Category Archive Foreign Exchange Law

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The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,1974

1. Short title, extent and commencement –

[13th December, 1974]

An Act to provide for preventive detention in certain cases for the purposes of conservation and augmentation of foreign exchange and prevention of smuggling activities and for matters connected therewith.

WHEREAS violations of foreign exchange regulations and smuggling activities are having an increasingly deleterious effect on the national economy and thereby a serious adverse effect on the security of the State ;

AND WHEREAS having regard to the persons by whom and the manner in which such activities or violations are organized and carried on, and having regard to the fact that in certain areas which are highly vulnerable to smuggling, smuggling activities of a considerable magnitude are clandestinely organized and carried on, it is necessary for the effective prevention of such activities and violations to provide for detention of persons concerned in any manner there with ;

BE it enacted by Parliament in the Twenty-fifth Year of the Republic of India as follows

(1) This Act may be called the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.

(2) It extends to the whole of India.

(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint

2. Definitions –

In this Act, unless the context otherwise requires, –

(a) “appropriate Government” means, as respects a detention order made by the Central Government or by an officer of the Central Government or a person detained under such order, the Central Government, and as respects a detention order made by a State Government or by an Officer of a State Government or a person detained under such order, the State Government ;

(b) “detention order” means an order made under section 3;

(c) “foreigner” has the same meaning as in the Foreigners Act, 1946 (31 of 1946) ;

(d) “Indian customs waters” has the same meaning as in clause (28) of section 2 of the Customs Act, 1962 (52 of 1962) ;

(e) “smuggling” has the same meaning as in clause (39) of section 2 of the Customs Act, 1962, and all its grammatical variations and cognate expressions shall be construed accordingly ;

(f) “State Government”, in relation to a Union Territory, means the Administrator thereof ;

(g) any reference in this Act to a law which is not in force in the State of Jammu and Kashmir shall, in relation to that State, be construed as a reference to the corresponding law, if any, in force in that State.

COMMENTS

“Indian Customs Waters” means the waters extending into the sea upto the limit of continuous zone of India under section 5 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone an Other Maritime Zones Act, 1976 (80 of 1976) and includes any bay, gulf, harbour, creek or tidal river.

“Smuggling” in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113.

3. Power to make orders detaining certain persons –

(1) The Central Government or the State Government or any officer of the Central Government, not below the rank of a Joint Secretary to that Government, specially empowered for the purposes of this section by that Government, or any officer of the State Government, not below the rank of a Secretary to that Government, specially empowered for the purposes of this section by that Government, may, if satisfied, with respect to any person (including a foreigner), that, with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from –

(i) smuggling goods, or

(ii) abetting the smuggling of goods, or

(iii) engaging in transporting or concealing or keeping smuggled goods, or

(iv) dealing in smuggled goods otherwise than by engaging in transporting or concealing or keeping smuggled goods, or

(v) harbouring persons engaged in smuggling goods or in abetting the smuggling of goods,

It is necessary so to do, make an order directing that such person be detained :

[(Note:- Added by Act No.46 of 1988, S.15 (w.e.f. 4-7-1988) Provided that no order of detention shall be made on any of the grounds specified in this sub-section on which an order of detention may bemade under section 3 of the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 or under section 3 of the Jammu and Kashmir Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Ordinance, 1988]. (J&K Ordinance, 1 of 1988).

(2) When any order of detention is made by a State Government or by an officer empowered by a State Government, the State Government shall, within ten days, forward to the Central Government a report in respect of the order.

(3) For the purposes of clause (5) of article 22 of the Constitution, the communication to a person detained in pursuance of a detention order of the grounds on which the order has been made shall be made as soon as may be after the detention, but ordinarily not later than five days, and in exceptional circumstances and for reasons to be recorded in writing, not later than fifteen days, from the date of detention.

COMMENTS

A. Subjective satisfaction – Validity of

It is well settled that the subjective satisfaction requisite on the part of the detaining authority, the formation of which is a condition precedent to the passing of the detention order will get initiated if material or vital facts which would have a bearing on the issue and would influence the mind of the detaining authority one way or the other are ignoredor not considered by the detaining authority before issuing the detention order. [Varinder Singh Batra v.Union of India & Ors., (1993) 3 Crimes 637 (Delhi)]. R / t: Ashadevi v.Shivraj & Anr., AIR 1979 Sc 447. R/t. Ayya alias Ayub v.State of U.P & Anr., (1989) 1 Crimes 8 (S.C.).

If a piece of evidence which might reasonably have affected the decision whether or not to pass an order of detention is excluded from consideration, there would be a failure of application of mind, which in turn, vitiates the detention. [abid].

There would be vitiation of the detention order on grounds of non-application of mind if a piece of evidence which was relevant though not binding, had not been considered at all. [ibid].

If an important document on which reliance has been placed by the detaining authority and it has not been supplied to the detenu it is sufficient to vitiate the order of detention. [Mohammed Salim /Khatri v.Union of India & Anr., (1993) 3 Crimes 867 (Delhi)].

It is the duty of the sponsoring authority to collect all the relevant material and place it before the detaining authority. The requisite subjective satisfaction the formation of which is a condition precedent to passing of a detention order will get vitiated if material or vital facts which would have bearing on the issue and weighted the satisfaction of the detaining authority one way or the other and influenced his mind are either withheld or suppressed by the sponsoring authority or ignored and not considered by the detaining authority before issuing the detention order. [ibid] R/t. Dharamdas Shamlal Agarwal v.Police Commissioner & Anr., AIR 1989 SC 1282 as also Madan Gopal alias Madan Bhaiya v.Union of India & Ors. (1993) 49 Delhi Law Times 174.

Every failure to furnish copy of a document to which reference is made in the grounds of detention under section 3(1) of COFEPOSA is not an infringement of article 22(5) of the Constitution fatal to the order of detention. It is only failure of furnish copies of such documents as were relied upon by the detaining authority, making it difficult for the detenu to make an effective representation that amounts to a violation of fundamental rights guaranteed by article 22(5).[abid] R/t Mst. L.M.S. Ummu Saleema v.B.B. Gujaral & Anr., AIR 1981 SC 1191.

When the non-supply of copies of relevant documents has prevented the detenu from making an effect and purposeful representation, it results in violation of article 22(5) of the Constitution of India read with section 3(3) of the COFEPOSA. [ibid].

Documents cannot be said irrelevant when they have been mentioned in the detention order and reliance has been placed upon them. [ibid].

B. Grounds – Communication of

Since the order is based on grounds to be served on the detenu, the order of detention could be passed only if the grounds are in existence and are prepared contemporaneously, otherwise the order of detention becomes purely illusory. [Pakhar Singh v.Union of India & Anr., (1993) 3 Crimes 765 (P & H) R/t. Krishna Murari Aggarwal v.Union of India, AIR 1975 SC 1877.

It is the duty of the detaining authority to satisfy the court about the existence of the material and that he has not acted in a mechanical or cavalier manner while exercising the power. The detaining authority owes a duty to the detenu as wall as to the Court. An obligation of the detaining authority is to satisfy the Court that he has acted in accordance with law. [abid] R/t. Mohiuddin Tayab Sony v.State of Maharashtra & Anr., 1980 Crl. LJ. 1040 (Bom.) D.B.

It is well settled that judicial scrutiny cannot be shut our merely on the ipsedixit of the detaining authority. [abid]. Ibid.

The grounds of detention must be communicated in the language understood by the detenu. [In re: Smt. B.Ramprannamma, 1993 FAJ 485 (Cal Circuit Bench at Port Blair) D.B.]

Article 22(5) of the Constitution requires that the grounds of detention must be communicated to the detenu. “Communicate” is a strong word. It requires that sufficient knowledge of the basic-facts constituting the grounds should be imparted effectively and fully to the detenu in writing in a language which he understands, so as to enable him to make a purposeful and effective representation. If the grounds are only verbally explained to the detenu and nothing in writing is left with him in a language which he understands, then that purpose is not served, and the constitutional mandate in article 22(5) is infringed. This follows from the decisions in Harikisan v. State of Maharashtra, AIR 1962 SC 911, and Hadibandhu Das v.District Magistrate, Cuttack and Ors., AIR 1969 SC 43.

In the case of Smt. Raziya Umar Bakshi v.Union of India and Ors., AIR 1980 SC 1751, it was held by the Supreme Court that the service of the ground of detention on the detenue is a very precious constitutional right and where the grounds are couched in a language which is not known to the detenu, unless the contents of the grounds are fully explained and translated to the detenu, it will tantamount to not serving the grounds of detention to the detenue and would thus vitiate the detention ex-facie. In case where the detaining authority is satisfied that the grounds are couched in a language which is not known to the detenue, it must see to it that the grounds are explained to the detenu, a translated script is given to him and the grounds bear some sort of a certificate to show that the grounds have been explained to the detenue in the language which he understands. A bare statement at the stage when Habeas Corpus petition is filed in the Court by the detaining authority that these formalities were observed would be of no consequence particularly when it is not supported by any document or by any affidavit of the person who had done the job of explaining or translation.

In the case of Mr. Kubic Dariusz v. Union of India and other, AIR 1990 SC 605, the Supreme Court observed that ‘it is settled law that the communication of the grounds which is required by the earlier part of clause (5) of article 22 is for the purpose of enabling the detenu to make a representation, the right to which is guaranteed by the latter part of the clause’. A communication in this context, must, therefore, mean imparting to the detenu sufficient and effective knowledge of the facts and circumstances on which the order of detention is passed, that is, of the prejudicial acts which the authorities attribute to him. Such a communication would be there when it is made in a language understood by the detenu.

C. Execution – Prior to

It is well settled that the High Courts have the powers to entertain and examine the grievances against the detention order prior to its execution. [Pakhar Singh v. Union of India & Anr., (1993) 3 Crimes 765 (P & H). R/t. Addl. Secretary to the Government of India & Ors. V.Smt. Alka Subhash Gadia & Anr., 1992 SCC (Crl.) 301.

The grounds on which the courts have interfered with them at the preexecution stage are necessarily very limited in scope and number, viz., where the courts are prima facie satisfied (i) that the impugned order is not passed under the Act under which it is purported to have been passed, (ii) that it is sought to be executed against a wrong person, (iii) that it is passed for a wrong purpose, (iv) that it is passed on vague, extraneous and irrelevant grounds, or (v) that the authority which passed it has no authority to do so.

It is well settled in our Constitution frame word that the power of directing preventive detention given to the appropriate authorities must be exercised in exceptional cases as contemplated by the various provisions of the different statutes dealing with preventive detention and should be used with great deal of circumspection. There must be awareness of the facts necessitating preventive custody of a person for social defence. If a man is in custody and there is no imminent possibility of his being released, the power of preventive detention should not be exercised. [Ibrahim Umarbhaya v. State of Gujarat & Ors., (1993) 3 Crimes 730 (Guj.) D.B.] R/t. Rameshwar Shaw v. District Magistrate, AIR 1964 SC 334.

D. Pre-execution stage –

Challenge at Detention order under the Act cannot be challenged at pre-execution stage merely on the ground that there was delay in its execution. [Inderjit Singh Chani v. Union of India & Anr., (1994) 1 Crimes 539 (Delhi)].

E. Delay –

Effect of Long and undue delay in passing the detention order snaps the nexus between the activity alleged and the activity sought to be curbed and shows that the detention order was passed mechanically without application of mind. When the detention order has been passed after a long delay and the service was also effected after delay the detention order is liable to be quashed. [Daljit Singh Sandhu v. Union of India & Ors., (1993) 3 Crimes 629 (Delhi)].

No doubt it is true that if the detaining authority shows that there is a reasonable nexus between the prejudicial activity and the purpose of detention, the delay in passing the detention order has to be overlooked. [ibid].

The delay in passing the detention order, if not adequately explained, vitiates the same. [ibid].

Indeed more delay in passing a detention order is not conclusive. The authorities concerned must have due regard to the object with which the order is passed. Inordinate delay in passing of a detention order will raise genuine doubt about the satisfaction of the Detaining Authority.

The test as to whether the detention order should be quashed on the ground of delay is not a rigid or mechanical test by merely counting the number of days or months; the court should examine whether the Detaining Authority has satisfactorily explained the delay. [Gurvinder Singh v. Under-Secretary, Home, Government of Punjab, (1993) 3 Crimes 760 (P & H) R/t. Lakshman Khatik v. State of W.B., AIR 1974 SC 1264 as also T.A. Abdul Rehman v. State of Kerala, (1989) 2 All India Criminal Law Reporter 294 (S.C.)].

The detenu had been evading execution of the detention order hardly gives credit to the authorities incharge of enforcing the orders of detention. In case where the authorities are guilty of inaction after passing of the order, a reasonable conclusion has to be drawn that the detention order has lost nexus with the prejudicial activities. [ibid].

4. Execution of detention order –

A detention order may be executed at any place in India in the manner provided for the execution of warrants of arrest under the Code of Criminal Procedure, 1973 (2 of 1974).

5. Power to regulate place and conditions of detention–

Every person in respect of whom a detention order has been made shall be liable –

(a) To be detained in such place and under such conditions including conditions as to maintenance, interviews or communication with others, discipline and punishment for breaches of discipline, as the appropriate Government may, by general or special order, specify ; and

(b) To be removed from one place of detention to another place of detention, whether within the same State or in another State by order of the appropriate Government ;

Provided that no order shall be made by a State Government under clause

(b) for the removal of a person from one State to another State except with the consent of the Government of that other State.

5A. Grounds of detention sever able –

Where a person has been detained in pursuance of an order of detention under sub-section (1) of section 3 which has been made on two or more grounds, such order of detention shall be deemed to have been made separately on each of such grounds and accordingly –

(a) such order shall not be deemed to be invalid or inoperative merely because one or some of the grounds is or are –

(i) vague,

(ii) non-existent,

(iii) not relevant,

(iv) not connected or not proximately connected with such person, or

(v) invalid for any other reason whatsoever, and it is not, therefore, possible to hold that the Government or officer making such order would have been satisfied as provided in sub-section (1) of section 3 with reference to the remaining ground or grounds and made the order of detention ;

(b) the Government or officer making the order of detention shall be deemed to have made the order of detention under the said sub-section (1) after being satisfied as provide din that sub-section with reference to the remaining ground or grounds.

