1992 (6) TMI 190 - AT - FEMA

Tribunal Overturns Travelers' Cheque Confiscation, Orders Refund; Upholds Penalty for Foreign Exchange Violation.

Sayed Ahmed Mizammil Versus Director of Enforcement

The appellate tribunal set aside the confiscation of US $500 in travellers' cheques, finding it unjustified, but upheld the Rs. 500 penalty for ... - Issues:- Confiscation of US $500 in travellers' cheques and penalty imposition under section 8(3) of the Foreign Exchange Regulation Act, 1973.Detailed Analysis:Confiscation of US $500:The appeal arose from an adjudication order confiscating US $500 in travellers' cheques and imposing a penalty of Rs. 500 on the appellant for contravention of section 8(3) of the Act. The appellant failed to sell the unutilized foreign currency to an authorized dealer within the prescribed period. The appellant challenged the confiscation mainly on the grounds that the currency was legally acquired, and the Adjudicating Officer did not exercise discretion judiciously. The appellant argued that confiscation was a harsh punishment compared to the penalty. The Adjudicating Officer's reasoning for confiscation was solely based on the contravention of section 8(3) without considering other factors. The appellant maintained that the currency was intended for future trips and not for illegal activities. The Adjudicating Officer's failure to provide adequate reasons for confiscation indicated a lack of judicious exercise of discretion under section 63 of the Act.Legal Analysis of Section 63:Section 63 of the Act allows confiscation of property involved in contravention, subject to specific conditions. The provision mandates that confiscation can be directed by a Court or Adjudicating Officer if deemed fit, in addition to any penalty imposed for the contravention. In this case, the Adjudicating Officer failed to meet the conditions for confiscation under section 63. The Officer's decision was based solely on the contravention of section 8(3) without considering whether confiscation was warranted beyond the imposed penalty. The Adjudicating Officer's failure to provide adequate justification for confiscation indicated a lack of proper application of discretion.Final Judgment:The appellate tribunal found that the confiscation of US $500 in travellers' cheques was not legally justified and set it aside. However, the penalty of Rs. 500 for contravention of section 8(3) was confirmed. The tribunal directed the Enforcement Directorate to convert the confiscated amount into Indian currency and refund it to the appellant within two months. The decision highlighted the importance of exercising discretionary powers judiciously and ensuring proper application of the law. The appeal was partly allowed, modifying the adjudication order accordingly.