Foreign exchange received as a gift can amount to "otherwise acquiring" it; section 8(2) fails without proof of the authorised rate.

Receipt of foreign exchange by a resident as a gift outside India constitutes "otherwise acquiring" foreign exchange under section 8(1) of the Foreign Exchange Regulation Act, 1973, and the amount so received had to be surrendered within the period prescribed by the RBI notification; minor defects in the notice, joinder of charges, and the absence of a proved cross-examination request did not vitiate the proceedings. On the purchase of US $ 4,000, the appellant's statements and surrounding circumstances established acquisition from an unauthorised person without RBI permission, so contravention of section 8(1) was sustained. However, contravention of section 8(2) failed because the authorised exchange rate at the relevant time was not proved.

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Issues: (i) Whether receipt of foreign exchange as a gift outside India amounted to "otherwise acquiring" foreign exchange under section 8(1) of the Foreign Exchange Regulation Act, 1973 read with the RBI notification, and whether the procedural objections regarding the notice and charges vitiated the proceedings; (ii) Whether contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973 in respect of the purchase of US $ 4,000 was established; (iii) Whether contravention of section 8(2) of the Foreign Exchange Regulation Act, 1973 was established.

Issue (i): Whether receipt of foreign exchange as a gift outside India amounted to "otherwise acquiring" foreign exchange under section 8(1) of the Foreign Exchange Regulation Act, 1973 read with the RBI notification, and whether the procedural objections regarding the notice and charges vitiated the proceedings.

Analysis: A gift of foreign exchange confers title and possession on the donee and falls within the expression "otherwise acquire" in section 8(1). Foreign exchange so received outside India by a resident was required to be surrendered within the period prescribed by the notification, and the discrepancy in the notice as to the surrender period was treated as a minor irregularity causing no failure of justice. The mere clubbing of two charges in one notice did not invalidate the proceedings where both charges were clearly stated and no prejudice was shown. The objection regarding opportunity of cross-examination was also not accepted, as the record did not show that such a request had been made at the adjudication stage.

Conclusion: The receipt of foreign exchange as a gift amounted to contravention of section 8(1), and the procedural objections did not vitiate the proceedings.

Issue (ii): Whether contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973 in respect of the purchase of US $ 4,000 was established.

Analysis: The appellant's own statements, supported by the earlier statement before the Customs Officers and by surrounding circumstances, established purchase of foreign exchange from a person other than an authorised dealer without RBI permission. The retraction was treated as an afterthought, and the confessional statements were accepted as voluntary and true.

Conclusion: Contravention of section 8(1) was established against the appellant.

Issue (iii): Whether contravention of section 8(2) of the Foreign Exchange Regulation Act, 1973 was established.

Analysis: Liability under section 8(2) required proof of conversion at a rate other than the rate authorised by the Reserve Bank of India. Although the purchase of foreign exchange without permission was proved, there was no material to show the authorised rate of exchange at the relevant time. In the absence of proof on that essential element, the charge could not be sustained.

Conclusion: Contravention of section 8(2) was not established.

Final Conclusion: The adjudication order was modified by sustaining the findings under section 8(1), setting aside the finding under section 8(2), and reducing the penalty accordingly.

Ratio Decidendi: Receipt of foreign exchange by way of gift by a resident outside India constitutes "otherwise acquiring" foreign exchange under section 8(1), and a charge under section 8(2) fails unless the authorised rate of exchange is proved.

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