2005 (98) ECC 74 (ATFFE)

APPELLATE TRIBUNAL FOR FOREIGN EXCHANGE

New Delhi at Chandigarh Camp

Shri O.P. Nahar, Member

Tarlochan Singh

Versus

Director, Enforcement Directorate

Appeal No. 492 of 1994

[Appeal against Adjudication Order No. DD/JL/7-8/94 dated 22.8.1994 passed by Deputy Director, Enforcement Directorate]

Order dated 25.5.2004, Certified on 31.5.2004

Foreign Exchange Regulation Act, 1973

Acquisition -- Confession -- Foreign exchange recovered from co-noticee, without any general or special permission of the RBI -- Co-noticee named appellant -- His confession, coupled with the confession of appellant can be taken as correct -- However, the same thing cannot be said with regard to receipt of Indian currency on the orders of foreign resident -- Therefore, guilt arrived at under Section 9(1)(b) was required to be set aside and could not be sustained -- However, the guilt arrived at for contravention of the provisions of Section 8(1) was sustainable and difficult to challenge in view of the confession of the Appellant supported by another confession of the co-noticee.

Appeal partly allowed

PRESENT :

Shri M.L. Jassal, Advocate for the appellant.

Shri A.C. Singh, ALA for the respondent.

ORDER

This is an appeal against Adjudication Order No. DD/JL/7-8/94 dated 22.8.1994 passed by Deputy Director, Enforcement Directorate, imposing a penalty of Rs. 1 lakh for contravention of the provisions of Section 8(1) and Rs. 40,000 for contravention of the provisions of Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973. The total penalty against the Appellant as imposed in Rs. 1,40,000 on the reasons that one Khuspal Arora was intercepted at Sahara Airport, Mumbai, when foreign exchange of US dollar 15950 and Saudi Riyals 50,000 was recovered from him who made a statement that he acquired the said foreign currency from the Appellant when the Appellant, after receipt of Rs. 4,35,000 on the instructions of one N. Singh of Singapore, converted Indian currency into foreign exchange through unauthorized channels without any permission from RBI. This is an old appeal of 1994, hence, pre-deposit of penalty is dispensed with whereafter the matter is taken up for hearing on merits.

2. A Show Cause Notice No. T-4/99/PE/JL/92/3465 dated 10.8.1992 was issued to the Appellant asking him to show cause why adjudication proceedings should not be held against him for the reasons that he received Rs. 4,35,000 on the instructions of a non-resident Indian N. Singh of Singapore, in contravention of Section 9(1) (b) which he later converted into foreign exchange of US dollar 15950 and Saudi Riyal 50,000 in contravention of the Section 8(1) of the Foreign Exchange Regulation Act, 1973, and handed over the same to Khuspal Arora. No reply was filed whereupon the adjudication proceedings were held when despite notice the Appellant failed to present himself, except in one hearing, so impugned order is passed imposing a penalty of Rs. 1,40,000.

3. It is contended that the impugned order is passed on confession of the Appellant and the confession of co-noticee Khuspal Arora which is irregular and not in accordance with law. Further, it is argued that co-noticee, from whom the total foreign currency is recovered, is left with a small penalty of Rs. 30,000 only but the Appellant is visited with harsh penalty which is more than 4 times than the co-noticee. According to ALA Shri A.C. Singh, the impugned order is passed on the basis of the confession corroborated by the factum of the confession of the co-noticee, so is liable to be sustained.

4. Admittedly, the foreign exchange of US dollar 15950 and Saudi Riyal 50,000 is recovered from co-noticee Khuspal Arora and not the Appellant. It is the co-noticee who named the Appellant as contraveneer of the Foreign Exchange Regulation Act, 1973. His confession, coupled with the confession of the Appellant can be taken as correct so far as acquisition of foreign exchange without any general or special permission of the RBI is concerned. However, the same thing cannot be said with regard to receipt of Indian currency on the orders of foreign resident named N. Singh. Therefore, the guilt arrived at under Section 9(1)(b) is required to be set aside and cannot be sustained. However, the guilt arrived at for contravention of the provisions of Section 8(1) is correct and difficult to challenge in view of the confession of the Appellant supported by another confession of the co-noticee. In this situation, the finding of the guilt under Section 8(1) are sustainable and there is no merit in the arguments advanced by the Appellant on this count.

A penalty of Rs. 30,000 is imposed on the co-noticee Jaswant Singh but a penalty of Rs. 1 lakh is imposed for the similar type of contravention, involving same amount of foreign exchange, as against the Appellant.

6. For the reasons stated hereinabove, the impugned order relating to the contravention of Section 8(1) is sustained but the part relating to contravention of Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973, is set aside. Simultaneously, the amount of penalty of Rs. 1 lakh is reduced to Rs. 30,000. This appeal is partly allowed. The Appellant is permitted to deposit Rs. 30,000 in the office of Respondent within 30 days from the receipt of this Order failing which the Respondent may recover the same in accordance with law.

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