1998 (6) TMI 593 - AT - FEMA

Tribunal Overturns Penalty Citing Lack of Evidence for Direct Involvement in Foreign Exchange Acquisition.

The Appellate Tribunal allowed the appeal, setting aside the penalty imposed on the appellant for contravening section 8(1) of the Foreign Exchange ... - Issues:1. Appeal against penalty imposed for contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.2. Plea for waiver from pre-deposit of penalty based on financial hardship and prima facie case.3. Allegation of acquiring foreign exchange without permission and contravention of section 8(1) of the Act.4. Dispute regarding application of section 8(1) to the facts of the case.5. Examination of facts related to the appellant's trips to Singapore and acquisition of foreign exchange.6. Dispute regarding statements of passengers supporting the appellant's actions.7. Appellant's statement regarding financing of trips and denial of contravention of section 8(1).8. Analysis of appellant's role in the alleged contravention and partnership in the alleged racket.9. Lack of evidence to establish contravention of section 8(1) against the appellant.10. Decision to set aside the impugned order based on the above analysis.Analysis:1. The appeal before the Appellate Tribunal pertains to a penalty imposed on the appellant for contravening section 8(1) of the Foreign Exchange Regulation Act, 1973. The appellant sought a waiver from pre-deposit of the penalty based on financial hardship and a prima facie case.2. The appellant was accused of acquiring foreign exchange without permission, amounting to US $42,900, from individuals other than authorized dealers, thereby violating section 8(1) of the Act. The appellant contested the application of this provision to the facts of the case.3. The Tribunal examined the appellant's trips to Singapore, where he acted as a group leader, facilitating passengers in acquiring Foreign Travel Scheme (FTS) allowances and purchasing goods using those funds. The Adjudicating Officer's findings were based on the appellant's own admissions during the trips.4. Discrepancies arose regarding the statements of passengers supporting the appellant's actions. The appellant denied certain allegations and claimed that the Enforcement Officer did not verify the facts with the passengers involved.5. The appellant stated that the trips were financed by a third party, Jagan Nath, and he acted as an agent and air-ticketing agent. He argued that he did not contravene section 8(1) as he did not directly acquire foreign exchange and the goods were imported in the passengers' names.6. The Tribunal found that the appellant's role was more of a facilitator for the passengers and financiers, rather than a direct acquirer of foreign exchange. The Tribunal highlighted the lack of evidence showing the appellant's direct involvement in acquiring foreign exchange.7. The Adjudicating Officer's observation of the appellant being a willing partner in a racket was challenged, with the appellant's counsel arguing that the goods were imported in the passengers' names, absolving the appellant of direct acquisition of foreign exchange.8. The Tribunal concluded that the impugned order lacked sufficient evidence to establish the appellant's contravention of section 8(1) and set aside the penalty imposed on the appellant.9. Ultimately, the Tribunal allowed the appeal, setting aside the impugned order based on the lack of evidence connecting the appellant to the contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.