6. Detention order not to be invalid or inoperative on certain grounds –

No detention order shall be invalid or inoperative merely by reason –

(a) That the person to be detained there under is outside the limits of the territorial jurisdiction of the Government or the officer making the order of detention, or

(b) That the place of detention of such person is outside the said limits.

7. Powers in relation to absconding persons–

(1) If the appropriate Government has reason to believe that a person in respect of whom a detention order has been made has absconded or is concealing himself so that the order cannot be executed, the Government may –

(a) Make a report in writing of the fact to a Metropolitan Magistrate or a Magistrate of the first class having jurisdiction in the place where the said person ordinarily resides ; and thereupon the provisions of sections 82, 83, 84 & 85 of the Code of Criminal Procedure, 1973 (2 of 1974), shall apply in respect of the said person and his property as if the order directing that he be detained were a warrant issued by the Magistrate ;

(b) By order notified in the Official Gazette direct the said person to appear before such officer, at such place and within such period as may be specified in the order ; and if the said person fails to comply with such direction, he shall, unless he proves that it was not possible for him to comply therewith and that he had, within the period specified in the order, informed the officer mentioned in the order of the reason which rendered compliance therewith impossible and of his whereabouts, be punishable with imprisonment for a term which may extend to one year or with fine or with both.

(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence under clause (b) of sub-section (1) shall be cognizable.

8. Advisory Board–

For the purposes of sub-clause (a) of clause (4), and sub-clause (c) of clause (7) of article 22 of the Constitution,-

(a) The Central Government and each State Government shall, wherever necessary, constitute one or more Advisory Boards each of which shall consist of a Chairman and two other persons possessing the qualifications specified in sub-clause (a) of clause (4) of article 22 of the Constitution ;

(b) Save as otherwise provided in section 9, the appropriate Government shall, within five weeks from the date of detention of a person under a detention order make a reference in respect thereof to the Advisory Board constituted under clause (a) to enable the Advisory Board to make the report under sub-clause (a) of clause (4) of article 22 of the Constitution ;

(c) The Advisory Board to which a reference is made under clause (b) shall after considering the reference and the materials placed before it and after calling for such further information as it may deem necessary from the appropriate Government or from any person called for the purpose through the appropriate Government, from the person concerned, and if, in any particular case, it considers it essential so to do or if the person concerned desires to be heard in person, after hearing him in person, prepare its report specifying in a separate paragraph thereof its opinion as to whether or not there is sufficient cause for the detention of the person concerned and submit the same within eleven weeks from the date of detention of the person concerned ;

(d) When there is a difference of opinion among the members forming the Advisory Board the opinion of the majority of such members shall be deemed to be the opinion of the Board ;

(e) A person against whom an order of detention has been made under this Act shall not be entitled to appear by any legal practitioner in any matter connected with the reference to the Advisory Board, and the proceedings of the Advisory Board and its report, excepting that part of the report in which the opinion of the Advisory Board is specified, shall be confidential ;

(f) In every case where the Advisory Board has reported that there is in its opinion sufficient cause for the detention of a person, the appropriate Government may confirm the detention order and continue the detention of the person concerned for such period as it thinks fit and in every case where the Advisory Board has reported that there is in its opinion no sufficient cause for the detention of the person concerned, the appropriate Government shall revoke the detention order and cause the person to be released forthwith.

9. Cases in which and circumstances under which persons may be detained for period longer than three months without obtaining the opinion of Advisory Board –

(1) Notwithstanding anything contained in this Act, any person (including a foreigner) in respect of whom an order of detention is made under this Act at any time before the [(Note:- Subs. by Act No.52 of 1993, s.2 (w.e.f. 25-6-1993)) 31st of July, 1996], may be detained without obtaining, in accordance with the provisions of sub-clause (a) of clause (4) of article 22 of the Constitution, the opinion of an Advisory Board for a period longer than three months but not exceeding six months from the date of his detention, where the order of detention has been made against such person with a view to preventing him from smuggling goods or abetting the smuggling of goods or engaging in transporting or concealing or keeping smuggled goods and the Central Government or any Officer of the Central Government, not below the rank of an Additional Secretary to that Government, specially empowered for the purposes of this section by that Government, is satisfied that such person,-

(a) smuggles or is likely to smuggle goods into, out of or through any area highly vulnerable to smuggling ; or

(b) abets or is likely to abet the smuggling of goods into, out of or through any area highly vulnerable to smuggling ; or

(c) engages or is likely to engage in transporting or concealing or keeping smuggled goods in any area highly vulnerable to smuggling, and makes a declaration to that effect within five weeks of the detention of such person.

Explanation 1 – In this Sub-section, “area highly vulnerable to smuggling” means,–

(i) The Indian customs waters, contiguous to [(Note:- Subs. by Act No.23 of 1987, s.2 (w.e.f. 2.7.1987)) The States of Goa, Gujarat, Karnataka, Kerala, Maharashtra, Tamil Nadu and the Union territories of Daman and Diu and Pondicherry] ;

(ii) The inland area fifty kilometers in width from the coast of India falling within the territories of [(Note:- Subs. by Act No.23 of 1987, s.2 (w.e.f. 2.7.1987)) States of Goa, Gujarat, Karnantaka, Kerala, Maharashtra, Tamil Nadu and the Union Territories of Daman and Diu and Pondicherry] ;

(iii) The inland area fifty kilometres in width from the India-Pakistan border in the State of Gujarat, Jammu and Kashmir, Punjab and Rajasthan ;

(iv) The customs air port of Delhi ; and

(v) Such further or other Indian customs waters, or inland area not exceeding one hundred kilometres in width from any other coast or border of India, or such other customs station, as the Central Government may, having regard to the vulnerability of such waters, area or customs station, as the case may be, to smuggling, by notification in the Official Gazette, specify in this behalf.

Explanation 2 – For the purposes of Explanation 1, “customs airport” and “customs station” shall have the same meaning as in clauses (10) and (13) of section 2 of the Customs Act, 1962 (52 of 1962), respectively.

(2) In the case of any person detained under a detention order to which the provisions of sub-section (1) apply, section 8 shall have effect subject to the following modifications, namely :-

(i) in clause (b), for the words “shall, within five weeks”, the words “shall, within four months and two weeks” shall be substituted ;

(ii) in clause (c), –

(1) for the words “the detention of the person concerned”, the words “the continued detention of the person concerned” shall be substituted ;

(2) for the words “eleven weeks”, the words “five months and three weeks” shall be substituted ;

(iii) in clause (f), for the words “for the detention”, at both the places where they occur, the words “for the continued detention” shall be substituted.]

COMMENTS

“Customs airport” means any airport appointed under clause (a) of section 7 to be a customs airport.

“Customs station” means any customs port, customs airport to land customs station.

10. Maximum period of detention–

The maximum period for which any person may be detained in pursuance of any detention order to which the provisions of section 9 do not apply and which has been confirmed under clause (f) of section 8 shall be [(Note:- Subs. by Act No.20 of 1976 for words “one year from the date of detention”) a period of one year from the date of detention or the specified period, whichever period expires later] and the maximum period for which any person may be detained in pursuance of any detention order to which the provisions of section 9 apply and which has been confirmed under clause (f) of section 8 read with sub-section (2) of section 9 shall be [(Note:- Ibid, for words “two years from the date of detention”) a period of two years from the date of detention or the specified period, whichever period expires later :

Provided that nothing contained in this section shall affect the power of the appropriate Government in neither case to revoke or modify the detention order at any earlier time.

[(Note:- Ins. by Act No.20 of 1976) Explanation.—In this section and in section 10A, “specified period” means the period during which the Proclamation of Emergency issued under clause (1) of article 352 of the Constitution on the 3rd day of December, 1971 and the Proclamation of Emergency issued under that clause on the 25th day of June, 1975, are both in operation.]

10A. Extension of period of detention. –

(1) Notwithstanding anything contained in any other contained in any other provision of this Act, the detention of every person detained under a detention order which has been confirmed under clause (f) of section 8 before the commencement of the Conservation of Foreign Exchange and Prevention of Smuggling Activities (Amendment) Act, 1976, and which is in force immediately before such commencement shall, unless his detention has been continued by the appropriate Government under the said clause for a period shorter than one year from the date of his detention, continue until the expiry of a period of one year from the date of his detention under such order or until the expiry of the specified period, whichever period expires later :

Provided that nothing contained in this sub-section shall affect the power of the appropriate Government to revoke or modify such detention order at any earlier time.

(2) Notwithstanding anything contained in any other provision of this Act, the detention of every person detained under a detention order which has been confirmed under clause (f) of section 8 read with sub-section (2) of section 9 before the commencement of the Conservation of Foreign Exchange and Prevention of Smuggling Activities (Amendment) Act, 1976, and which is in force immediately before such commencement, shall, unless his detention has been continued by the appropriate Government under the said clause (f) read with the said sub-section (2), for a period shorter than two years from the date of his detention, continue until the expiry of a period of two years from the date of his detention under such order or until the expiry of the specified period, whichever period expires later :

Provided that nothing contained in this sub-section shall affect the power of the appropriate Government to revoke or modify such detention order at any earlier time.

11. Revocation of detention orders –

(1) Without prejudice to provisions of section 21 of the General Clauses Act, 1897 (10 of 1897), a detention order may, at any time, be revoked or modified –

(a) notwithstanding that the order has been made by an officer of a State Government, by that State Government or by the Central Government ;

(b) notwithstanding that the order has been made by an officer of the Central Government or by a State Government, by the Central Government.

(2) The revocation of a detention order shall not bar the making of another detention order under section 3 against the same person.

COMMENTS

Representation – Disposal of

There is no prescribed period either under the provisions of the Constitution or under the concerned detention law within which the representation should be dealt with. The use of the words “as soon as may be” occurring in article 22 (5) of the constitution reflects that the representation should be expeditiously considered and disposed of with due promptitude and diligence and with a sense of urgency and without avoidable delay. [Rama Dhondu Borado Vs. V.K. Sarf, Commissioner of Police & Ors., JT 1989 (2) 579 ]. What is reasonable despatch depends on the facts and circumstances of each case and no hard and fast rule can be laid down in that regard. In case the gap between the receipt of the representation and its consideration by the authority is so unreasonable and the explanation offered by the authority is so unsatisfactory, such order could vitiate the order of detention.[ibid].

In a detention matter the Government is required to deal with the representation of a detenu expeditiously without avoidable delay. Undue and unexplained delay in disposing of the representation vitiates the detention order.[Hussain Erumban vs. Union of India, (1993) 3 crimes 627 (Delhi)]. It is settled law that the representation made by the detenu for seeking revocation of te detention order must be dealt with promptly and in right earnest by the authorities concerned and they are not supposed to deal with the representation in a casual manner and allow the same to remain unattended for any period of time. If there occurs any undue delay in dealing with the representation it is incumbent upon the authorities to explain such delay. [ibid].

Detaining Authority – Duty of

In smt. Gracy vs. State of Kerala, (1991 ) 41 DLT1, the Supreme Court observed that the detaining authority is obliged to consider the representation even if the same was simply addressed to the Advisory Board and not to him. “It being settled that the aforesaid deal obligation of consideration of the detenu’s representation by the Advisory Board and independently by the detaining authority flows from article 22 (5) when only one representation is made and addressed to the detaining authority there is no reason to hold that the detaining authority is relieved of this obligation merely because the representation is addressed to the Advisory Board instead of the detaining authority and submitted to the Advisory Board during pendency of the reference before it. It is difficult to spell out such an inference from the contents of article 22 (5) in support of the contention of the learned Solicitor General. The contents of article 22(5) as well as the nature of duty imposed thereby on the detaining authority support the view that so long as there is a representation made by the detenu against the order of detention, the aforesaid dual obligation under article 22 (5) arises irrespective of the fact whether the representation is addressed to the detaining authority or to the Advisory Board or to both. The mode of address is only a matter of form which cannot whittle down the requirement of the constitutional mandate in article 22 (5) enacted as one of the safeguard provided to the detenu in case of preventive detention.”It is clear that once the detenu makes a representation, it has to be considered by the detaining authority independent of its consideration by the Advisory Board.[ Yashvir Singh vs. Administrator, Delhi & Ors., (1993) 3 Crimes 441 (Delhi)].

12. Temporary release of persons detained –

[(Note:- Subs. for sub-section (1) by Act No.20 of 1976, s.4 (w.e.f. 12-12-1975) (1) The Central Government may, at any time, direct that any person detained in pursuance of detention order made by that Government or an officer subordinate to that Government or by a State Government or by an officer subordinate to a State Government , may be released for any specified period either without conditions or upon such conditions specified in the direction as that person accepts, and may, at any time, cancel his release.

(1A) A State Government may, at any time, direct that any person detained in pursuance of a detention order made by the Government or by an officer subordinate to that Government may be released for any specified period either without conditions or upon such conditions specified in the direction as that person accepts, and may, at any time, cancel his release.]

(2) In directing the release of any person [(Note:- Subs. by Act No.20 of 1976, s.4 (w.e.f. 12.12.1975) under sub-section (1) or sub – section (1A) , the Government directing the release] may require him to enter into a bond with sureties for the due observance of the conditions specified in the direction.

(3) Any person released under [(Note:- Subs. for “under sub-section (1), the appropriate Government” by Act No.20 of 1976, s.4(b) (w.e.f. 12-12-1975) sub- section (1) or sub – section (1A)] shall surrender him self at the time and place, and to the authority, specified in the order directing his release or can canceling his release, as the case may be.

(4) If any person fails without sufficient cause to surrender himself in the manner specified in sub-section (3) , he shall be punishable with imprisonment for a term which may extend to two years, or with fine, or with both.

