Bombay High Court Allows FERA Appeal: Tribunal Erred in Affirming Penalty for Alleged Contravention of Section 9(1)(f)(i) of FERA 1973 — Remittances Protected Under Remittances in Foreign Exchange (Immunities and Exemptions) Act, 1991 and Scheme of 1991.

Appeal against order of Appellate Tribunal for Foreign Exchange confirming penalty under FERA 1973.

Appellants sought quashing of penalty orders and setting aside of Tribunal's order.

Appellants aggrieved by Tribunal's order dated 24.4.2011 in Review Application Nos. 43-46 of 2010 confirming order dated 25.3.2009 in Appeal Nos. 253-256 of 2002.

Special Director of Enforcement imposed penalty; Tribunal confirmed penalty in Appeal Nos. 253-256 of 2002 on 25.3.2009; Review dismissed on 24.4.2011.

Whether the Tribunal was justified in affirming the imposition of penalty for alleged contravention of Section 9(1)(f)(i) of FERA 1973 on the ground that the appellants had paid equivalent Indian currency through Mr. Niranjan Shah to a person outside India without any general or special exemption granted by the RBI as a consideration for acquisition of US$ 1,00,000/-?

Appellants: The remittances were protected under the Remittances in Foreign Exchange (Immunities and Exemptions) Act, 1991 and the Scheme of 1991, and the department could not inquire into the source or nature of the remittance. The burden was on the department to prove contravention. Respondents: The protection under the 1991 Act and Scheme did not extend to contraventions of FERA. The appellants failed to prove that the remittance was a gift or otherwise exempt.

The remittances received by the appellants under the Remittances in Foreign (Immunities) Scheme, 1991, framed under the Remittances in Foreign Exchange (Immunities and Exemptions) Act, 1991, are protected from inquiry into the source or nature of the remittance. The department bears the burden to prove that the remittance was not protected, and mere receipt of foreign exchange does not automatically lead to an inference of contravention of Section 9(1)(f)(i) of FERA 1973.

Whether the Tribunal was justified in affirming the imposition of penalty for the alleged contravention of Section 9(1)(f)(i) of FERA 1973 on the ground that the appellants had paid equivalent Indian currency through Mr. Niranjan Shah to a person outside India without any general or special exemption granted by the RBI as a consideration for acquisition of US$ 1,00,000/- ? Each of the appellant received US$ 25000/- in their respective saving bank account on or about 12.10.1991 as and by way of remittance. The said remittances were received by them in accordance with the scheme namely Remittances in Foreign (Immunities) Scheme, 1991. On account of the provisions of the said Act and the said Scheme, each of the appellant was fully protected in as much as it was not necessary for each of the appellant to disclose what is the nature of the remittance, what is the source of remittance, who had sent the foreign exchange, how this foreign exchange has been generated or earned, whether the remittance is a gift from any person or whether the remittance is the self-earned money of the recipients which has been illegally stacked in the foreign bank, or whether this remittance is on

The Special Director of Enforcement imposed penalties on each appellant for alleged contravention of Section 9(1)(f)(i) of FERA 1973. The appellants appealed to the Appellate Tribunal for Foreign Exchange, which confirmed the penalties on 25.3.2009 in Appeal Nos. 253-256 of 2002. The appellants filed review applications (Review Application Nos. 43-46 of 2010), which were dismissed on 24.4.2011. The appellants then filed the present appeal under FERA before the Bombay High Court.

• Foreign Exchange Regulation Act, 1973: Section 9(1)(f)(i)
• Remittances in Foreign Exchange (Immunities and Exemptions) Act, 1991: Section 3