1995 (7) TMI 445 - AT - FEMA

Appellate Tribunal reduces penalties under Foreign Exchange Regulation Act, citing lack of intent to violate objectives.

Fredrick MeCrahan Versus Director of Enforcement

The Appellate Tribunal acknowledged the contraventions of the Foreign Exchange Regulation Act, 1973, by the appellants but recognized the absence of ... - Issues:1. Contravention of section 9(1)(a) of the Foreign Exchange Regulation Act, 1973 - Appeal No. 607 of 1992.2. Contravention of section 9(1)(d) and section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 - Appeal No. 24 of 1993.Detailed Analysis:Issue 1: Contravention of section 9(1)(a) - Appeal No. 607 of 1992The appellant was penalized for making a payment to a person resident outside India after migration for permanent settlement. The appellant argued that the transactions were not in foreign exchange or for dealings in foreign exchange. The appellant's inability to pay the amount before migration was highlighted, showing no economic bargain intent. The appellant contended that the payment was made for charity and religious purposes, with no evidence of compensatory payments or Hawala transactions. The appellant's plea for reduction of penalties was based on the technical nature of the contravention and lack of guilty intention.Issue 2: Contravention of section 9(1)(d) and section 9(1)(b) - Appeal No. 24 of 1993The appellant was penalized for making payments on behalf of non-residents, including for charity purposes. The appellant maintained that all payments were made from amounts that would have been paid to the non-resident if present in India. The appellant argued that the transactions were motivated by love and regard for the non-resident brother and were distributed for charity without any personal gain. The appellant's counsel emphasized that the charges against both appellants were related to the same amount and lacked foreign exchange involvement, advocating for token penalties.Conclusion:The Appellate Tribunal considered the circumstances and found that while the appellants' acts contravened the law, they did not prejudice the Act's objectives. The penalties were reduced based on the appellants' arguments and the nature of the contraventions. The penalties were set at Rs. 5,000 for Appeal No. 607 of 1992 and Rs. 10,000 for Appeal No. 24 of 1993, with adjustments for amounts already paid. The appellants were directed to pay the reduced penalties within thirty days of the order.