(5) If any person released under [(Note:- Subs. for “sub-section (1)” by Act No.20 of 1976, s.4(c) (w.e.f. 12-12-1975) sub-section (1) or sub section (1A)] fails to fulfill any of the conditions imposed upon him under the said sub- section or in the bond entered into by him, the bond shall be declared to be forfeited and any person bound thereby shall be liable to pay the penalty thereof.

(6) [(Note:- Ins. by Act No.35 of 1975, s.3 (w.e.f. 1-7-1975) Notwithstanding anything contained in any other law and save as otherwise provided in this section, no person against whom a detention order made under this Act is in force shall be released whether on bail or bail bond or otherwise.]

12A. Special Provisions for dealing with emergency—

(1) notwithstanding anything contained in this Act or any rules of natural justice, the provisions of this section shall have effect during the period of operation of the Proclamation of Emergency issued under clause (1) of article 352 of the constitution on the 3rd day of December, 1971, or the Proclamation of Emergency issued under that clause on the 25th day of June, 1975, or a period of [(Note:- Subs. for “twelve months” by Act No.90 of 1976, s.2 (w.e.f. 16-6-1976) twenty four months] from the 25th day of June , 1975, whichever period is the shortest.

(2) When making an order of detention under this Act, against any person after the commencement of the Conservation of Foreign Exchange and Prevention of Smuggling Activities (Amendment) Act, 1975, the Central Government or the State Government or, as the case may be, the officer making the order of detention shall consider whether the detention of such person under this Act is necessary for dealing effectively with the emergency in respect of which the Proclamations referred to in sub- section (1) have been issued (hereafter in this section referred to as the emergency) and if, on such consideration, the Central Government or that State Government or, as the case may be, the officer is satisfied that it is necessary to detain such person for effectively dealing with the emergency, that government or officer may make a declaration to that effect and communicate a copy of the declaration to the person concerned;

Provided that where such declaration is made by an officer, it shall be reviewed by the appropriate Government within fifteen days from the date of making of the declaration and such declaration shall cease to have effect unless it is confirmed by that Government, after such review, within the said period of fifteen days.

(3) The question whether the detention of any person in respect of whom a declaration has been made under sub- section (2) continues to be necessary for effectively dealing with the emergency shall be reconsidered by the appropriate Government within four months from the date of such declaration and thereafter at intervals not exceeding four months, and if, on such reconsideration, it appears to the appropriate government that the detention of the person is no longer necessary for effectively dealing with the emergency, the Government may revoke the declaration.

(4) In making any consideration, review or reconsideration under sub-section (2) or (3), the appropriate Government or officer may, if such Government or officer considers it to be against the public interest to do otherwise, act on the basis of the information and materials in its or his possession without disclosing the facts or giving an opportunity of making a representation to the person concerned.

(5) It shall not be necessary to disclose to any person detained under a detention order to which the provisions of sub – section (2) apply, the grounds on which the order has been made during the period the declaration made in respect of such person under that sub section is in force, and, accordingly, such period shall not be taken into account for the purposes of sub- section (3) of section 3.

(6) In the case of every person detained under a detention order to which the provisions of sub- section (2) apply, being a person in respect of whom a declaration has been made thereunder, the period during which such declaration is in force shall not be taken into account for the purpose of computing. –

(i) The periods specified in clause (b) and (c) of section 8;

(ii) The periods of ‘one year’ and ‘ five weeks ‘ specified in sub section (1) , the period of one year’ specified in sub section (2) (i0 and the period of “six months” specified in sub section (3) , of section 9.]

13. Protection of action taken in good faith –

No suit or other legal proceeding shall lie against the Central government or a State Government, and no suit, prosecution or other legal proceedings shall lie against any person, for anything in good faith done or intended to be done in pursuance of this Act.

14. Repeal –

The maintenance of Internal Security (Amendment) Ordinance, 1974 (11 of 1974), shall, on the commencement of this Act, stand repealed and accordingly the amendments made in the Maintenance of Internal Security Act, 1971 (26 of 1971), by the said Ordinance shall, on such commencement, cease to have effect.

Bydeb

The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976

1. Short title, extent and commencement –

(13 of 1976)

An Act to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matter connected therewith or incidental thereto.

WHEREAS for the effective prevention of smuggling activities and foreign exchange manipulations which are having a deleterious effect on the national economy it is necessary to deprive persons engaged in such activities and manipulations of their ill-gotten gains;

AND WHEREAS such persons have been augmenting such gains by violations of wealth-tax, income-tax or other laws or by other means and have been increasing their resources for operating in a clandestine manner;

AND WHEREAS such persons have in many cases been holding the properties acquired by them through such gains in the names of their relatives, associates and confidants;

BE it enacted by Parliament in the Twenty-sixty Year of the Republic of India as follows:

(1) This Act may be called the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.

(2) It extends to the whole of India except the State of Jammu and Kashmir.

(3) It shall be deemed to have come into force on the 5th day of November, 1975.

2. Application –

(1) The provisions of this Act shall apply only to the person specified in sub-section (2).

(2) The person referred to in sub-section (1) are the following namely:-

(a) Every person-

(i) Who has been convicted under the Sea Customer Act, 1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), of an offence in relation to goods of a value exceeding one lakh of rupees; or

(ii) Who has been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), of an offence, the amount or value involved in which exceeds one lakh or rupees; or

(iii) Who having been convicted under the Sea Customs Act, 1878(8 of 1878), or the Customs Act, 1962 (52 of 1962), has been convicted subsequently under either of those Acts; or

(iv) Who having been convicted under the Foreign Exchange Regulation Act, 1947 (7 or 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), has been convicted subsequently under either of those Acts;

(a) Every person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974):

Provided that-

(i) Such order of detention, being an order to which the provisions of section 9 or section 12A of the said Act do no apply, has not been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or

(ii) Such order of detention, being an order to which the provisions of section 9 of the said Act apply, has snot been revoked before the expiry of the time for, or on the basis of the review under sub-section (3) of section 9, or on the report of the Advisory Board under section8, read with sub-section (2) of section 9 of the said Act; or

(iii) Such order of detention, being an order to which the provisions of section12A of the said Act apply, has snot been revoked before the expiry of the time for, or on the basis of the review under sub-section (3) of section 9, or on the report of the Advisory Board under section8, read with sub-section (6) of section 12A, of that Act; or

(iv) Such order of detention has not been set aside by a court of competent jurisdiction;

(a) Every person who is a relative of a person referred to in clause (a) or clause (b);

(b) Every associate person referred to in clause (a) or clauses (b);

(c) Any holder (hereafter in this clause referred to as the present holder) of any property which was at any time previously held by a person referred to in clause (a) or clause (b) unless the present holder or, as the case may be, any one who held such property after such person and before the present and before the present holder, is or was a transferee in good faith for adequate consideration.

Explanation1.- For the purposes of sub-clause (I) of clause (a), the value of any goods in relation to which a person has been convicted of an offence shall be the wholesale price of the goods in the ordinary course of trade in India as on the date of the commission of the offence.

Explanation 2.—For the purposes of clause (c), “relative”, in relation to a person, means –

(i) Spouse of the person;

(ii) Brother or sister of the person;

(iii) Brother or sister of the spouse of the person;

(iv) Any lineal ascendant or descendant of the person;

(v) Any lineal ascendant or descendant of the spouse of the person;

(vi) Spouse of a person referred to in clause (ii), clauses (iii) clause (iv) or clauses (v);

(vii) Any lineal descendant of a person referred to in clause (ii) or clause

(iii);

Explanation 3.- For the purposes of clause (d), “associate”, in relation to a person, means-

(i) Any individual who had been or is residing in the residential premises (including out-houses) of such person;

(ii) Any individual who had been or is managing the affairs or keeping the accounts of such person;

(iii) Any association of persons, body of individuals, partnership firm, or private company within the meaning of the Companies Act, 1956 (1 of 1956), of which such person had been or is a member, partner or director;

(iv) Any individual who had been or is a member, partner or director of an association of person, body of individuals partnership firm, or private company within the meaning of the Companies when such person had been or is a member, partner or director of such association body, partnership firm or private company;

(v) Any person who had been or is managing the affairs, or keeping the accounts, of an association of person, body of individuals, partnership firm or private company referred to in clause (iii);

(vi) The trustee of any trust, where,-

(a) the trust has been created by such person; or

(b) the value of the assets contributed by such person (including the value of the assets if any, contributed by him earlier) to the trust amounts, on the date on which the contribution is made, to not less than twenty per cent, of the value of the assets of the trust on that date;

(i) where the competent authority , for reasons to be recorded in writing, considers that any properties of such person are held on his behalf by any other person, such other person.

Explanation 4. – For the avoidance of doubt , it is hereby provided that the question whether any person is a person to whom the provisions of this Act apply may be determined with reference to any facts, circumstances or events (including any conviction or detention) which occurred or took place before the commencement of this Act.

3. Definition-

(1) In this Act, unless the context otherwise requires,- (a) “Appellate Tribunal” means the Appellate Tribunal for Forfeited Property constituted under section 12;

(b) “competent authority” means an officer of the Central Government authorised by it under sub-section (1) of section 5 to perform the functions of a competent authority under this Act;

(c) “illegally acquired property”, in relation to any person to whom this Act applies, means-

(i) Any property acquired by such person, whether before or after the commencement of this Ac, wholly or partly out of or by means of any income, earnings or assets derived or obtained from or attributable to any activity prohibited by or under any law for the time being in force relating to any matter in respect of which Parliament has power to make laws; or

(ii) Any property acquired by such person, whether before or after the commencement of this Act, wholly or partly our of or be means of any income, earning or assets in respect of which any such law has been contravened; or

(iii) Any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earnings or assets the source of which cannot be proved and which cannot be shown to be attributable to any act or thing done in respect of any matter in relation to which Parliament has no power to make laws; or

(iv) Any property acquired by such person, whether before or after the commencement of this Act, for a consideration, or by any means, wholly or partly traceable to any property referred to in such-clauses (I) to (iii) or the income or earnings from such property ; and includes-

(A) Any, property held by such person which would have been, in relation to any previous holder thereof, illegally acquired property under this clause if such previous holder had not ceased to hold it, unless such person or any other person who held the property at any time after such previous holder or, where there are two or more such previous holders the last of such previous holders is or was a transferee in good faith for adequate consideration ;

(B) Any property acquired by such person, whether before or after the commencement of this Act, for a consideration, or by any means, wholly or partly traceable to any property falling under item (A), or the income or earnings therefrom ;

(a) “prescribed” means prescribed by rules made under this Act;

(b) “property” includes any interest in property, movable or immovable;

(c) “trust” includes any other legal obligation.

(2) Any reference in this Act to any law which is not in force in any areas shall, in relation to that area, be construed as a reference to the corresponding law, if any, in force in that area.

(3) Any reference in this Act to any officer or authority shall, in relation to any area in which there is not officer or authority with the same designation, be construed as a reference to such officer or authority as may be specified by the Central Government by notification in the Official Gazette.

4. Prohibition of holding illegally acquired property –

(1) As from the commencement of this Act, it shall not be lawful for any person to whom this Act applies to hold any illegally acquired property wither by himself or through any other person on his behalf.

(2) Where any person holds any illegally acquired property in contravention of the provision of sub- section (1), such property shall be liable to be forfeited to the Central Government in accordance with the provisions of this Act.

5. Competent authority –

(1) The Central Government may, by order published in the official Gazette, authorise as many officers of the Central Government ( not below the rank of a joint Secretary to the Government ), as it thinks fit, to perform the functions of the competent authority under this Act.

(2) The competent authorities shall perform their functions in respect of such persons or classes or persons as the Central Government may, by order, direct.

6. Notice of forfeiture –

(1) If, having regard to the value of the properties held by any person to whom this act applies, either by himself or through any other person on this behalf, his known sources of income, earnings or assets, any other information or material available to it as a result of action taken under section 18 or otherwise, the authority has reason to believe (the reason for such belief to be recorded in writing ) that all or any of such properties are illegally acquired properties, it may serve a notice upon such person (hereinafter referred to as the person affected) calling upon him within such time as may be specified in the notice, which shall not be ordinarily less than thirty days, to indicate the sources of his income, earnings or assets, out of which or by means of which he has acquired such property, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties as the case may be should not be declared to be illegally acquired properties and forfeited to the Central Government under this Act.

(2) Whereas notice under sub-section (1) to any person specifies any property as being held on behalf of such person by any other person, ac copy of the notice shall also be served upon such other person.

7. Forfeiture of property in certain cases-

(1) The competent authority may, after considering the explanation, if any, to the show cause notice issued under section 6, and the materials available before it and after giving to the person affected (and in a case where the person affected holds any property specified in the notice through any other person, to such other person also) a reasonable opportunity of being heard, by order, record a finding whether all or any of the properties in question are illegally acquired properties.

(2) Where the competent authority is satisfied that some of the properties referred to in the show cause notice are illegally acquired properties but is not able to identity specifically such properties, then it shall be lawful for the competent authority to specify the properties which, to the best of its judgment, are illegally acquired properties and record a finding accordingly under sub-section(1).

(3) Where the competent authority records a finding under this section to the effect that any property is illegally acquired property, it shall declare that such property shall, subject to the provisions of this Act, stand forfeited to the Central Government free from all encumbrances.

(4) Where any shares in a company stand forfeited to the Central Government under this Act then, the company shall, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or the articles of association of the company , forthwith register the Central Government as the transferee of such shares.

8. Burden of proof-

In any proceedings under this Act, the burden of proving that any property specified in the notice served under section 6 is not illegally acquired property shall be on the person affected.

9. Fine in lieu of forfeiture –

(1) Where the competent authority makes a declaration that any property stands forfeited to the Central Government under section 7 and it is a case where the source of only a part, being less than one-half , of the income, earnings or assets with which such property was acquired has not been proved to the satisfaction of the competent authority, it shall make an order giving an option to the person affected to pay, in lieu of forfeiture, a fine equal to one and one fifth times the value of such part.

