Foreign exchange penalty and confiscation fail where evidence did not show unauthorised acquisition by the appellant.

Penalty for alleged contravention of section 8(1) of the Foreign Exchange Regulation Act and confiscation of seized foreign currency were found unsustainable on the record. The currency was recovered from an almirah in the room occupied by the appellant's son and daughter-in-law, both non-residents, and the appellant's own statement and letter indicated that the son had given the currency for the daughter-in-law's expenses. As the record did not show recovery from the appellant's person or proof that he had acquired foreign exchange from an unauthorised source without Reserve Bank permission, the contravention was not established. Confiscation also failed because the currency belonged to the non-resident daughter-in-law, who was entitled to possess and use it in India or take it back.

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Issues: Whether the penalty imposed for alleged contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973 and the confiscation of the seized foreign currency could be sustained on the evidence on record.

Analysis: The appeal challenged the finding that the appellant had acquired foreign exchange from an unauthorised source without the Reserve Bank's permission. The material relied upon in the show-cause notice and the appellant's own statement and letter indicated that the foreign currency was recovered from the almirah in the room occupied by the appellant's son and daughter-in-law, who were non-residents, and that the currency had been given by the son for the daughter-in-law's expenses. The record also did not show recovery from the appellant's person. On that evidence, the finding that the appellant himself had contravened section 8(1) was unsustainable. The plea to retain confiscation also failed because the currency belonged to the non-resident daughter-in-law, who was entitled to possess and use it in India or take it back with her.

Conclusion: The penalty and confiscation were held unsustainable and were set aside in favour of the appellant.

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