Non-resident nexus and payment on behalf of a non-resident determine liability under foreign exchange restrictions.

Section 9(1)(b) of the Foreign Exchange Regulation Act required affirmative proof that the receipt was made on the instruction of a person resident outside India; an uncorroborated statement and a mere draft payment were insufficient to establish the necessary non-resident nexus. Section 9(1)(d) covered payments made by order or on behalf of a non-resident, and the payment of customs duty for a non-resident son-in-law fell within that provision even though it was made in Indian rupees and no foreign exchange was involved. The text states that the first charge failed, while the second contravention was sustained with a reduced penalty.

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Issues: (i) Whether the penalty for contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 was sustainable on the evidence recorded; (ii) Whether the payment made towards customs duty on behalf of a person resident outside India attracted section 9(1)(d) of the Foreign Exchange Regulation Act, 1973, and if so, whether the penalty called for reduction.

Issue (i): Whether the penalty for contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 was sustainable on the evidence recorded.

Analysis: The finding under section 9(1)(b) rested mainly on the appellant's statement. That statement was later denied in reply, where the appellant asserted that the amount had been received by draft from his native place and not on the instruction of a non-resident son-in-law. The material on record did not adequately establish that the receipt was on the instruction of a person resident outside India. Mere receipt through a draft, without proof of the source or the non-resident nexus required by the provision, was insufficient to sustain the charge.

Conclusion: The charge under section 9(1)(b) failed and the penalty of Rs. 1,000 was set aside.

Issue (ii): Whether the payment made towards customs duty on behalf of a person resident outside India attracted section 9(1)(d) of the Foreign Exchange Regulation Act, 1973, and if so, whether the penalty called for reduction.

Analysis: Section 9(1)(d) covers any payment made to, or for the credit of, a person by order or on behalf of a person resident outside India. The admitted facts showed that the appellant had paid Rs. 12,000 towards customs duty on behalf of his non-resident son-in-law. The absence of foreign exchange did not take the transaction outside the scope of the provision, because the statutory focus is on the payment made by order or on behalf of a non-resident. The contravention was therefore made out, though the amount of penalty was considered excessive in the circumstances of an old case.

Conclusion: The finding of contravention under section 9(1)(d) was upheld, but the penalty was reduced to Rs. 1,000.

Final Conclusion: The appeal succeeded only in part: one charge was quashed, the other was sustained with reduced penalty, and the pre-deposit was directed to be adjusted against the remaining liability.

Ratio Decidendi: For section 9(1)(b), the non-resident nexus must be affirmatively proved and cannot rest on an uncorroborated statement alone; for section 9(1)(d), a payment made by order or on behalf of a person resident outside India is actionable even if the payment is made in Indian rupees and no foreign exchange is involved.

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