Discretionary confiscation under foreign exchange law requires separate reasons beyond mere contravention; penalty sustained, confiscation set aside.

Confiscation under section 63 of the Foreign Exchange Regulation Act, 1973 is a discretionary power and is not automatic on proof of contravention. The Adjudicating Officer must record a separate, reasoned satisfaction that confiscation is warranted in addition to penalty. Where the only established breach was failure to return unutilised foreign exchange within the prescribed time under section 8(3), and the material showed no unlawful use or sale of the foreign exchange, confiscation could not be justified. The confiscation was therefore set aside, while the penalty for breach of section 8(3) was sustained.

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Issues: Whether confiscation of the travellers' cheques under section 63 of the Foreign Exchange Regulation Act, 1973 was legally sustainable when the only established contravention was failure to return the unutilised foreign exchange within the prescribed time under section 8(3).

Analysis: Confiscation under section 63 is not automatic upon proof of contravention. The provision requires not only that the property be one in respect of which the contravention has taken place, but also that the Adjudicating Officer must think fit to order confiscation in addition to the penalty. The reasons recorded for confiscation showed only that section 8(3) had been breached, which addressed the fact of contravention but did not show any independent application of mind to why confiscation, over and above penalty, was warranted. The foreign exchange had been lawfully obtained under the Foreign Travel Scheme and there was no material that it was meant for illegal sale or other unlawful use.

Conclusion: The confiscation was unjustified and was set aside, while the penalty for contravention of section 8(3) was sustained.

Final Conclusion: The appeal succeeded only to the extent of setting aside the confiscation, with the monetary penalty maintained and the foreign exchange directed to be restored to the appellant in Indian currency equivalent.

Ratio Decidendi: Confiscation under a discretionary statutory power must be supported by a separate, reasoned exercise of judgment beyond mere proof of contravention; otherwise, the order cannot stand.

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