Foreign exchange contravention upheld as unauthorised dealing was proved, but the penalty was reduced in partial relief.

Contravention of foreign exchange law was upheld where contemporaneous statements and record evidence showed recovery of foreign currency from the appellant's personal custody at the shop premises, and the explanation that it belonged to a customer was rejected. The material supported a finding that the appellant dealt in foreign exchange without authority, attracting liability under FEMA. However, the penalty was moderated in the interest of justice, and the amount was reduced, granting partial relief while sustaining the contravention and penalty liability.

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Issues: Whether the alleged contravention of Section 3(a) of the Foreign Exchange Management Act, 1999 was established and, if so, whether the penalty imposed required interference.

Analysis: The Appellant's explanation that the foreign currency belonged to a customer was not found persuasive in view of the contemporaneous statements and the material on record showing recovery of US $ 10,000 from the Appellant's personal custody at the shop premises. The concurrent findings recorded in the adjudication and appeal orders supported the conclusion that the Appellant had dealt with foreign exchange without authority, attracting liability under the Act. At the same time, the circumstances showed that the penalty could be moderated in the interest of justice.

Conclusion: The contravention was upheld and the Appellant was found liable for penalty, but the penalty was reduced to Rs. 1,00,000/-, resulting in partial relief to the Appellant.

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