Explanation. – For the purposes of this sub-section, the value of any part of income, earnings, assets, with which any property has been acquired , shall be-

(a) In the case of any part of income or earnings, the amount of such part on income or earnings;

(b) In the case of any part of assets, the proportionate part of the full value of the consideration for the acquisition of such assets.

(2) Before making an order imposing a fine under sub-section (1), the person affected shall be given a reasonable opportunity of being heard.

(3) Where the person affected pays the fine due under sub-section(1), within such time as may be allowed in that behalf, the competent authority , any by order, revoke the declaration of forfeiture under section 7 and thereupon such property shall stand released.

10. Procedure in relation to certain trust properties–

In the case of any person referred to in clause (vi) of Explanation 3 of sub-section (2), if the competent authority, on the basis of the information and materials available to it, has reason to believe (the reasons for such belief to be recorded in writing) that any property held in trust is illegally acquired property, it may serve a notice upon the author of the trust or, as the case may be, the contributor of the assets out of or by means of which such property was acquired by the trust and the trustees, calling upon them within such time as may be specified in the notice which shall not ordinarily be less than thirty days, to explain the source of the money or other assets out of or by means of which such property was acquired or, as the case may be, the source of the money or other assets which were contributed to the trust for acquiring such property and thereupon such notice shall be deemed to be a notice served under section 6 and all the other provisions of this Act shall apply accordingly.

Explanation. – For the purposes of this section “illegally acquired property”, in relation to any property held in trust, includes-

(i) Any property which if it had continued to be held by the author of the trust or the contributor or such property to the trust would have been illegally acquired property in relation to such author or contributor;

(ii) Any property acquired by the trust out of any contributions made by any person which would have been illegally acquired property in relation to such person had such person acquired such property out of such contributions.

11. Certain transfers to be null and void –

Where after the issue of a notice under section 6 or under section 10, any property referred to in the said notice is transferred by any mode whatsoever such transfer shall for the purposes of the proceedings under this Act , be ignored and if such property is subsequently forfeited to the central Govt. under section 7 then the transfer of such property shall be deemed to be null and void.

12. Constitution of Appellate Tribunal –

(1) The Central Government may, by notification in the Official Gazette, constitute an Appellate Tribunal to be called the Appellate Tribunal for Forfeited Property consisting of a Chairman and such number of other members (being of officers of the Central Government not below the rank of a Joint Secretary to the Government ) as the Central Government thinks fit, to be appointed by the Government for hearing appeals against the orders made under section 7, sub- section (1) of section9 or section 10.

(2) The Chairman of the Appellate Tribunal shall be a person who is or has been or is qualified to be a Judge of the Supreme Court or of a High Court.

(3) The terms and conditions of service of the Chairman and other members shall be such as may be prescribed.

(4) Any person aggrieved by an order of the competent authority made under section 7, sub- section (1) of section 9 or section10 , may, within forty- five days from the date on which the order is served on him, prefer an appeal to the Appellate Tribunal:

Provided that the Appellate Tribunal may entertain any appeal after the said period of forty- five days, but not after sixty days, from the date aforesaid if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.

(5) On receipt of an appeal under sub- section (4) the Appellate Tribunal may, after giving an opportunity to the appellant to be heard, if he so desires, and after making such further enquiry it deems fit, confirm, modify or set aside the order appealed against.

(6) The powers and functions of the Appellate Tribunal may be exercised and discharged by Benches consisting of three members and constituted by the Chairman of the Appellate Tribunal.

[ (6A)(Note:- Ins. by Act No.55 of 1980, s.2 (w.e.f. 1-7-1981) Notwithstanding anything contained in sub- section (6), where the chairman considers it necessary so to do for the expeditious disposal of appeals under this section, he may constitute a Bench of two members and a Bench so constituted may exercise and discharge the powers and functions of the Appellate Tribunal:

Provided that if the members of a Bench so constituted differ on any point or points, they shall state the point or points on which they differ and refer the same to a third member (To be specified by the Chairman) for hearing on such point or points and such point or points shall be decided according to the opinion of that member. ]

(7) The Appellate Tribunal may regulate its own procedure

[(8) (Note:- Ins. by Act No.55 of 1980, s.2 (w.e.f. 1-7-1981) On application to the Appellate tribunal and on payment of the prescribed fee, the Tribunal may allow a party to any appeal or any person authorised in this behalf by such party to inspect at any time during office hours, any relevant records and registers of the Tribunal and obtain a certified copy of any part thereof.]

13. Notice or order not to be invalid for error in description-

No notice issued or served, no declaration made, and no order passed, under this Act shall be deemed to be invalid by reason of any error in the description of the property or person mentioned therein if such property or person is identifiable from the description so mentioned.

14. Bar of jurisdiction-

No order passed or declaration made under these Act shall be appeasable except as provided therein and no civil court shall have jurisdiction in respect of any matter which the Appellate Tribunal or any competent authority is empowered by or under this Act to determine, and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

15. Competent authority and Appellate Tribunal to have powers of civil court–

The competent authority, and the Appellate Tribunal shall have all the powers of a civil court while trying a suit under the Code of Civil Procedure, 1908 ( 5 of 1908) , in respect of the following matters, namely:-

(a) Summoning and enforcing the attendance of any person and examining him on oath,

(b) Requiring the discovery and production of documents;

(c) Receiving evidence or affidavits;

(d) Requisitioning any public record or copy thereof from any court or office;

(e) Issuing commissions for examination of witnesses or documents;

(f) Any other matter which may be prescribed.

16. Information to competent authority –

(1) Notwithstanding anything contained in any other law, the competent authority shall have power to require any officer or authority of the Central Government or a State Government or a local authority to furnish information in relation to such persons, points or matters as in the opinion of the competent authority will be useful for, or relevant to, the purposes of this Act.

(2) Any officer of the Income – tax Department, the Customs Department or the Central Excise Department or any officer of enforcement appointed under the Foreign Exchange Regulation Act, 1973 (46 of 1973 ) may furnish sou motu any information available with him to the competent authority if in the opinion of the officer such information will be useful to the competent authority for the purposes of this Act.

17. Certain officers to assist competent authority and Appellate Tribunal –

For the purposes of any proceedings under this Act, the following officers are hereby empowered and required to assist the competent authority and the Appellate Tribunal, namely:-

(a) Officers of the Custom Department ;

(b) Officers of the Central Excise Department;

(c) Officers of the Income- Tax Department ;

(d) Officers of enforcement appointed under the Foreign Exchange Regulation Act,1973 ( 46of 1973 ),

(e) Officers of police ;

(f) Such other officers of the Central or State Government as are specified by the Central Government in this behalf by notification in the Official Gazette.

18. Power of competent authority to require certain officers to exercise certain powers –

(1) For the purposes of any proceeding under this Act or the initiation of any such proceedings, the competent authority shall have power to cause to be conducted any inquiry, investigation or survey in respect of any person, place, property, assets, documents, books of account or any other relevant matter.

(2) For the purposes referred to in sub- section (1) the competent authority may, having regard to the nature of the inquiry, investigation of survey, require an officer of the Income-tax Department to conduct or cause to be conducted such inquiry, investigation or survey.

(3) Any officer of the Income-tax Department who is conducting or is causing to be conducted under sub section (2) may, for the purpose of such inquiry, investigation or survey, exercise any power (including the power to authorise the exercise of any power) Which may be exercised by him for any purpose under the Income-tax Act, 1961 (43 of 1961), and the provisions of this said Act shall, so far as may be, apply accordingly.

19. Power to take possession-

(1) Where any property has been declared to be forfeited to the Central Government under this Act, or where the person affected has failed to pay he fine due under sub-section(1) of Section 9 within the time allowed therefor under sub-section (3) of that section, the competent authority may order the person affected as well as any other person who may be in possession of the property to surrender or deliver possession thereof to the competent authority or to any person duly authorised by it in this behalf within thirty days of the of the service of the order.

(2) If any person refuses or fails to comply with an order made under sub-section (1), the competent authority may take possession of the property and may for that purpose use such force as may be necessary.

(3) Notwithstanding anything contained in sub-section (2), the competent authority may, for the purpose of taking possession of any property referred to in sub-section (1), requisition the service of any police officer to assist the competent authority and it shall be the duty of such officer to comply with such requisition.

20. Rectification of mistakes-

With a view to rectifying any mistakes apparent from record, the competent authority or the Appellate Tribunal, as the case may be, may amend any order made by it within a period of one year from the date of the order.

Provided that if any such amendment is likely to affect any person prejudicially, it shall not be made without giving to such person a reasonable opportunity of being heard.

21. Finding under other laws not conclusive for proceedings under this Act-

No finding of any officer or authority under any law shall be conclusive for the purposes of any proceeding under this Act.

22. Service of notices and orders –

Any notice or order issued or made under this Act shall be served-

(a) By tendering the notice or order or sending it by registered post to the person for whom it is intended or to his agent;

(b) If the notice or order cannot be served in the manner provided in clause (a), by affixing it on a conspicuous place in the property in relation which the notice or order is issued or made, or on some conspicuous part of the premises in which the person for whom it is intended is known to have last resided or carried on business or personally worked for gain.

23. Protection of action taken in good faith-

No suit, prosecution or other proceeding shall lie against the Central Government or any officer of the Central or State Government for anything which is done, or intended to be done, in good faith, in pursuance of this Act or the rules made thereunder.

24. Act to have overriding effect-

The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

25. Provisions of the Act not to apply to certain properties held in trust-

Nothing contained in this Act shall apply in relation to any property held a trust or an institution created or established wholly for public religious or charitable purposes if-

(i) Such property has been so held by such trust or institution from a date prior to the commencement of this Act, or

(ii) Such property is wholly traceable to any property held by such trust or institution prior to the commencement of this Act.

26. Power to make rules –

(1) The Central Government may, by notification in the Official Gazette, make rules to carry out the provisions of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-

(a) the terms and conditions of service of the Chairman and other members of the Appellate Tribunal under sub-section (3) of section 12.

[(aa) (Note:- Ins. by Act No.55 of 1980, s.3 (w.e.f. 1-7-1981) the fees which shall be paid for the inspection of the records and registers of the Appellate Tribunal or for obtaining a certified copy of any part thereof under sub-section (8) of section 12;]

(b) The powers of a civil court that may be exercised by the compet4ent authority and the Appellate Tribunal under clause (f) of section 15;

(c) Any other matter which has to be, or may be, prescribed.

(3) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which be comprised in one session or in two or more successive sessions, and if, before the expiry of the sessions immediately following the sessions aforesaid, both Houses agree in making any modification in the rule, or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified from or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

27. Repeal and saving-

(1) The Smugglers and Foreign Manipulators (Forfeiture of Property) Ordinance, 1975 (20 of 1975) is hereby repealed.

(2) Notwithstanding such repeal , anything done or any action taken under the Ordinance so repealed shall be deemed to have been done or taken under the corresponding provisions of this Act.

Bydeb

The Foreign Exchange Management Act, 1999

1. Short title, extent, application and commencement – 

ACT NO. 42 OF 1999

[29th December, 1999.]

An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. BE it enacted by Parliament in the Fiftieth Year of the Republic of India as follows:-

1. This Act may be called the Foreign Exchange Management Act, 1999.

2. It extends to the whole of India.

3. It shall also apply to all branches, offices and agencies outside India owned or controlled by a person resident in India and also to any contravention there under committed outside India by any person to whom this Act applies.

4. It shall come into force on such date1as the Central Government may, by notification in the Official Gazette, appoint:

 Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

————————–

1. Came into force on 1-6-2000, vide G.S.R. 371(E), dated 1st May, 2000.

2. Definitions –

In this Act, unless the context otherwise requires,-

(a) “Adjudicating Authority” means an officer authorised under subsection

(1) of section 16;

(b) “Appellate Tribunal” means the Appellate Tribunal for Foreign

Exchange established under section 18;

 (c) “Authorised person” means an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under sub-section (1) of section 10 to deal in foreign exchange or foreign securities;

(d) “Bench” means a Bench of the Appellate Tribunal;

(e) “Capital account transaction” means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in subsection (3) of section 6;

 (f) “Chairperson” means the Chairperson of the Appellate Tribunal;

(g) “Chartered accountant” shall have the meaning assigned to it in clause

(b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949);

 (h) “Currency” includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, travelers cheques, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by the Reserve Bank;

(i) “Currency notes” means and includes cash in the form of coins and bank notes;

(j) “Current account transaction” means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes,-

(i) Payments due in connection with foreign trade, other current business, services, and short-term banking and credit facilities in the ordinary course of business,

(ii) Payments due as interest on loans and as net income from investments,

(iii) Remittances for living expenses of parents, spouse and children residing abroad, and

(iv) Expenses in connection with foreign travel, education and medical care of parents, spouse and children;

(k) “Director of Enforcement” means the Director of Enforcement appointed under sub-section (1) of section 36;

(l) “Export”, with its grammatical variations and cognate expressions, means,-

(i) The taking out of India to a place outside India any goods, (ii) Provision of services from India to any person outside India;

 (m) “Foreign currency” means any currency other than Indian currency;

 (n) “Foreign exchange” means foreign currency and includes,-

(i) Deposits, credits and balances payable in any foreign currency,

(ii) Drafts, travelers cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency,

(iii) Drafts, travelers cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency;

(o) “Foreign security” means any security, in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency and includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividends is payable in Indian currency;

(p) “Import”, with its grammatical variations and cognate expressions, means bringing into India any goods or services;

(q) “Indian currency” means currency which is expressed or drawn in Indian rupees but does not include special bank notes and special one rupee notes issued under section 28A of the Reserve Bank of India Act, 1934 (2 of 1934);

(r) “Legal practitioner” shall have the meaning assigned to it in clause (i) of sub-section (1) of section 2 of the Advocates Act, 1961 (25 of 1961);

(s) “Member” means a Member of the Appellate Tribunal and includes the Chairperson thereof;

(t) “Notify” means to notify in the Official Gazette and the expression notification” shall be construed accordingly;

