Benefit of doubt in foreign exchange penalty cases where old import records are unavailable after long delay.

In foreign exchange penalty proceedings under FEMA and the Realisation, Repatriation and Surrender Regulations, proof of import against remittances remains central. The article notes that where import documents, airway bills and invoices supported part of the transactions, and the balance records could not be traced after 13 to 14 years because of gaps in the bank record chain, the appellant should receive the benefit of doubt. On that basis, non-production of old documents alone was treated as insufficient to establish contravention, and the penalty was regarded as unsustainable.

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Issues: Whether the appellant had failed to prove import against the foreign exchange remittances so as to attract contravention under Section 10(6) of the Foreign Exchange Management Act, 1999 read with Regulation 6(1) of the Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000, and whether the penalty could be sustained in view of the lapse in bank records and the long delay in initiation of proceedings.

Analysis: The appellant produced import documents for three of the five disputed remittances, and the supporting airway bills and invoices showed the consignee as the predecessor bank with intimation to the importer. On that basis, the missing records were not treated as sufficient proof of contravention for those transactions. For the remaining two remittances, the Tribunal accepted that the documents could not be traced after 13 to 14 years and that the lapse of the erstwhile bank and the absence of complete successor-bank records could not fairly be visited on the appellant. In these circumstances, the Tribunal held that the appellant was entitled to benefit of doubt and that penalty could not be sustained merely because the documents were not available after such a long interval.

Conclusion: The alleged contravention was not established against the appellant, and the penalty order was unsustainable.

Final Conclusion: The appeal succeeded and the penalty order was set aside.

Ratio Decidendi: In quasi-penal foreign exchange proceedings, where part of the import evidence is produced and the remaining records are unavailable after a long lapse of time due to circumstances attributable to the bank record chain, the authority must give the appellant the benefit of doubt and cannot sustain penalty solely on non-production of old documents.

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