Burden of proof in foreign exchange contravention failed where invoices and statements did not establish over-invoicing.

Alleged contravention of sections 8(3) and 8(4) of the Foreign Exchange Regulation Act, 1973 was found not proved because the evidence did not establish over-invoicing. A lower-priced proforma invoice created suspicion, but other invoices showed similar scanners at the higher price and a proforma invoice addressed to the appellant reflected that same higher price before import. The letters relied on in adjudication did not support the over-invoicing theory and were consistent with the appellant's case, while the section 40 statements also did not advance the Department's position. The burden of proving breach was not discharged, so the penalty could not be sustained.

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Issues: Whether the alleged contravention of section 8(3) read with section 8(4) of the Foreign Exchange Regulation Act, 1973 was established on the evidence, and whether the consequential penalty could be sustained.

Analysis: The recovery of a proforma invoice suggesting a lower price created a suspicion, but the material on record also included other invoices for similar scanners at the higher price and a proforma invoice addressed to the appellant showing the same higher price before import. The letters relied upon in the adjudication order did not support the conclusion of over-invoicing and, if anything, were consistent with the appellant's case. The statements recorded under section 40 of the Act also did not advance the Department's case. The finding of contravention was therefore not supported by evidence, and the Department failed to discharge the burden of proving the alleged breach.

Conclusion: The alleged contravention was not proved, and the penalty imposed on the appellants could not stand. The appeal succeeds.

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