(u) “Person” includes-

An individual, A Hindu undivided family,

(i) A company,

(ii) A firm,

(iii) An association of persons or a body of individuals, whether incorporated or not,

 (iv) Every artificial juridical person, not falling within any of the preceding sub-clauses, and

(v) Any agency, office or branch owned or controlled by such person;

 (v) “Person resident in India” means-

(v) A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include;-

(A) A person who has gone out of India or who stays outside India, in either case-

 (a) For or on taking up employment outside India, or

(b) For carrying on outside India a business or vocation outside India, or

(c) For any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B) A person who has come to or stays in India, in either case, otherwise than-

(a) For or on taking up employment in India, or

(b) For carrying on in India a business or vocation India, or

(c) For any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

(i) Any person or body corporate registered or incorporated in India,

(ii) An office, branch or agency in India owned or controlled by a person resident outside India,

(iii) An office, branch or agency outside India owned or controlled by a person resident in India;

(w) “Person resident outside India” means a person who is not resident in India;

 (x) “Prescribed” means prescribed by rules made under this Act;

 (y) “Repatriate to India” means bringing into India the realised foreign exchange and-

 (i) The selling of such foreign exchange to an authorised person in India in exchange for rupees; or (ii) The holding of realised amount in an account with anauthorised person in India to the extent notified by the Reserve Bank, and includes use of the realised amount for discharge of a debt or liability denominated in foreign exchange and the expression “repatriation” shall be construed accordingly;

(z) “Reserve Bank” means the Reserve Bank of India constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);

(za) “Security” means shares, stocks, bonds and debentures, Government securities as defined in the Public Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings Certificates Act, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities and units of the Unit Trust of India established under sub-section (1) of section 3 of the Unit Trust of India Act, 1963 (52 of 1963) or of any mutual fund and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes or any other instruments which may be notified by the Reserve Bank as security for the purposes of this Act;

(zb) “Service” means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, medical assistance, legal assistance, chit fund, real estate, transport, processing, supply of electrical or other energy, boarding or lodging or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;

 (zc) “Special Director (Appeals)” means an officer appointed under section 1 8;

(zd) “Specify” means to specify by regulations made under this Act and the expression “specified” shall be construed accordingly;

(ze) “Transfer” includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien.

3. Dealing in foreign exchange, etc. – 

Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall-

(a) Deal in or transfer any foreign exchange or foreign security to any person not being an authorised person; (b) Make any payment to or for the credit of any person resident outside India in any manner;

(c) Receive otherwise through an authorised person, any payment by order or on behalf of any person resident outside India in any manner;

Explanation.– For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised person) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised person;

(d) Enter into any financial transaction in India as consideration for. or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person.

 Explanation. – For the purpose of this clause, “financial transaction” means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt.

4. Holding of foreign exchange, etc.

Save as otherwise provided in this Act, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India

5. Current account transactions –

Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction:

Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed

 Comments

Any person can sell or draw foreign exchange to or from an authorised person provided that such sale or drawal is a current account transaction. The Central Government can, in public interest and in consultation with the Reserve Bank, impose reasonable restrictions for such transactions.

6. Capital account transactions –

(1) Subject to the provisions of sub-section (2), any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction.

(2) The Reserve Bank may, in consultation with the Central Government, specify-

(a) Any class or classes of capital account transactions which are permissible;

(b) The limit up to which foreign exchange shall be admissible for such transactions:

 Provided that the Reserve Bank shall not impose any restriction on the drawal of foreign exchange for payments due on account of amortization of loans or for depreciation of direct investments in the ordinary course of business.

(3) Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by regulations prohibit, restrict or regulate the following,-

(a) Transfer or issue of any foreign security by a person resident in India;

 (b) Transfer or issue of any security by a person resident outside India;

 (c) Transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India;

(d) Any borrowing or lending in foreign exchange in whatever form or by whatever name called;

 (e) Any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside India;

(f) Deposits between persons resident in India and persons resident outside India;

 (g) Export, import or holding of currency or currency notes;

(h) Transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in India;

(i) Acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India;

(j) Giving of a guarantee or surety in respect of any debt, obligation or other liability incurred,-

(i) By a person resident in India and owed to a person resident outside India; or

(ii) By a person resident outside India.

(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

(5) A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.

(6) Without prejudice to the provisions of this section, the Reserve Bank may by regulation prohibit, restrict, or regulate establishment in India of a branch, office or other place of business by a person resident outside India, for carrying on any activity relating to such branch, office or other place of business.

7. Export of goods and services –

(1) Every exporter of goods shall; –

(a) Furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, containing true and correct material particulars, including the amount representing the full export value or, if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in a market outside India;

(b) Furnish to the Reserve Bank such other information as may be required by the Reserve Bank for the purpose of ensuring the realisation of the export proceeds by such exporter.

 (2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market conditions, is received without any delay, direct any exporter to comply with such requirements as it deems fit.

(3) Every exporter of services shall furnish to the Reserve Bank or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relation to payment for such services.

8. Realisation and repatriation of foreign exchange –

Save as otherwise provided in this Act, where any amount of foreign exchange is due or has accrued to any person resident in India such person shall take all reasonable steps to realise and repatriate to India such foreign exchange within such period and in such manner as may be specified by the Reserve Bank.

 9. Exemption from realisation and repatriation in certain cases – 

The provisions of sections 4 and 8 shall not apply to the following, namely:-

(a) Possession of foreign currency or foreign coins by any person up to such limit as the Reserve Bank may specify;

(b) Foreign currency account held or operated by such person or class of persons and the limit up to which the Reserve Bank may specify;

 (c) Foreign exchange acquired or received before the 8th day of July, 1947 or any income arising or accruing thereon which is held outside India by any person in pursuance of a general or special permission granted by the Reserve Bank;

 (d) Foreign exchange held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person referred to in clause (c), including any income arising there from;

(e) Foreign exchange acquired from employment, business, trade, vocation, services, honorarium, gifts, inheritance or any other legitimate means up to such limit as the Reserve Bank may specify; and

(f) Such other receipts in foreign exchange as the Reserve Bank may specify.

10. Authorised person –

(1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit.

(2) An authorisation under this section shall be in writing and shall be subject to the conditions laid down therein.

(3) An authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that-

(a) It is in public interest so to do; or (b) The authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made there under:

Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter.

(4) An authorised person shall, in all his dealings in foreign exchange or foreign security comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section.

(5) An authorised person shall, before under-taking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank.

(6) Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to authorised person under sub-section (5) does not use it for such purpose or does not surrender it to authorised person within the specified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction or order made there under shall be deemed to have committed contravention of the provisions of the Act for the purpose of this section.

 Comments

The Reserve Bank may authorise any person to be known as authorised person to deal in foreign exchange or in foreign securities as an authorised dealer, money changer or off-shore banking unit. The Reserve Bank may specify the conditions in the authorisation and may also revoke the same in the public interest in the case of any contravention of the provisions of this Act or failure to comply with the conditions in the authorisation.

11. Reserve Bank’s powers to issue directions to authorised person

 (1) The Reserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made there under, give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security.

 (2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act or of any rule, regulation, notification, direction, or order made there under, direct any authorised person to furnish such information, in such manner, as it deems fit.

(3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which may extend to two thousand rupees for every day during which such contravention continues.

Comments

Reserve Bank has been empowered to give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security and has also been empowered to direct any authorised person to furnish such information in such manner as it deems fit. If any authorised person contravenes any direction or fails to furnish any information as directed by the Reserve Bank he is liable to a penalty upto ten thousand rupees and in the case of continuing contravention with an additional penalty upto two thousand rupees for every day.

12. Power of Reserve Bank to inspect authorised person

 (1) The Reserve Bank may, at any time, cause an inspection to be made, by any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, of the business of any authorised person as may appear to it to be necessary or expedient for the purpose of-

(a) Verifying the correctness of any statement, information or particulars furnished to the Reserve Bank;

 (b) Obtaining any information or particulars which such authorised person has failed to furnish on being called upon to do so;

(c) Securing compliance with the provisions of this Act or of any rules, regulations, directions or orders made thereunder.

 (2) It shall be the duty of every authorised person, and where such person is a company or a firm, every director, partner or other officer of such company or firm, as the case may be, to produce to any officer making an inspection under sub-section (1), such books, accounts and other documents in his custody or power and to furnish any statement or information relating to the affairs of such person, company or firm as the said officer may require within such time and in such manner as the said officer may direct.

 13. Penalties – 

(1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.

 (2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.

 Explanation.- For the purposes of this sub-section, “property” in respect of which contravention has taken place, shall include ;-

(a) Deposits in a bank, where the said property is converted into such deposits;

 (b) Indian currency, where the said property is converted into that currency; and (c) Any other property which has resulted out of the conversion of that property

14. Enforcement of the orders of adjudicating authority –

 (1) Subject to the provisions of sub-section (2) of section 19, if any person fails to make full payment of the penalty imposed on him under section 13 within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment under this section.

 (2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied

(a) That the defaulter, with the object or effect of obstructing the recovery of penalty, has after the issue of notice by the Adjudicating Authority, dishonestly transferred, concealed, or removed any part of his property, or

(b) That the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same.

(3) Notwithstanding anything contained in sub-section (1), a warrant for the arrest of the defaulter may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority.

(4) Where appearance is not made pursuant to a notice issued and served under sub-section (1), the Adjudicating Authority may issue a warrant for the arrest of the defaulter.

 (5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or sub-section (4) may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for the time being be found.

(6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey):

Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him such officer shall at once release him.

 Explanation. – For the purpose of this sub-section, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter.

 (7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil prison.

(8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or release him on his furnishing the security to the satisfaction of the Adjudicating Authority for his appearance as and when required.

 (9) Upon the conclusion of the inquiry, the Adjudicating Authority may make an order for the detention of the defaulter in the civil prison band shall in that event cause him to be arrested if he is not already under arrest:

Provided that in order to give a defaulter an opportunity of satisfying the arrears, the Adjudicating Authority may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the expiration of the specified period if the arrears are not satisfied.

(10) When the Adjudicating Authority does not make an order of detention under sub-section (9), he shall, if the defaulter is under arrest, direct his release.

 (11) Every person detained in the civil prison in execution of the certificate may be so detained ;-

(a) Where the certificate is for a demand of an amount exceeding rupees one crore – up to three years, and

(b) In any other case – up to six months:

Provided that he shall be released from such detention on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison.

 (12) A defaulter released from detention under this section shall not, merely by reason of his release, be discharged from his liability for the arrears but he shall not be liable to be arrested under the certificate in execution of which he was detained in the civil prison.

(13) A detention order may be executed at any place in India in the manner provided for the execution of warrant of arrest under the Code of Criminal Procedure. 1973 (2 of 1974).

 15. Power to compound contravention – 

(1) Any contravention under section 13 may, on an application made by the person committing such contravention, be compounded within one hundred and eighty days from the date of receipt of application by the Director of Enforcement or such other officers of the Directorate of Enforcement and officers of the Reserve Bank as may be authorised in this behalf by the Central Government in such manner as may be prescribed.

(2) Where a contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded.

16. Appointment of Adjudicating Authority –

(1) For the purpose of adjudication under section 13, the Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under section 13, against whom a complaint has been made under sub-section

(2) (hereinafter in this section referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any penalty:

Provided that where the Adjudicating Authority is of opinion that the said person is likely to abscond or is likely to evade in any manner, the payment of penalty, if levied, it may direct the said person to furnish a bond or guarantee for such amount and subject to such conditions as it may deem fit.

(2) The Central Government shall, while appointing the Adjudicating Authorities under sub-section (1), also specify in the order published in the Official Gazette their respective jurisdiction.

(3) No Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government.

(4) The said person may appear either in person or take the assistance of a legal practitioner or a chartered accountant of his choice for presenting his case before the Adjudicating Authority

(5) Every Adjudicating Authority shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and;-

(a) All proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code, 1860 (45 of 1860); (b) Shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974).

(6) Every Adjudicating Authority shall deal with the compliant under sub-section (2) as expeditiously as possible and endeavor shall be made to dispose off the complaint finally within one year from the date of receipt of the complaint:

Provided that where the complaint cannot be disposed off within the said period, the Adjudicating Authority shall record periodically the reasons in writing for not disposing off the complaint within the said period.

17. Appeal to Special Director (Appeals) –

(1) The Central Government shall, by notification, appoint one or more Special Directors (Appeals) to hear appeals against the orders of the Adjudicating Authorities under this section and shall also specify in the said notification the matter and places in relation to which the Special Director (Appeals) may exercise jurisdiction.

(2) Any person aggrieved by an order made by the Adjudicating Authority, being an Assistant Director of Enforcement or a Deputy Director of Enforcement, may prefer an appeal to the Special Director (Appeals)

 (3) Every appeal under sub-section (1) shall be filed within forty-five days from the date on which the copy of the order made by the Adjudicating Authority is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed:

Provided that the Special Director (Appeals) may entertain an appeal after the expiry of the said period of forty-five days, if he is satisfied that there was sufficient cause for not filing it within that period.

(4) On receipt of an appeal under sub-section (1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit confirming, modifying or setting aside the order appealed against.

(5) The Special Director (Appeals) shall send a copy of every order made by him to the parties to appeal and to the concerned Adjudicating Authority.

(6) The Special Director (Appeals) shall have the same powers of a civil court which are conferred on the Appellate Tribu

18. Establishment of Appellate Tribunal –

The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Appellate Tribunal for Foreign Exchange to hear appeals against the orders of the Adjudicating Authorities and the Special Director (Appeals) under this Act.

19. Appeal to Appellate Tribunal – 

 (1) Save as provided in sub-section (2), the Central Government or any person aggrieved by an order made by an Adjudicating Authority other than those referred to sub-section (1) of section 17, or the Special Director (Appeals), may prefer an appeal to the Appellate Tribunal:

Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified by the Central Government:

Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation of penalty.

(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or the Special Director (Appeals) is received by the aggrieved person or by the Central Government and it shall be in such form verified in such manner and be accompanied by such fee as may be prescribed:

 Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.

