Clandestine foreign exchange transactions can be proved on preponderance of probabilities with corroborative records and statements.

In clandestine foreign exchange adjudication, statements recorded under the Customs Act and FERA may be relied on with corroborative documentary material, and the test remains preponderance of probabilities rather than strict proof. On the facts, over-invoicing, subsequent import of the same goods, remittance movements, cash withdrawals, and overseas enquiries indicating common control of buyer and seller supported the contravention. Denial of cross-examination did not vitiate the adjudication because no specific prejudice was shown. The penalty for contravention of Sections 8(1) and 9(1)(f)(i) of FERA was therefore sustained.

---

---

Issues: Whether the penalty for contravention of Sections 8(1) and 9(1)(f)(i) of FERA, 1973 was sustainable on the basis of the documentary record and statements recorded under the Customs Act and FERA, and whether denial of cross-examination caused such prejudice as to vitiate the adjudication.

Analysis: The record showed over-invoiced export of 40,000 CD-ROMs from India, subsequent import of the same goods, transfer and cash withdrawal of remittances, and overseas enquiries showing that the foreign buyer and seller were controlled by the same person. The statements recorded under Section 108 of the Customs Act, 1962 and Section 40 of FERA, 1973 were treated as admissible and corroborative of the surrounding documents and transactions. The denial of cross-examination did not establish prejudice sufficient to warrant interference, since the appellant's involvement was inferable from the material on record and the transaction was of a clandestine nature assessed on a preponderance of probabilities.

Conclusion: The contravention was established and the penalty was held to be justified; the request for interference on the ground of denial of cross-examination was rejected.

Final Conclusion: The adjudication and penalty were upheld in full, and the appeal failed.

Ratio Decidendi: In adjudicatory proceedings involving clandestine foreign exchange transactions, statements recorded under the Customs Act and FERA may be relied upon with corroborative documentary material, and the standard of proof is preponderance of probabilities; denial of cross-examination does not vitiate the order absent demonstrated prejudice.

---