Foreign exchange liability depends on strict proof of statutory ingredients, not on assumptions about remuneration or overseas holdings.

Receipt in India of remuneration for performances abroad does not, by itself, amount to receipt on behalf of a person resident outside India under foreign exchange law; the payment remains a person's own remuneration unless the statutory ingredient of third-party receipt is proved. A charge of holding foreign exchange outside India likewise requires reliable proof of actual ownership or possession abroad, and cannot rest on an uncorroborated third-party statement or an unclear seized entry. The material described in the text was treated as insufficient to establish either contravention, so the penalty basis failed on both charges.

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Issues: (i) Whether receipt of payment in India by the appellant as remuneration for performances abroad amounted to contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973. (ii) Whether the allegation that the appellant held foreign exchange outside India was proved so as to sustain contravention of section 14 of the Foreign Exchange Regulation Act, 1973.

Issue (i): Whether receipt of payment in India by the appellant as remuneration for performances abroad amounted to contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973.

Analysis: The charge under section 9(1)(b) required proof that the appellant received payment in India on behalf of a person resident outside India. The facts relied upon by the department showed, at best, receipt of money as remuneration for services rendered or to be rendered. A person receiving remuneration for his own services receives it on his own behalf and not on behalf of another. On the department's own version, the receipt in India did not answer the statutory description of a prohibited receipt.

Conclusion: The finding of contravention of section 9(1)(b) was unsustainable and was set aside in favour of the appellant.

Issue (ii): Whether the allegation that the appellant held foreign exchange outside India was proved so as to sustain contravention of section 14 of the Foreign Exchange Regulation Act, 1973.

Analysis: A charge under section 14 required proof that the person proceeded against owned or held foreign exchange outside India. The department relied mainly on a statement of a third party and a seized page that did not contain any clear entry of foreign exchange against the appellant beyond the figure corresponding to the Indian rupee payment. The third party was not an eye-witness to any alleged foreign-currency payment, and there was no corroboration from the alleged payer or any direct evidence that the appellant actually received foreign exchange abroad. The essential ingredient of possession or holding of foreign exchange outside India was therefore not established.

Conclusion: The finding of contravention of section 14 was unsustainable and was set aside in favour of the appellant.

Final Conclusion: The penalty order could not survive on either of the two charges, and the appeal succeeded with consequential refund of the pre-deposit.

Ratio Decidendi: A penalty for contravention under the foreign exchange law cannot stand unless the department proves the specific statutory ingredient of the alleged breach by reliable and corroborated evidence; a payment received as a person's own remuneration does not become a prohibited receipt merely because the payer is connected with a non-resident, and a charge of holding foreign exchange abroad must be supported by direct proof of that fact.

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