(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.

 (4) The Appellate Tribunal shall send a copy of every order made by it to the par-ties to the appeal and to the concerned Adjudicating Authority (or the Special Director (Appeals) as the case may be.

(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt of the appeal:

Provided that where any appeal could not be disposed off within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing off the appeal within the said period.

 (6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Authority under section 16 in relation to any proceeding, on its own motion or other-wise, call for the records of such proceedings and make such order in the case as it think fit.

 Comments

 This section provides for preferring of appeal before the Appellate Tribunal against the order made by the Adjudicating Authority, period for filing the appeal, condonation of delay for sufficient cause and the period for disposal of appeal.

 20. Composition of Appellate Tribunal –

(1) The Appellate Tribunal shall consist of a Chairperson and such number of Members as the Central Government may deem fit.

(2) Subject to the provisions of this Act,-

(a) The jurisdiction of the Appellate Tribunal may be exercised by Benches thereof;

 (b) A Bench may be constituted by the Chairperson with one or more Members as the Chairperson may deem fit;

 (c) The Benches of the Appellate Tribunal shall ordinarily sit at New Delhi and at such other places as the Central Government may, in consultation with the Chairperson, notify;

(d) The Central Government shall notify the areas in relation to which each Bench of the Appellate Tribunal may exercise jurisdiction.

(3) Notwithstanding anything contained in sub-section (2), the Chairperson may transfer a member from one Bench to another Bench.

(4) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit.

 Comments

The Chairperson of the Appellate Tribunal has constituted the following Benches of the Appellate Tribunal namely:—

1.  (a) Single Member Benches, one Bench consisting the Chairperson, and other Benches consisting of a Member each; and

 (b)  Division Benches consisting of either the Chairperson with a Member or any two Members sitting jointly.

2.  A Division Bench shall hear cases in which the amount of penalty, exceeds rupees five lakhs, and all other cases shall be heard by a Single Member Bench. The distribution of work amongst Benches shall be done a times by the Chairperson.

 [Vide S.O. 388 (3), dated 22nd March, 2003, published in the Gazette of India, Extra., Pt. II, Sec. 3 (ii), No. 289, dated 22nd March, 2003.]

21. Qualifications for appointment of Chairperson, member and Special Director (Appeals)

(1) A person shall not be qualified for appointment as the Chairperson or a Member unless he;-

 (a) In the case of Chairperson, is or has been, or is qualified to be, a Judge of a High Court; and

 (b) In the case of a Member, is or has been, or is qualified to be, a District Judge.

 (2) A person shall not be qualified for appointment as a Special Director (Appeals) unless he;-

(a) Has been a member of the Indian Legal Service and has held a post in Grade 1 of that Service; or

 (b) Has been a member of the Indian Revenue Service and has held a post equivalent to a Joint Secretary to the Government of India

22. Term of office –

The Chairperson and every other Member shall hold office as such for a term of five years from the date on which he enters upon his office:

Provided that no Chairperson or other Member shall hold office as such after he has attained,-

(a) In the case of the Chairperson, the age of sixty-five years;

 (b) In the case of any other Member, the age of sixty-two years.

23. Terms and Conditions of service – 

The salary and allowances payable to and the other terms and conditions of service of the Chairperson, other Members and the Special Director (Appeals) shall be such as may be prescribed:

 Provided that neither the salary and allowances nor the other terms and conditions of service of the Chairperson or a Member shall be varied to his disadvantage after appointment.

24. Vacancies – 

If, for reason other than temporary absence, any vacancy occurs in the office of the Chairperson or a Member, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Appellate Tribunal from the stage at which the vacancy is filled.

25. Resignation and removal

(1) The Chairperson or a Member may, by notice in writing under his hand addressed to the Central Government, resign his office:

Provided that the Chairperson or a Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of term of office, whichever is the earliest.

(2) The Chairperson or a Member shall not be removed from his office except by an order by the Central Government on the ground of proved misbehavior or incapacity after an inquiry made by such person as the President may appoint for this purpose in which the Chairperson or a Member concerned has been informed of the charges against him and given a reasonable opportunity of being heard in respect of such charges.

26. Member to act as Chairperson in certain circumstances –

(1) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most member, shall act as the Chairperson until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

 (2) When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the senior-most member, shall discharge the functions of the Chairperson until the date on which the Chairperson resumes his duties.

27. Staff of Appellate Tribunal & Special Director ( Appeals ) – 

(1) The Central Government shall provide the Appellate Tribunal and the Special Director (Appeals) with such officers and employees as it may deem fit.

(2) The officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall discharge their functions under the general superintendence of the Chairperson and the Special Director (Appeals), as the case may be.

 (3) The salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and Office of the Special Director (Appeals) shall be such as may be prescribed.

28. Procedure and powers of Appellate Tribunal & Special Director (Appeals) –

 (1) The Appellate Tribunal and the Special Director (Appeals) shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Appellate Tribunal and the Special Director (Appeals) shall have powers to regulate its own procedure.

(2) The Appellate Tribunal and the Special Director (Appeals) shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit, in respect of the following matters, namely:-

(a) Summoning and enforcing the attendance of any person and examining him on oath;

 (b) Requiring the discovery and production of documents; (c) Receiving evidence on affidavits;

(d) Subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), requisitioning any public record or documents or copy of such record or document from any office;

 (e) Issuing commissions for the examination of witnesses or documents;

 (f) Reviewing its decisions;

(g) Dismissing a representation of default or deciding it ex-parte;

 (h) Setting aside any order of dismissal of any representation for default or any order passed by it ex-parte; and

(i) Any other matter which may be prescribed by the Central Government.

 (3) An order made by the Appellate Tribunal or the Special Director (Appeals) under this Act shall be executable by the Appellate Tribunal or the Special Director (Appeals) as a decree of civil court and, for this purpose, the Appellate Tribunal and the Special Director (Appeals) shall have all the powers of a civil court.

(4) Notwithstanding anything contained in sub-section (3), the Appellate Tribunal or the Special Director (Appeals) may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court.

(5) All proceedings before the Appellate Tribunal and the Special Director (Appeals) shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code, 1860 (45 of e 1860) and the Appellate Tribunal shall be deemed to be a civil court the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974).

29. Distribution of business amongst Benches –

Where Benches are constituted, the Chairperson may, from time to time, by notification, make provisions as to the distribution of the business of the Appellate Tribunal amongst the Benches and also provide for the matters which may be dealt with by each Bench.

30. Power of Chairperson to transfer cases –

 On the application of any of the parties and after notice to the parties, and after hearing such of them as he may desire to be heard, or on his own motion without such notice, the Chairperson may transfer any case pending before one Bench, for disposal, to any other Bench.

31. Decision to be by majority –

If the Members of a Bench consisting of two Members differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the Chairperson who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it.

32. Right of appellant to take assistance of legal practitioner or Chartered Accountant and of Government, to appoint presenting officers – 

(1) A person preferring an appeal to the Appellate Tribunal under this Act may either appear in person or take the assistance of a legal practitioner or a Chartered Accountant of his choice to present his case before the Appellate Tribunal or the Special Director (Appeals), as the case may be.

(2) The Central Government may authorise one or more legal practitioners or a Chartered Accountants or any of its officers to act as presenting officers and every person so authorised may present the case with respect to any appeal before the Appellate Tribunal or the Special Director (Appeals), as may be.

33. Members, etc., to be public servants –

The Chairperson, Members and other officers and employees of the Appellate Tribunal the Special Director (Appeals) and the Adjudicating Authority shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code, 1860 (45 of 1860).

34. Civil court not to have jurisdiction –

No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an Adjudicating Authority or the Appellate Tribunal or the Special Director (Appeals) is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

35. Appeal to High Court –

Any person aggrieved by any decision or order of the Appellate Tribunal or the Special Director (Appeals) may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal or the Special Director (Appeals) to him on any question of law arising out of such order:

 Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.

Explanation.-In this section High Court means;-

(a) The High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and

(b) Where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.

36. Directorate of Enforcement

(1) The Central Government shall establish a Directorate of Enforcement with a Director and such other officers or class of officers as it thinks fit, who shall be called officers of Enforcement, for the purposes of this Act.

 (2) Without prejudice to provisions of sub-section (1), the Central Government may authorise the Director of Enforcement or an Additional Director of Enforcement or a Special Director of Enforcement or a Deputy Director of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement.

 (3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act.

37. Power of search, seizure, etc. – 

(1) The Director of Enforcement and other officers of Enforcement not below the rank of an Assistant Director shall take up for investigation the contravention referred to in section 13.

(2) Without prejudice to the provisions of sub-section (1), the Central Government may also, by notification, authorise any officer or class of officers in the Central Government, State Government or the Reserve Bank, not below the rank of an Under Secretary to the Government of India to investigate any contravention referred to in section 13.

 (3) The officers referred to in sub-section (1) shall exercise the like powers which are confer-red on income-tax authorities under the Income-tax Act, 1961 (43 of 1961) and shall exercise such powers, subject to such limitations laid down under that Act.

38. Empowering other officers –

(1) The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any central excise officer or any police officer or any other officer of the Central Government or a State Government to exercise such of, the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under this Act as may be stated in the order.

 (2) The officers referred to in sub-section (1) shall exercise the like powers which are conferred on the income-tax authorities under the Income-tax Act, 1961 (43 of 1961), subject to such conditions and limitations as the Central Government may impose

39. Presumption as to documents in certain cases –

 Where any document-

(i) Is produced or furnished by any person or has been seized from the custody or control. of any person, in either case, under this Act or under any other law; or

 (ii) Has been received from any place outside India (duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation of any contravention under this Act alleged to have been committed by any person, and such document is tendered in any proceeding under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him. the court or the adjudicating authority, as the case may be, shall-

(a) Presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person’s handwriting and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;

 (b) Admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence;

 (c) In a case falling under clause (i), also presume, unless the contrary is proved, the truth of the contents of such document

40. Suspension of operation of this Act –

(1) If the Central Government is satisfied that circumstances have arisen rendering it necessary that any permission granted or restriction imposed by this Act should cease to be granted or imposed, or if it considers necessary or expedient so to do in public interest, the Central Government may, by notification, suspend or relax to such extent either indefinitely or for such period as may be notified, the operation of all or any of the provisions of this Act.

(2) Where the operation of any provision of this Act has under sub-section (1) been suspended or relaxed indefinitely, such suspension or relaxation may, at any time while this Act remains in force, be removed by the Central Government by notification.

(3) Every notification issued under this section shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification or both Houses agree that the notification should not be issued, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification.

41. Power of Central Government to give directions –

For the purposes of this Act, the Central Government may, from time to time, give to the Reserve Bank such general or special directions as it thinks fit and the Reserve Bank shall, in the discharge of its functions under this Act, comply with any such directions.

42. Contravention by companies –

(1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made there under is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:

 Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention.

(2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made there under has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

Explanation.- For the purposes of this section-

(i) “Company” means any body corporate and includes a firm or other association of individuals; and (ii) “Director”, in relation to a firm, means a partner in the firm.

43. Death or insolvency in certain cases –

Any right, obligation, liability, proceedings or appeal arising in relation to the provisions of section 13 shall not abate by reason of death or insolvency of the person liable under that section and upon such death or insolvency such rights and obligations shall devolve on the legal representative of such person or the official receiver or the official assignee, as the case may be:

 Provided that a legal representative of the deceased shall be liable only to the extent of the inheritance or estate of the deceased.

44. Bar of legal proceedings –

No suit, prosecution or other legal proceedings shall lie against the Central Government or the Reserve Bank or any officer of that Government or of the Reserve Bank or any other person exercising any power or discharging any functions or performing any duties under this Act, for anything in good faith done or intended to be done under this Act or any rule, regulation, notification, direction or order made there under.

45. Removal of difficulties –

(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, do anything not inconsistent with the provisions of this Act for the purpose of removing the difficulty:

Provided that no such order shall be made under this section after the expiry of two years from the commencement of this Act.

 (2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.

46. Power to make rules –

(1) The Central Government may, by notification, make rules to carry out the provisions of this Act.

 (2) Without prejudice to the generality of the foregoing power, such rules may provide for,-

 (a) The imposition of reasonable restrictions on current account transactions under section 5;

 (b) The manner in which the contravention may be compounded under sub-section (1) of section 15;

(c) The manner of holding an inquiry by the Adjudicating Authorities under sub-section (1) of section 16;

(d) The form of appeal and fee for filing such appeal under sections 17 and 19;

 (e) The salary and allowances payable to and the other terms and conditions of service of the Chairperson and other Members of the Appellate Tribunal and the Special Director (Appeals) under section 23;

 (f) The salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and the Office of the Special Director (Appeals) under sub-section (3) of section 27;

 (g) The additional matters in respect of which the Appellate Tribunal and the Special Director (Appeals) may exercise the powers of a civil court under clause (i) of sub-section (2) of section 28;

 (h) The authority or person and the manner in which any documents may be authenticated under clause (ii) of section 39; and

(i) Any other matter which is required to be, or may be prescribed

47. Power to make regulations –

(1) Reserve Bank may, by notification, make regulations, to carry out the provisions of this Act and the rules made there under :

 (2) Without prejudice to the generality of the foregoing power, such regulations may provide for,-

 (a) The permissible classes of capital account transactions, the limits of admissibility of foreign exchange for such transactions, and the prohibition, restriction or regulation of certain capital account transactions under section 6;

(b) The manner and the form in which the declaration is to be furnished under clause (a) of sub-section (1) of section 7;

 (c) The period within which and the manner of repatriation of foreign exchange under section 8;

(d) The limit up to which any person may possess foreign currency or foreign coins under clause (a) of section 9;

 (e) The class of persons and the limit up to which foreign currency account may be held or operated under clause (b) of section 9;

 (f) The limit up to which foreign exchange acquired may be exempted under clause (d) of section 9;

 (g) The limit up to which foreign exchange acquired may be retained under clause (e) of section 9;

 (h) Any other matter which is required to be, or may be, specified.

