SAFEMA Tribunal confirms confiscation of unexplained foreign currency but reduces penalty from ₹10 lakh to ₹5 lakh after partial mitigation findings.
SAFEMA Upholds FEMA Confiscation, Cuts Penalty by 50%
The Special Appellate Formation under FEMA (SAFEMA) has upheld the confiscation of unexplained foreign currency held in violation of the Foreign Exchange Management Act (FEMA), while halving the original penalty from ₹10 lakh to ₹5 lakh. The case involved Sanjay Jain, accused of retaining undeclared foreign currency beyond permissible limits.
The adjudicating authority had invoked Section 13 of FEMA for contravention of possession norms, supported by seizure records. While SAFEMA upheld the confiscation based on material evidence, it reduced the penalty noting cooperation, lack of laundering intent, and absence of prior contraventions.
"Penalties must reflect proportionality and the respondent’s conduct post-detection,"the Tribunal observed.
The decision reiterates that while strict liability applies to FEMA contraventions, appellate review allows mitigation based on equitable factors. Legal practitioners should leverage conduct, transparency, and remedial steps when representing clients in penalty adjudication to seek commutation under compounding or appeal mechanisms.
Citations
- FEMA Act, 1999, Section 13
