1992 (6) TMI 188 - AT - FEMA

Penalty Reduced: Appeal Leads to Refund of Rs. 1,000 Under Foreign Exchange Regulation Act Section 9(1)(b.

Mrs. Syedunnisa Ismail Versus Director of Enforcement

The appeal concerning the penalty under section 9(1)(b) of the Foreign Exchange Regulation Act, 1973, resulted in a partial allowance. The Chairman ... - Issues:Violation of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973; Imposition of penalty; Justification of penalty amount; Appeal against penalty imposition.Analysis:The case involved an appeal against the imposition of a penalty on the appellant for violating section 9(1)(b) of the Foreign Exchange Regulation Act, 1973. The appellant was accused of receiving Rs. 13,000 from a local person without proper authorization from the Reserve Bank of India. The Adjudicating Officer had imposed a penalty of Rs. 1,500 on the appellant, which she contested as unreasonable and unjustified, citing her ignorance of foreign exchange regulations and the circumstances of the transaction. The appellant argued that the draft she received was in relation to a loan given by her husband to an Indian working in Saudi Arabia, and she had not encashed the cheque as it was returned by the bank. The respondent contended that the penalty was justified based on the appellant's statement and lack of mention of the alleged loan.Upon review of the case records and submissions, the Chairman noted that the appellant had indeed received a cheque of Rs. 13,000 from a non-authorized dealer, which she attempted to encash but was returned by the bank. While the appellant did not actually receive the amount, the attempt to receive it constituted a contravention of the Act. The Chairman referenced section 64(2) of the Act, which deems attempted contraventions as actual contraventions. However, considering the circumstances where the amount was sent by the appellant's husband for family support and was not realized by the appellant, the Chairman found the original penalty amount excessive.Regarding the quantum of penalty, the Chairman acknowledged that the appellant's husband, employed in Saudi Arabia, had sent the amount specifically for his family, and the cheque was returned after being dishonored by the bank. In light of these factors, the Chairman deemed the Rs. 1,500 penalty as high and reduced it to Rs. 500 to meet the ends of justice. The appeal was partly allowed, and the modified penalty amount of Rs. 500 was deemed appropriate, with the excess amount of Rs. 1,000 to be refunded to the appellant.