Foreign exchange penalty fails where under-invoicing is unsupported by independent evidence and derived payment allegations collapse.

A penalty for contravention of foreign exchange law cannot be sustained where the alleged under-invoicing rests only on customs valuation that has already been set aside, and there is no independent evidence of the import value or payment. The appellant's statement alone was insufficient to prove guilt or replace objective proof. Because the alleged payment was wholly derivative of the unproved under-invoicing, that allegation also failed. The contravention finding was therefore set aside and the penalty was held unsustainable.

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Issues: Whether the penalty for contravention of section 9(1)(a) of the Foreign Exchange Regulation Act, 1973 was sustainable in the absence of reliable evidence of under-invoicing and the alleged payment.

Analysis: The differential amount was worked out on the basis of the customs valuation, but that valuation had already been set aside in the connected customs proceedings. In the absence of that foundation, the charge of under-invoicing was unsupported by independent evidence. The appellant's statement, by itself, could not replace objective proof of the import value or establish guilt under the Act. Since the allegation of payment was entirely derivative of the alleged under-invoicing, it also failed once the primary charge was not established.

Conclusion: The penalty was not sustainable and the finding of contravention was set aside in favour of the appellant.

Ratio Decidendi: A penalty for contravention of foreign exchange law cannot rest solely on an uncorroborated admission or on a valuation basis that has been disapproved; the charge must be proved by objective and adequate evidence.

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