1995 (12) TMI 430 - AT - FEMA

Tribunal Overturns Penalty, Orders Return of Seized Currency; Supports Appellant's Ownership Claim Under FERA 1973.

The appeal against the penalty for contravening section 8(1) of the Foreign Exchange Regulation Act, 1973, was allowed by the Tribunal. The Tribunal found ... - Issues: Appeal against penalty imposed for contravention of Foreign Exchange Regulation Act, 1973 by acquiring foreign exchange without permission.Analysis:1. Adjudication Order and Allegations: The appeal was filed against an Adjudication Order imposing a penalty for contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973. The appellant, a resident in India, was accused of acquiring foreign exchange without the required permission. The order also included confiscation of the foreign currency. The penalty had already been deposited, leading to the disposal of the appeal on merits.2. Contentions of the Appellant: The appellant's counsel argued that the order was untenable and contrary to the evidence presented in the show-cause notice (SCN) and on record. The evidence included a letter from income-tax authorities confirming a search at the appellant's premises and the recovery of foreign currency. The appellant's statement under section 40 of the Act and subsequent letters indicated that the foreign currency was given by his non-resident son to the daughter-in-law for her expenses. The appellant's retired status and the funds held by his son in an NRE account were also highlighted as reasons why he had no motive to acquire foreign exchange.3. Defense and Counterarguments: The appellant's counsel further contended that the sole reason for finding the appellant guilty was inadequate, as the daughter-in-law had previously stored foreign exchange in a locker during the same visit. It was argued that this fact, along with evidence of the currency belonging to the son, should have absolved the appellant of the contravention.4. Respondent's Justification: The respondent attempted to justify the order, aligning with the Assistant Director's reasoning, which was deemed to lack merit. The plea to retain the confiscation order was also made, despite the penalty being set aside.5. Judgment and Findings: The Chairman found the contravention of section 8(1) baseless, agreeing with the appellant's arguments. The plea to uphold the confiscation order was rejected, emphasizing that the seized currency belonged to the daughter-in-law, a non-resident entitled to spend or take back the funds. Consequently, the appeal was allowed, the impugned order and confiscation were set aside, and the penalty amount and foreign currency were ordered to be returned to the appellant within 45 days.This detailed analysis highlights the legal arguments, evidence, and reasoning considered in the judgment, leading to the decision to overturn the penalty and confiscation orders based on the lack of merit in the allegations and the rightful ownership of the foreign currency.