Foreign exchange contravention sustained where high sea sale documents failed to prove remittances were covered, reducing the penalty.

The transferee's bill of entry and related high sea sale documents did not satisfactorily displace the finding of contravention under the Foreign Exchange Regulation Act, 1973, because the handwritten endorsement linking the remittances was unauthenticated, the customs assessment showed only the CIF value with high sea sale expenses, and the RBI confirmation indicated that the bill of entry for the three remittances had not been submitted to the authorised dealer. The explanation was therefore not fully accepted, although the surrounding circumstances justified a reduction in penalty. The finding of contravention was sustained, and the penalty was reduced with adjustment of the pre-deposit.

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Issues: Whether the bill of entry filed by the transferee on high sea sale covered the impugned foreign remittances so as to displace the finding of contravention and penalty under the Foreign Exchange Regulation Act, 1973.

Analysis: The bill of entry was shown to have been filed by the transferee and was connected with the same bill of lading, but the supporting handwritten endorsement that the total came to the remittance amount was neither clear nor authenticated by any authorised person. The customs assessment reflected only the CIF value with high sea sale expenses, and there was no material showing that customs duty had been charged on the larger amount claimed by the appellant. The record also contained the RBI confirmation that the bill of entry for the three remittances had not been submitted to the authorised dealer. On these facts, the explanation was not accepted in full, though the circumstances warranted a reduction in penalty.

Conclusion: The finding of contravention was sustained, but the penalty was reduced to Rs. 2,50,000/-, with adjustment of the pre-deposit against the reduced penalty.

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