainable for contravention of section 9(1)(d) read with section 64(2) of the Foreign Exchange Regulation Act, 1973.

Issue (i): Whether the penalties imposed for contravention of section 9(1)(b) and section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 were sustainable.

Analysis: The impugned order relied substantially on the appellant's statement and on statements of alleged recipients whose documents were not among the relied upon documents in the show-cause notice. The material did not independently establish the alleged receipt and disbursement of foreign exchange or the essential ingredients of the contraventions. The evidence was found insufficient to sustain the penalties on the available record.

Conclusion: The penalties of Rs. 2,50,000 and Rs. 1,50,000 were not sustainable and were quashed, in favour of the appellant.

Issue (ii): Whether the penalty of Rs. 50,000 and confiscation of the seized amount were sustainable for contravention of section 9(1)(d) read with section 64(2) of the Foreign Exchange Regulation Act, 1973.

Analysis: The seized amount was not denied, and the appellant's explanation was inconsistent and unsupported by the record. In adjudication proceedings, the standard is not proof beyond reasonable doubt, and some evidence was available linking the seized currency to the alleged contravention. The circumstances justified interference only to the extent of the first two penalties, not the penalty and confiscation relating to this charge.

Conclusion: The penalty of Rs. 50,000 and confiscation of the seized amount were upheld, against the appellant.

Final Conclusion: The appeal succeeded only to the extent of setting aside the penalties under section 9(1)(b) and section 9(1)(d), while the penalty and confiscation connected with section 9(1)(d) read with section 64(2) were maintained.

Ratio Decidendi: Where the relied upon material does not independently establish the contravention and the impugned finding rests materially on unrelied statements, the penalty cannot stand; but where some evidence supports the charge and the explanation for the seized currency remains unsatisfactory, the adjudicatory finding may be sustained in quasi-judicial proceedings.

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