48. Rules and regulations to be laid before Parliament –

Every rule and regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.

49. Repeal and saving – 

(1) The Foreign Exchange Regulation Act, 1973 (46 of 1973) is hereby repealed and the Appellate Board constituted under sub-section (1) of section 52 of the said Act (hereinafter referred to as the repealed Act) shall stand dissolved.

(2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office as such immediately before such date shall vacate their respective offices and no such Chairman or other person shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service.

 (3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 5 1 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act.

(4) Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed.

(5) Notwithstanding such repeal,-

(a) Anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorization or exemption granted or any document or instrument executed or any direction given under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;

 (b) Any appeal preferred to the Appellate Board under sub-section (2) of section 52 of the repealed Act but not disposed of before the commencement of this Act shall stand transferred to and shall be disposed of by the Appellate Tribunal constituted under this Act;

 (c) Every appeal from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of section 52 of the repealed Act shall, if not filed before the commencement of this Act, be filed before the High Court within a period of sixty days of such commencement:

Provided that the High Court may entertain such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period.

(6) Save as otherwise provided in sub-section (3), the mention of particular matters in sub-sections (2), (4) and (5) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal.

Bydeb

The Foreign Trade (Development and Regulation) Act,1992

Chapter I – Preliminary

1. Short title and commencement. —

ACT NO. 22 OF 1992.

[7th August, 1992.]

An Act to provide for the development and regulation of foreign trade by facilitating imports into, a, A augmenting exports from, India and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Forty-third Year of the Republic of India as follows: –

(1) This Act may be called the Foreign Trade (Development and Regulation) Act 1992.

 (2) Sections 11 to 14 shall come into force at once and the remaining provisions of this Act shall be deemed to have come into fore on the 19th day of June, 1992.

2. Definitions – In this Act, unless the context otherwise requires, –

(a) “Adjudicating Authority” means the authority specified in, or under, state sub section (1) of section 15;

(b) “Appellate Authority” means the authority specified in, or under, state sub section (1) of section 15;

(c) “Conveyance” means any vehicle, vessel, aircraft of any other means of transport including any animal:

(d) “Director General” means the Director General of Foreign Trade appointed under section 6;

 (e) “Import” and “export” means respectively bringing into, or taking out of, India any goods by land , sea or air;

 (f) “Importer- exporter Code Number” means the Code Number granted under section 7;

(g) “Licence” means a licence to import or export and includes a customs clearance permit and any other permission issued or granted under this Act:

 (h) “Order” means any Order made by the Central Government under section 3: and

(i)            “Prescribed’ means prescribed by rules made under this Act.

Chapter II – Power of Central Government to make orders and announce export and import policy

3. Powers to make provisions relating to imports and exports.—

(1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports.

(2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting , restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any , as may be made by or under the Order, the import or export of goods.

(3) All goods to which any Order under sub section (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly.

Chapter III – Importer exporter code number and licence

4. Importer exporter Code Number. —

No person shall make any import or export except under an Importer exporter Code Number granted by the Director General or the officer authorised by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General.

5. Suspension and cancellation of Importer Exporter Code Number.—

(1) Where –

(a) Any person has contravened any law relating to Central excise or customs or foreign exchange or has committed any other economic offence under any other law for the time being in force as may be specified by the Central Government by notification in the Official Gazette, or

(b) The Director General has reason to believe that any person has made an export or import in a manner gravely prejudicial to the trade relations of India with any foreign country or to the interests of other person engaged in imports or exports or has brought disrepute to the credit or the goods of the country, the Director General may call for the record or any other information from that person and may, after giving to that person a notice in writing informing him of the grounds on which it is proposed to suspend or cancel the Importer exporter Code Number and giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice and, if that person so desires, of being heard, suspend for a period, as may be specified in the order, or cancel the Importer exporter Code Number granted to that person.

(2) Where any Importer exporter Code Number granted to a person has been suspended or cancelled under sub section (1), that person shall not be entitled to import or export any good except under a special licence, granted, in such manner and subject to such conditions as may be prescribed, by the Director General to that person.

 6. Issue, suspension and cancellation of licence.—

(1) The Central Government may levy fees, subject to such exceptions, in respect of such persons or class of persons making an application for licence of in respect of any licence granted or renewed in such manner as may be prescribed.

(2) The Director General or an officer authorised by him may, on an application and after making such inquiry as he may think fit, grant or renew or refuse to grant or renew a licence to import or export such class or classes of goods as may be prescribed, after recording in writing his reasons for such refusal.

(3) A licence granted or renewed under this section shall – (a) Be in such form as may be prescribed;

(b) Be valid for such period as may be specified therein; and

(c) Be subject to such terms , conditions and restrictions as may be prescribed or as specified in the licence with reference to the terms, conditions and restrictions so prescribed.

(4) The Director General or the officer authorised under sub section (2) may, subject to such conditions as may be prescribed, for good and sufficient reasons, to be recorded in writing, suspend or cancel any licence granted under this Act:

 Provided that no such suspension or cancellation shall be made except after giving the holder of the licence a reasonable opportunity of being heard.

 (5) AN appeal against an order refusing to grant, or renew or suspending or canceling, a licence shall lie in like manner as an appeal against an order would lie under section 15.

Chapter IV – Search, Seizure, Penalty and Confiscation

7. Power relating to search and seizure. —

(1) The Central Government may by notification in the Official Gazette, authorise any person for the purposes of exercising such powers with respect to entering such premises and searching , inspecting and seizing of such goods, documents, things and conveyances, subject to such requirements and conditions, as may be prescribed.

 (2) The provisions of the Code of Criminal Procedure, 1973, (2 of 1974) relating to searches and seizures shall, so for as may be , apply to every search and seizure made under this section.

8. Contravention of provisions of this Act, rules, orders and export and import policy. –

(1) No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made there under and the export and import policy for the time being in force.

(2) Where any person makes or abets or attempts to make any export or import in contravention of any provision of this Act or any rules or orders made thereunder or the export and import policy, he hall be liable to a penalty not exceeding one thousand rupees of five time the value of the goods in respect of which any contravention is made or attempted to be made, whichever is more.

(3) Where any person, on a notice to him by the Adjudicating Authority, admits any contravention, the Adjudication Authority may, in such class or classes of cases and in such manner as may be prescribed, determine , by way of settlement , an amount to be paid by that person.

(4) A penalty imposed under this Act may, if it is not paid, be recovered as

an arrears of land revenue and the Importer – exporter Code Number of the person concerned, may, on failure to pay the penalty by him, be suspended by the Adjudicating Authority till the penalty is paid.

(5) Where any contravention of any provision of this Act or any rules or orders made there under or the export and import policy has been , is being, or is attempted to be, made, the goods together with any package, covering or receptacle and any conveyances shall, subject to such requirements and conditions as may be prescribed, be liable to confiscation by the Adjudicating Authority.

(6) The goods or the conveyance confiscated under sub-section (5) may be released by the Adjudicating Authority, in such manner and subject to such conditions as may be prescribed, on payment by the person concerned of the redemption charges equivalent to the market value of the goods or conveyance, as the case may be.

9. Penalty or confiscation not to interfere with other punishment. —

No penalty imposed or confiscation made under this Act shall prevent the imposition of any other punishment to which the person affected thereby is liable under any other law for the time being in force.

10. Adjudicating Authority. —

Any penalty may be imposed or any confiscation may be adjudged under this Act by the Director General or, subject to such limits as may by specified , by such other officer as the Central Government may , by notification in the Official Gazette, authorise in this behalf.

11. Giving of opportunity to the owner of the goods etc. —

No order imposing a penalty or of adjudication of confiscation shall be made unless the owner of the goods or conveyance, or other person concerned , has been given a notice in writing –

 (a) Informing him of the grounds on which it is proposed to impose a penalty or to confiscate such goods or conveyance; and

(b) To make a representation in writing within such reasonable time as may be specified in the notice against the imposition of penalty or confiscation mentioned therein, and, if he so desires, of being heard in the matter.

Chapter V – Appeal and Revision

12. Appeal —

(1) Any person aggrieved by any decision or order made by the Adjudication Authority under this Act may prefer an appeal,-

(a) Where the decision or order has been made by the Director General, to the Central Government ;

 (b) Where the decision or order has been made by an officer subordinate to the Director General, to the Director General or to any officer superior to the Adjudicating Authority authorised by the Director General to hear the appeal, within a period of forty- five days from the date on which the decision or order is served on such person :

Provided that the Appellate Authority may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the aforesaid period, allow such appeal to be preferred within a further period of thirty days:

Provided further that in the case of an appeal against a decision or order imposing a penalty or redemption charges, no such appeal shall be entertained unless the amount of the penalty or redemption charges has been deposited by the appellant:

Provided also that, where the Appellate Authority is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, at its discretion, dispense with such deposit either unconditionally or subject to such conditions as it may impose.

 (2) The Appellate Authority may, after giving to the appellant a reasonable opportunity of being heard, if he so desires, and after making such further inquiries, if any, as it may consider necessary, make such orders as it thinks fit, confirming, modifying or reversing the decision or order appealed against, or may send back the case with such directions, as it may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary:

Provided that an order enhancing or imposing a penalty or redemption charges or confiscating goods of a greater value shall not be made under this section unless the appellant has been given an opportunity of making a representation, and, if he so desires, of being heard in his defence.

(3) The order made in appeal by the Appellate Authority shall be final.

13. Revision. —

The Central Government, in the case of any decision or order, not being a decision or order made in an appeal, made by the Director General, or the Director General in the case of any decision or order made by any officer subordinate to him, may on its or his own motion or otherwise, call for and examine the records of any proceeding in which a decision or an order imposing a penalty or redemption charges or adjudicating confiscation has been made and against which no appeal has been preferred, for the purpose of satisfying it self or himself, as the case may be, as to the correctness, legality or propriety of such decision or order and made such orders thereon as may be deemed fit:

Provided that no decision or order shall be varied under this section so as to prejudicially affect any person unless such person —

(a) Has, within a period of two years form the date of such decision or order, received a notice to show cause why such decision or order shall not be varied, and

(b) Has been given a reasonable opportunity of making representation and, if he so desires, of being heard in his defence.

14. Powers of Adjudicating and other Authorities. —

(1) Every authority making any adjudication or hearing any appeal or exercising any powers of revision under this Act shall have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:–

(a) Summoning and enforcing the attendance of witnesses;

(b) Requiring the discovery and production of any document:

(c) Requisitioning any public record or copy thereof from any court or office:

 (d) Receiving evidence on affidavits; and

(e) Issuing commissions for the examination of witnesses or documents

(2) Every authority making any adjudication or hearing any appeal or exercising any powers of revision under this Act shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974).

(3) Every authority making any adjudication or hearing any appeal or

exercising any powers of revision under this Act shall have the power to make such orders of an interim nature as it may think fit and may also, for sufficient cause, order the stay of operation of any decision or order .

 (4) Clerical or arithmetical mistakes in any decision or order or errors arising therein from any accidental slip or omission may at any time be corrected by the authority by which the decision or order was made, either on its own motion or on the application of any of the parties:

 Provided that where any correction proposed to be made under this sub section will have the effect of prejudicially affecting any person, no such correction shall be made except after giving to that person a reasonable opportunity of making a representation in the matter and no such correction shall be made after the expiry of two years from the date on which such decision or order was made.

Chapter VI – Miscellaneous

15. Protection of action taken in good faith. —

No order made or deemed to have been made under this Act shall be called in question in any court , and no suit, prosecution or order legal proceeding shall lie against any person for anything in good faith done or intended to be done under this Act or any order made or deemed to have made there under.

16. Power to make rules.—

(1) The Central Government may , by notification in the Official Gazette, make rules for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provided for all or any of the following matters, namely:-

(a) The manner in which and the conditions subject to which a special licence may be issued under sub-section (2) of section 8;

(b) The exception subject to which and the person or class of persons in respect of whom fees may be levied and the manner in which a licence may be granted or renewed under sub-section (1)of section 9;

(c) The class or classes of goods for which a licence may be granted under sub section (2) of section 9;

(d) The form in which and the terms, conditions and restrictions subject to which licence may be granted under sub section (3) of section 9;

(e) The conditions subject to which a licence may be suspended or cancelled under sub section (4) of section 9;

(f) The premises, good, documents, things and conveyances in respect of which and the requirements and conditions subject to which power of entry, search, inspection and seizure may be exercised under sub-section (1) of section 10;

(g) The class or classes of cases for which and the manner in which an amount, by way of settlement, may be determined under subsection 3 of section 11;

(h) The requirements and conditions subject to which goods and conveyances shall be liable to confiscation under sub section (5) of section 11;

(i) The manner in which and the conditions subject to which goods and conveyances may be released on payment of redemption charges under sub section (6) of section 11; and

(j) Any other matter which is to be, or may be, prescribed, or in respect of which provision is to be, or may be, made by rules.

(3) Every rue and every Order made by the Central Government under this Act shall be laid, as soon as may be after it is made , before each House of Parliament, while it is in session , for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or the Order or both Houses agree that the rule or the Order should not be made , the rule or the Order, as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be: so, however, that any such modification or annulment shall be without prejudice to the validity of any thing previously done under that rule or the Order

17. Repeal and savings —

(1) The Imports and Export (Control) Act, 1947 (18 of 1947) and the Foreign Trade (Development and Regulation ) Ordinance, 1992 (Ord. 11 of 1992) are hereby repealed.

(2) the repeal of the Imports and Exports (Control ) Act 1947 (18 of 1947), shall, however, not affect, –

  (a) The previous operation of the Act so repealed or anything duly done or suffered there under; or

(b) Any right, privilege, obligation or liability acquired, accrued or incurred under the Act so repealed; or

 (c) Any penalty, confiscation or punishment incurred in respect of any contravention under the Act so repealed; or

 (d) Any proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, confiscation or punishment as aforesaid, and any such proceeding or remedy may be instituted, continued or enforced, and any such penalty, confiscation or punishment may be imposed or made as if that Act had not been repealed.

