Foreign exchange contraventions require reliable proof; mere possession or uncorroborated statements are insufficient, though confiscation may still stand.

Foreign exchange contraventions under FERA were examined on three distinct bases: receipt of foreign remittances on behalf of family members was treated as supported by surrounding bank and investment records and the contravention finding under section 9(1)(b) was sustained; possession of a single US Dollar 50 note was held insufficient by itself to prove unlawful acquisition under section 8(1), so the penalty was set aside while confiscation was retained; and a charge under section 15 read with the relevant notifications could not be sustained on an uncorroborated statement alone, so that contravention and related penalty were withdrawn. The text emphasises that foreign exchange liability must rest on reliable proof, not mere possession or unverified allegations.

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Issues: (i) Whether the appellant's receipt of foreign remittances on behalf of family members constituted contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 and warranted the penalty imposed; (ii) Whether possession of a single US Dollar 50 note established contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973 and justified the penalty and confiscation order; (iii) Whether the charge under section 15 of the Foreign Exchange Regulation Act, 1973 read with the relevant notifications was proved so as to sustain the penalty.

Issue (i): Whether the appellant's receipt of foreign remittances on behalf of family members constituted contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 and warranted the penalty imposed.

Analysis: The receipt of the amounts stood supported by bank deposits and the purchase of National Saving Certificates. The appellant did not dispute receipt of the amounts on behalf of her son, and the adjudicating authority had already considered that most of the money came from the son and that there was no indication of any organised racket involving the appellant. The circumstances did not justify interference with the finding of contravention or with the penalty imposed for that charge.

Conclusion: The finding of contravention under section 9(1)(b) and the penalty therefor were sustained against the appellant.

Issue (ii): Whether possession of a single US Dollar 50 note established contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973 and justified the penalty and confiscation order.

Analysis: The explanation that the currency note was found while cleaning a room earlier occupied by a foreign tourist was considered plausible, especially because only one note was recovered. Mere possession, without more, was held insufficient to conclusively prove acquisition of foreign exchange in violation of section 8(1). The appellant was therefore given the benefit of doubt as to the charge, though lawful ownership of the foreign currency was not established.

Conclusion: The penalty for contravention of section 8(1) was set aside, but confiscation of the US Dollar 50 was sustained.

Issue (iii): Whether the charge under section 15 of the Foreign Exchange Regulation Act, 1973 read with the relevant notifications was proved so as to sustain the penalty.

Analysis: The charge rested solely on an alleged statement attributed to the appellant. It was held that guilt could not be sustained merely on such an admission, particularly when the Department had not proved the charge by independent material. In the absence of records showing the foreign tourists, duration of stay, services rendered, and payments received, no precise charge of contravention could be framed or sustained.

Conclusion: The finding of contravention under section 15 read with the notifications and the related penalty were set aside.

Final Conclusion: The appeal succeeded only in part. The penalty and finding concerning receipt of remittances under section 9(1)(b) remained undisturbed, while the remaining charges failed and the related monetary penalty was reduced accordingly, with confiscation retained only in respect of the foreign currency note.

Ratio Decidendi: A contravention under the foreign exchange law must be proved by reliable evidence and cannot be sustained on mere possession, uncorroborated admission, or unproved allegations, though lawful ownership and confiscation may be treated separately.

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