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of <h1>Seized cash and FEMA contraventions: document-supply and hearing fairness upheld; confiscation and separate penalties sustained, total reduced.</h1> Natural justice objections were rejected because relied-upon seized documents forming the SCN had been supplied under acknowledgment, effective ... Non- supply of important relied upon documents - No effective personal hearings - Breach of principles of natural justice - seizure of Indian Currency - money received from unknown persons in lieu of money transfers from relatives abroad. - contravention of Sections 3(a), 3 (b), 3 (d) and Section 4 of the Foreign Exchange Management Act, 1999 (FEMA) - waiver of the pre-deposit of the penalty - HELD THAT:- We find from the records that several call notices for joining the proceedings for adjudication were not availed by the Appellants. In the absence of any cooperation of the Appellants, the investigation under FEMA focused on the persons, whose names were appearing on the documents which have been recovered from the two residential premises and the business premises of the Appellants. All the documents which were seized and relied in the SCN had been supplied to the Appellants under proper acknowledgment. We are convinced that the Appellants herein deliberately avoided participating in the investigations and the adjudication proceedings and now therefore cannot be allowed to take advantage of their omissions. We also note that the genuineness of the documents recovered have been verified by recording the statement of the persons, whose contract details were mentioned in the said documents. The confiscation of Indian Currency recovered from the Appellants since they have been unable to explain the source of such cash with them. The challenge by the Appellants that why penalty for each of the violation of the Act has been imposed is best answered from the language used in the statute viz Section 13 (1) and 13 (2) of FEMA. We also note that the penalties imposed for each of the Appellant for the contravention indulged in by him of Sections 3 (a), 3 (b), 3 (d) and Section 4 of FEMA is 15% of the amount involved in the contravention of each of the aforementioned Sections. The interest of justice shall be served by reducing the cumulative penalty on each of the Appellant. The pre-deposit of the penalty amount already made shall be adjusted against the reduced penalty payable by each of the two Appellants. We uphold the Order of confiscation of the seized amount. Issues: (i) Whether the penalties and confiscation imposed under Sections 3(a), 3(b), 3(d), 4 read with Section 13(1) and 13(2) of the Foreign Exchange Management Act, 1999 are sustainable; (ii) Whether the quantum of penalty should be reduced and the pre-deposit adjusted.Issue (i): Whether the adjudicating authority validly imposed penalties for the contraventions alleged under Sections 3(a), 3(b), 3(d) and Section 4 of FEMA and validly ordered confiscation under Section 13(2).Analysis: The adjudication relied on seized loose sheets recovered in searches witnessed by independent witnesses and corroborative statements of persons whose contact details appeared in those records. The appellants did not participate in investigation or adjudication and failed to explain the seized documents or source of recovered cash. The statutory scheme permits penalty for each contravention and confiscation where appropriate under Section 13(1) and 13(2).Conclusion: The penalties and the confiscation of the seized Indian currency are upheld, subject to reconsideration of quantum under Issue (ii).Issue (ii): Whether the cumulative penalty quantified by the adjudicating authority should be maintained or reduced and whether pre-deposit already made should be adjusted.Analysis: The statutory maximum and method of calculation permit penalty for each contravention, but the adjudicatory forum has discretion to mitigate penalty in the interest of justice. Consideration was given to the facts, the appellants' non-cooperation, and proportionality of aggregate levy. The pre-deposit already paid was available for adjustment against any reduced liability.Conclusion: The cumulative penalty imposed on each appellant is reduced to Rs. 75,00,000 and the pre-deposit already made shall be adjusted against this reduced penalty.Final Conclusion: The appeals are partly allowed the substantive findings of contravention and confiscation are maintained while the penalty quantum is reduced and the pre-deposit adjusted.Ratio Decidendi: Under Sections 13(1) and 13(2) of FEMA, an adjudicating authority may impose penalty for each quantifiable contravention and order confiscation, and the adjudicatory forum retains discretion to reduce quantum of penalty and adjust pre-deposit in the interest of justice where supported by record and proportionality considerations.
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