Discretionary confiscation under foreign exchange law requires independent application of mind before any confiscation order can stand.

Confiscation under section 63 of the Foreign Exchange Regulation Act, 1973 is discretionary, because the word "may" does not make confiscation an automatic consequence of every violation. The authority must independently apply its mind and form a reason to believe that the amount sought to be confiscated relates to the alleged or proved breach. On the facts, the confiscation order was found to have been made mechanically without such independent consideration, so interference by the Tribunal was justified and the confiscation could not stand.

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Issues: Whether confiscation of amounts under section 63 of the Foreign Exchange Regulation Act, 1973 was mandatory on proof of violation, and whether the Tribunal was justified in setting aside the confiscation order.

Analysis: Section 63 uses the word "may" in relation to confiscation, which indicates discretion and not a mandatory consequence of every breach. The provision also requires the authority to apply its mind and form a reason to believe that the amounts sought to be confiscated relate to the alleged or proved breach. Confiscation, therefore, cannot follow automatically merely because a violation of the foreign exchange law is noticed. On the facts, there was no independent application of mind, and the Tribunal held that the confiscation had been made mechanically and was not justified.

Conclusion: Confiscation under section 63 was not mandatory, and the Tribunal was justified in interfering with the confiscation order. The question of law was answered against the Revenue.

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