FERA contravention through over-invoiced imports was supported by statements and records, with penalty reduced for limited role.

Recorded statements under section 40 of the Foreign Exchange Regulation Act, 1973, together with financial records and surrounding material, were treated as sufficient to show knowing facilitation of over-invoiced book imports and inflated foreign exchange remittances through proprietorship concerns. The denial of knowledge was rejected on that material, but the person was not viewed as the principal architect of the scheme. On that basis, contravention under section 8(3) read with section 8(4) and section 64(2) of FERA was stated to be established, while the penalty was moderated and the blocked amount ordered to be released after adjustment.

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Issues: Whether the appellant's role in permitting his proprietorship concerns to be used for over-invoiced book imports and foreign exchange remittances established contravention under FERA, and whether the penalty imposed required reduction.

Analysis: The recorded statements under section 40 of the Foreign Exchange Regulation Act, 1973, the financial records, and the surrounding material were treated as sufficient to prove the appellant's involvement in the scheme. The appellant was found to have permitted the use of his proprietorship firms for import transactions for commission, and the books were used as part of a design to remit inflated amounts abroad in foreign exchange. On that material, the denial of knowledge was not accepted. At the same time, the appellant was not treated as the main architect of the scheme, which warranted moderation of the penalty.

Conclusion: The contravention of section 8(3) read with section 8(4) and section 64(2) of the Foreign Exchange Regulation Act, 1973 was held established against the appellant, but the penalty was reduced to Rs. 2 lakhs and the blocked amount was directed to be released to the appellant after adjustment.

Final Conclusion: The liability finding was sustained, but the punitive consequences were substantially scaled down in the appellant's favour.

Ratio Decidendi: Contravention under FERA can be established on the basis of recorded inculpatory statements and corroborative financial material showing knowing facilitation of the prohibited transactions, even where the person is not the principal mastermind.

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