1989 (2) TMI 424 - AT - FEMA

Issues Involved:
1. Contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.
2. Contravention of section 4(1) and 4(2) of the Foreign Exchange Regulation Act, 1947.
3. Contravention of sections 8(1)(b) and 10(1) of the Foreign Exchange Regulation Act, 1947.
4. Contravention of sections 8(1) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973.

Detailed Analysis:

Issue 1: Contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973
The appellants were accused of acquiring foreign exchange without the RBI's permission. The adjudicating authority found them guilty based on the value of import licenses. However, the appellants argued that the goods were imported from Hungary using a 'switch deal,' which did not involve acquiring foreign exchange. The Tribunal found no evidence of the appellants converting Indian currency into foreign exchange or acquiring foreign exchange. The Tribunal concluded that mere involvement in a 'switch deal' does not violate section 8(1) unless foreign exchange is actually acquired. The Tribunal emphasized that the charge must be substantiated with concrete evidence, which was lacking in this case.

Issue 2: Contravention of Section 4(1) and 4(2) of the Foreign Exchange Regulation Act, 1947
The appellants were accused of acquiring foreign exchange valuing Rs. 23,36,352 through unauthorized means. The Tribunal noted that the appellants were absolved of the charge under section 4(2) but were held guilty under section 4(1) for acquiring foreign exchange. The Tribunal found no evidence to support the claim that the appellants acquired foreign exchange. The Tribunal highlighted that the adjudicating authority's reliance on the value of import licenses was misplaced, as there was no proof of actual foreign exchange acquisition.

Issue 3: Contravention of Sections 8(1)(b) and 10(1) of the Foreign Exchange Regulation Act, 1947
The appellants were accused of acknowledging a debt of Rs. 50,000 towards royalty to a West German entity without RBI's permission. The Tribunal noted that the appellants were absolved of this charge by the adjudicating authority. The Tribunal found no evidence to support the claim that the appellants acknowledged or settled the debt without permission.

Issue 4: Contravention of Sections 8(1) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973
The appellants were accused of acquiring foreign exchange amounting to DM 454.80 from an unauthorized dealer and making payments to a person outside India without RBI's permission. The Tribunal noted that the appellants were absolved of this charge by the adjudicating authority. The Tribunal found no evidence to support the claim that the appellants acquired or made payments in foreign exchange without permission.

Conclusion:
The Tribunal concluded that the charges against the appellants were not substantiated with concrete evidence. The appellants were acquitted of all charges, and the penalties imposed were set aside. The Tribunal ordered the refund of any penalty amount already deposited.

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