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2013 (7) TMI 887 - HC - FEMAWhether the appellants can be said to have not used the foreign exchange for the purpose for which it was given to them though they admittedly paid it to the aforesaid Switzerland company and therefore not liable for any penalty - Held that:- it is sub-section (3) of Section 8 which mandates that when a person other than an authorized dealer or a money changer acquires foreign exchange for any particular purpose, then he has to use it only for that purpose and if he fails to use it, he has to inform the authorities concerned. Then sub-section (4) further clarifies what is meant by “not using a foreign exchange” when it is obtained by a person for importing goods and it says that even if he fails to import the goods, he will be held to have violated sub-section (3). The burden is imposed upon him to explain to prove the contrary and what is the significance of the expression “to prove the contrary” will be dealt with a little later. The appellants should have entered into contract with the Switzerland company after making every arrangement with the concerned bank and making it doubly sure that they get the loan and when the bank fails, they cannot be expected to be heard to say that the bank was at fault and plead for exoneration. The learned counsel for the appellants did not cite any authority to show that mens rea is necessary to apply sub-sections (3) and (4) of Section 8 read with Section 50 of the Act and the appellants cannot be proceeded against in a situation like this. - impugned order of the appellate tribunal cannot, in principle, be disturbed though as will be presently seen there is, in my opinion, ground to reduce the penalty. Section 50 says that it cannot exceed five times the foreign exchange involved. It is now well settled that Section 50 provides an outer limit for the penalty prescribed which is not mandatory. Even the Deputy Director and the appellate tribunal did not impose the maximum penalty. In other words, it follows that the authorities under the Act and this court have also the power to impose a lesser penalty. - Decided partly in favour of assessee.
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