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K.R. Ramaswamy Vs. Director of Enforcement - Court Judgment

LegalCrystal Citation
CourtAppellate Tribunal for foreign Exchange New Delhi
Decided On
Case NumberAPPEAL NO. 147 OF 1984
Judge
AppellantK.R. Ramaswamy
RespondentDirector of Enforcement
Advocates:V.S. Thiagswaran for the Respondent.
Excerpt:
foreign exchange regulation act, 1973 - section 14 - comparative citation: 2001 (32) scl 518 (ferab).....for maintaining such accounts abroad and thereby contravened the provisions of section 14 of the foreign exchange regulation act, 1973 (‘the act’) read with the central government. notifications referred to therein. memorandum no. t-4/696/mas/ban/82(scn-iv) was issued to the appellant by the department alleging that he failed to surrender the foreign exchange mentioned therein which he brought from abroad within the prescribed period and thereby contravened the provisions of section 14 of the act. it was also alleged that he had defaulted to surrender the foreign exchange brought by him from abroad to an authorized dealer within the period prescribed and he was called upon to explain why the foreign exchange brought by him should not be confiscated to the central government.....
Judgment:

1. Three memorandum Nos. T-4/694/Mas/Ban/82, T-4/695/Mas/Ban/82 and T-4/697/Mas/Ban/82 (briefly the SCNs I, II and III) were issued to the appellant by the Enforcement Directorate, Madras (department) alleging that he was maintaining accounts in foreign currency abroad without repatriating the same to India within the period prescribed or without obtaining the exemption of the Reserve Bank of India (RBI) for maintaining such accounts abroad and thereby contravened the provisions of section 14 of the Foreign Exchange Regulation Act, 1973 (‘the Act’) read with the Central Government. Notifications referred to therein. Memorandum No. T-4/696/Mas/Ban/82(SCN-IV) was issued to the appellant by the Department alleging that he failed to surrender the foreign exchange mentioned therein which he brought from abroad within the prescribed period and thereby contravened the provisions of section 14 of the Act. It was also alleged that he had defaulted to surrender the foreign exchange brought by him from abroad to an authorized dealer within the period prescribed and he was called upon to explain why the foreign exchange brought by him should not be confiscated to the Central Government under section 63 of the Act. Not satisfied with the reply given to the SCNs, proceedings were initiated against him by the department. The Adjudication Officer held that the charges were established and imposed penalties aggregating to Rs. 5,500. He also directed confiscation of the foreign exchange. Aggrieved by the order of the Assessing Officer, the appellant has filed this appeal.

2. The appellant who appeared in person submits that he had taken an assignment outside India for his livelihood and opened accounts while he was abroad; that he came back to India on 11-9-1981 to follow up his immigration to States; that he was asked to obtain appointment letter from States before a visa could be issued; that as he was hoping to leave for States any day he forgot to declare by oversight the foreign exchange particulars or obtain the permission of RBI; that he had no mala fide intention in not complying with the statutory provisions and he may, therefore, be exonerated of the charges. Shri Tiagswaran, CEO appearing for the respondent submits that the explanation now given by the appellant for the delay at the highest demonstrates that the appellant had no mala fide intention but it does not in any way help to absolve him of the liabilities incurred in terms of section 14 of the Act and the Central Government. Notifications referred to in the SCNs.

3. On a careful consideration of the matter, I am satisfied that no wilful conduct on the part of the appellant is involved but there is no denying that he has contravened the provisions of the Act. I, therefore, confirm the finding of the Assessing Officer that the charges are established.

4. The appellant pleads for reduction of penalties on the ground that they are excessive. Taking an overall view of the matter, I find it difficult to accept the submission that the penalties imposed on the appellant are unreasonable. However, in view of the bona fides of the appellant, I consider this to be a fit case for imposing a consolidated penalty of Rs. 5,000 in respect of all charges instead of imposing penalty of Rs. 5,000 in respect of SCNs I to III and Rs. 500 in respect of SCN-IV. The penalties are reduced accordingly.

5. The last submission of the appellant is that the Assessing Officer erred in confiscating the foreign exchange in respect of SCN-IV on the ground that the foreign exchange is involved in the contravention. According to the appellant, the foreign exchange confiscated represents his hard-earned savings and the Assessing Officer has not given any finding that the foreign exchange was obtained by him in any unlawful or surreptitious manner so as to justify the confiscation.

This Board has held in a number of cases that where the appellant is not in a position to explain satisfactorily the source from which he acquired the foreign exchange involved in the contravention and if there is nothing prima facie to indicate that it is tainted money got by unlawful means, then he will have no valid ground to direct confiscation of the foreign exchange vide Dr. Jose v. Director of Enforcement (Appeal No. 148 of 1983) dated 20-2-1984. In this leading decision, the Board after referring to its earlier decisions and the case law both English and Indian on the subject observed :

“From the records of the case law given above, it is abundantly clear that the discretionary power reposed in the adjudicating officer under section 63 of the Act to confiscate the foreign exchange is coupled with a duty to decide whether the facts and circumstances warrant the confiscation in addition to the imposition of penalty. I am, therefore, satisfied that the adjudicating officer misdirected himself in thinking that in terms of section 63 of the Act, he could confiscate to the Central Government the foreign exchange involved in the contravention of the charges in SCNs II and III without recording any reason for doing so.”

Applying the ratio of the decision cited above, the department has not listed any material in the present case to falsify the assertion of the appellant that the foreign exchange constitutes his hard-earned savings and as such there is no basis-factual or legal for directing confiscation of the foreign exchange. I, therefore, set aside the order of the Assessing Officer, insofar as it relates to confiscation of foreign exchange.

6. In the result, the appeal is partly allowed.


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