1994 (1) TMI 321 - AT - FEMA

Tribunal Upholds Partial Appeal: Rs. 11,000 Penalty Retained, Rs. 37,000 Refund Ordered, Sterling lb550 to be Converted.

Smt. Anatholia Catherina Versus Director of Enforcement

The tribunal partially allowed the appeal, dismissing contraventions under SCNs II and III, while upholding penalties under SCNs IV and VII. The ... - Issues Involved:1. Contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973.2. Contravention of section 9(1)(a) of the Foreign Exchange Regulation Act, 1973.3. Contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.4. Excessive penalty and confiscation of foreign currency.Issue-wise Detailed Analysis:1. Contravention of section 9(1)(b):The appellant was charged under SCN II for receiving Rs. 1,76,000 in India from A.F.S. & Sons by order or on behalf of Shri Alban D'Souza of Canada. The appellant contended that the amount was received as a result of the settlement of accounts upon the reconstitution of the partnership firm, and not as a compensatory payment. The judgment referenced the Allahabad High Court case George Elwin King v. RBI, which established that payments received as a matter of one's own right do not fall under section 9(1)(b). The tribunal concluded that the Deputy Director erred in treating the payment as an order from Shri D'Souza, and thus, the charge under SCN II was set aside.2. Contravention of section 9(1)(a):Under SCN III, the appellant was charged for making payments totaling Rs. 88,000 to Shri Tonnemann, a non-resident, by issuing cheques through her bank account. The appellant admitted to receiving a draft of 900 Australian Dollars from Shri Tonnemann and issuing cheques in Indian currency as an equivalent amount. The tribunal noted that the transaction did not involve any compensatory payment as the amount was received and converted through proper banking channels. Therefore, the appellant was not found guilty of contravention under section 9(1)(a).3. Contravention of section 8(1):Under SCN IV, the appellant was charged with acquiring foreign exchange of Sterling lb550 from unauthorized dealers. The appellant claimed the amount was a Christmas gift from her husband sent through friends. However, the tribunal upheld the Deputy Director's finding that the appellant did not receive the foreign currency through normal banking channels nor offered it for sale to authorized dealers. Thus, the charge under section 8(1) was sustained, but the confiscation of the amount was set aside while upholding the penalty of Rs. 3,000.4. Excessive penalty and confiscation of foreign currency:Under SCN VII, the appellant was charged for acquiring various amounts of foreign currency. The tribunal reviewed the Deputy Director's detailed analysis and found no reason to interfere with the conclusions that the appellant contravened section 8(1). The penalty of Rs. 8,000 was deemed reasonable and not excessive.Conclusion:The tribunal partly allowed the appeal, setting aside the contraventions under SCNs II and III, while sustaining the penalties under SCNs IV and VII. The respondents were directed to retain Rs. 11,000 towards the penalty and refund Rs. 37,000 to the appellant within 45 days. Additionally, the Sterling lb550 was to be refunded to the appellant, who was instructed to sell it to an authorized dealer and receive the equivalent amount in Indian currency.