 (3) Notwithstanding the repeal of the Foreign Trade (Development and Regulation ) Ordinance, 1992 (Ord. 11 of 1992), anything done or taken under the corresponding provisions of this Act

 RULES

1. Short title and commencement. —

THE FOREIGN TRADE (REGULATION ) RULES, 1993

In exercise of the powers conferred by section 19 of the Foreign Trade (Development and Regulation ) Act 1992 (22 of 1992), the Central Government here by makes the following rules, namely:-

 1. Short title and commencement. — (1) These rules may be called the Foreign Trade (Regulation ) Rules, 1993.

(2) They shall come into force on the date of their publication in the Official gazette.

2. Definitions.—

In these rules unless the context otherwise requires,-

(a) “Act” means the Foreign trade (Development and Regulation ) Act 1992 (22of 1992);

 (b) “Charitable purpose” includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility;

(c) “Importer ” or “exporter” means a person who imports or exports goods and holds a valid Importer exporter Code Number granted under section 7;

 (d) “Licensing authority” means an authority authorised by the Director General under sub section (2) of section 9 to grant or renew a licence under these rules;

 (e) “Policy” means export and import Policy formulated and announced by the Central Government under section 5;

 (f) “Schedule” means a Schedule appended to these rules;

(g) “Schedule” means a section of the Act;

(h) “Special licence” means a licence granted under sub section (2) of section 8;

 (i) “Value” has the meaning assigned to it in clause (41) of section 2 of the Customs Act, 1962 (52 of 1962);

 (j) Words and expression used in these rules and not defined but defined in the Act shall have the meanings respectively assigned to them in the Act.

3. Grant of special licence. —

 (1) Where the Importer exporter Code Number granted to any person has been suspended or cancelled under sub section (1) of section 8, the Director General may, having regard to the following factors, grant to him a special licence, namely;-

 (1) That the denial of a special licence is likely to affect the Foreign Trade of India adversely; or

 (2) That the suspension or cancellation of the Importer exporter Code Number is likely to lead to non fulfillment of any obligation by India under any international agreement;

 (3) The special licence granted to any person under sub rule (1) shall be non transferable.

4. Application for grant of licences. —

A person may make an application for the grant of a licence to import or export goods in accordance with the provisions of the Policy or an Order made section 3.

 5. Fee. –

 (1) Every application for a licence to import shall be accompanied by the fee specified in the Schedule.

 (2) The mode of deposit of fee shall be as specified in the Schedule.

(3) No fee shall be payable in respect of any application made by

 (a) The Central Government, a State Government or any department or any office of the Government;

(b) Any local authority for the bonafide import of goods required by it for official use;

 (c) Any institution set up for educational, charitable or missionary purposes for the import of goods required for its use;

 (d) An applicant for the import of any goods (other than a vehicle) if the import of the goods is for his personal use which is not connected with trade or manufacture.

 (4) The fee once received will not be refunded except in the following circumstances, namely:–

 (i) Where the fee has been deposited in excess of the specified scale of fee; or

 (ii) Where the fee has been deposited but no application has been made; or

 (iii) Where the fee has been deposited in error but the applicant is exempt from payment of fee

6. Conditions of licence. –

(1) It shall be deemed to be a condition of every licence for export that –

 (i) No person shall transfer or acquire by transfer any licence issued by the licensing issued by the licensing authority except in accordance with the provisions of the Policy;

 (ii) The goods for the export of which the licence is granted shall be the property of the licensee at the time of the export.

 (2) The licensing authority may issue a licence for import subject to one or more of the following conditions, namely:–

 (a) That the goods covered by the licence shall not be disposed of except in accordance with the provisions of the Policy or in the manner specified by the licensing authority in the licence;

 (b) That the applicant for a licence shall execute a bond for complying with the terms and conditions of the licence.

 (3) It shall be deemed to be a condition of every licence for import that –

(a) No person shall transfer or acquire by transfer or acquire by transfer any licence issued by the licensing authority except in accordance with the provisions of the Polity.

 (b) The goods for the import of which a licence is granted shall be the property of the licensee at the time of import and upto the time of clearance through Customs;

 (c) The goods for the import of which a licence is granted shall be new goods, unless otherwise stated in the licence;

(d) That the goods covered by the licence for import shall not be exported without the written permission of the Director General.

 (4) Any person importing goods from the United States of America in accordance with the terms of the Indo – US Memorandum of Understanding on technology Transfer shall also comply with all the conditions and assurances specified in the Import Certificate issued in terms of such Memorandum, and such other assurances given by the person importing those terms of such Memorandum, and such other assurances given by the person importing those goods to the Government of the United States of America through the Government of India

7. Refusal of licence. —

(1) The Director General or the licensing authority may for reasons to be recorded in writing, refuse to grant or renew a licence if—

 (a) The applicant has contravened any law relating to customs or foreign exchange;

 (b) The application for the licence does not substantially conform to any provision of these rules;

 (c) The application or any document used in support thereof contains any false or fraudulent or misleading statement;

 (d) It has been decided by the Central government to canalise the export or import of goods and distribution thereof, as the case may be, through special or specialised agencies;

 (e) Any action against the applicant is for the time being pending under the Act or rules any Orders made thereunder;

(f) The applicant is or was a managing partner in a partnership firm, or is or was a Director of a private limited company, having controlling interest, against which any action is for the time being pending under the Act or rules and Orders made thereunder;

 (g) The applicant fails to pay any penalty imposed on him under the Act;

 (h) The applicant has tampered with a licence.

 (i) The applicant or any agent or employee of the applicant with his consent has been a party to any corrupt or fraudulent practice for the purposes of obtaining any other licence;

(j) The applicant is not eligible for a licence in accordance with any provision of the policy;

(k) The applicant fails to produce any documents called for by the Director General or the licensing authority;

(l) In the case of a licence for import, no foreign exchange is available for the purpose;

 (m) The application has been signed by a person other than a person duly authorised by the applicant under the provisions of the Policy;

(n) The applicant has attempted to obtain or has obtained cash compensatory support, duty drawback, cash assistance benefits allowed to Registered exporters or any other similar benefits from the Central Government or any agency authorised by the Central Government in relation to exports made by him on the basis of any false , fraudulent or misleading statement or any document which is false or fabricated or tampered with.

 (2) The refusal of a licence under sub rule (1) shall be without prejudice to any other action that may be taken against an applicant by the licensing authority under the Act.

8. Amendment of licence. —

The licensing authority may of its own motion or on an application by the licensee, amend any licence in such manner as may be necessary or to rectify any error or omission in the licence.

9. Suspension of a licence. —

(1) The Director General or the licensing authority may by order in writing, suspend the operation of a licence granted to –

 (a) Any person, if an order of detention has been made against such person under the provisions of the Conservation of foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 19740; or

(b) A partnership firm or a private limited company, if the person referred

to in clause (a) is a partner or a whole time director or managing director, as the case may be, of such firm or company:

Provided that the order of suspension shall cease to have effect in respect of the aforesaid person or, as the case may be, the partnership firm or company, when the order of detention made against such person,- (i) Being an order of detention to which the provisions of section 9 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) do not apply, has been revoked on the report of Advisory Board under section 8 of that Act or before receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or

 (ii) Being an order of detention to which the provisions of section 9 of the Conservation of foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) apply , has been revoked on the report of the Advisory Board under section 8 read with sub section (2) of section 9 of that Act or before receipt of such report;

 (iii) Has been set aside by a court of competent jurisdiction.

 (2) The Director General or the licensing authority may by an order in writing suspend the operation of any licence granted under these rules, where proceedings for cancellation of such licence have been initiated under rule 10.

10. Cancellation of the licence. —

The Director General or the licensing authority may, by an order in writing, cancel any licence granted under these rules, if –

 (a) The licence has been obtained by fraud , suppression of facts or misrepresentation; or

 (b) The licensee has committed a breach of any of the conditions of the licensee; or

 (c) The licensee has tampered with the licence in any manner; or

 (d) The licensee has contravened any law relating to customs or foreign exchange or the rules and regulations relating thereto.

11. Declaration as to value and quality of imported goods. —

On the importation into, or exportation out of, any customs port of any goods, whether liable to duty or not, the owner of such goods shall, in the bill of entry or the shipping bill or any other documents prescribed under the Customs Act, 1962, state the value, quality and description of such goods to the best of his knowledge and belief and in case of exportation of goods, certify that the quality and specification of the goods as stated in those documents are in accordance with the terms of the export contract entered into with the buyer or consignee in pursuance of which the goods are being exported and shall subscribe to a declaration of the truth of such statement at the foot of such bill of entry or shipping bill or any other documents.

12. Declaration as to importer exporter code number. —

On the importation into, or exportation out of, any customs port shall , in the bill of entry or shipping bill or, as the case may be , in any other documents prescribed by rules made under the Act or the Customs Act, 1962 (52 of 1962) , state the importer exporter code number allotted to him by the Competent Authority.

13. Utilisation of imported goods. —

(1) No person shall use any imported goods allotted to him by the State Trading Corporation of India or any other agency recognised by the Central Government in a manner and for the purpose, otherwise than as declared by him in his application for such allotment or in any document submitted by him in support of such application.

 (2) No person shall dispose of any goods imported by him against a licence except in accordance with the terms and conditions of such licence.

14. Prohibition regarding making, signing of any declaration, statement or documents. —

 (1) No person shall make, sign or use or cause to be make, signed or used any declaration, statement or document for the purposes of obtaining a licence or importing any goods knowing or having reason to believe that such declaration, statement or document is false in any material particular.

 (2) No person shall employ any corrupt or fraudulent practice for the purposes of obtaining any licence of importing or exporting any goods;

 15. Power to enter premises and inspect, search and seize goods, documents, things and conveyances. —

 (1) Any person authorised by the Central Government under sub section (1)of section 10 (hereinafter called “the authorised person”) may, as any reasonable time, enter any premises in which –

 (i) Any imported goods or materials which are liable to confiscation under the provisions of the Act; or

(ii) Any books of account or documents or things which, in his opinion, will be useful for or relevant to, any proceedings under the Act, are suspected to have been kept or concealed and may inspect such goods, materials, books of account, documents or things and may take such notes or extracts therefrom as he thinks fit.

(2) If the authorised person has reasons to believe that –

(i) Any imported goods or materials liable to confiscation under the Act; or

(ii) Any books of account or documents or things which , in his opinion, will be useful for, or relevant to , any proceedings under the Act, are secreted in any premises he may enter into and search such premises for such goods, materials, books of account, documents or things.

 (3) (a) If the authorised person has reason to believe that any imported goods or materials are liable to confiscation under the Act, he may seize such goods or materials together with the package, covering or receptable, if any, in which such goods or materials are found to have been mixed with any other goods or material:

 Provided that where it is not practicable to seize any such goods or materials, the authorised person may serve on the owner of the goods or materials an order that he shall not remove, part with or otherwise deal with the goods or materials except with the previous permission of the authorised person.

(b) Where any goods or materials are seized under clause (a) and no notice in respect thereof is given within six months of the seizure of the goods or materials, the goods or materials shall be returned to the person from whose possession they were seized:

Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Director General for a further period not exceeding six months.

 (c) The authorised person may seize any books of account or documents or things which in his opinion, will be useful for, or relevant to, any proceedings under the Act.

 (d) The person from whose custody any documents are seized under this sub rule, shall be entitled to make copies thereof or take extracts therefrom in the presence of the authorised person.

 (e) If any person legally entitled to the books of account or other documents or things seized under this sub rule objects, for any reason, to the retention by the authorised person of the books of account or the documents or things, he may move an application to the Central Government stating therein the reasons for such objection, request for the return of the books of account or documents or things.

(f) On receipt of the application under clause (e), the Central Government may, after giving the applicant an opportunity or being heard, pass such order as it may think fit.

 (g) Where any documents is produced or furnished by any person or has been seized form the custody or control of any person under the Act or has been received from any place outside India in the course of the investigation for any contravention referred to in section 11 by any person and such documents in tendered in evidence against the person by whom it is produced of from whom it was seized or against such person or any other person who is jointly proceeded against, the adjudicating authority, shall, notwithstanding anything to the contrary contained in any other law for the time being in force,–

(i) Presume, unless the contrary is proved , that the signature and every other part of such document which purports to be in the hand writing of any particular person of which the adjudicating, authority may reasonably assume to have been signed by or to be in the handwriting of any particular person, is under the person’s handwriting, and in the case of a document executed or attested, it was executed or attested by the person by whom it purports to have been so executed or attested;

 (ii) Admit the document evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence.

 (4) The authorised person , may, if he has reason to suspect that any conveyance or animal is being or is about to be used for the transportation of any imported goods or material which are liable to confiscation under the Act, and that by such transportation any provision of the Act has been, is being or is about to be contravened at any time, stop such conveyance or animal or in the case of aircraft, compel it to land, and –

 (a) Rummage and search the conveyance or any part thereof;

 (b) Examine and search any goods or material in the conveyance or on the animal;

 (c) If it becomes necessary to stop and conveyance or animal, he may use all lawful means for stopping it and where such means fail, the conveyance or animal may be fired upon, and where he is satisfied that it is necessary so to do to prevent the contravention of any provision of the Act or of the rules and orders made thereunder or the policy or condition of any licence, he may seize such conveyance or animal:

 Explanation.—Any reference in this rule to a conveyance shall, unless the context otherwise requires, be construed as including a reference to an aircraft, vehicle or vessel.

16. Settlement . —

(1) the adjudication authority may determine the amount of settlement to be paid by the person to whom a notice has been issued and who has opted for settlement, and has admitted the contravention specified in the notice, in the following cases, namely:–

 (i) Where it is of the opinion that the contravention of any provision of the Act or these rules or the policy has been made without mens rea or without willful mistake or without suppression of facts, or without any collusion or without fraud and forgery, or without an intent to cause loss of foreign exchange; or

(ii) Where the person importing the goods has not met the requirements of the actual user conditions as specified in the policy and has not misutilised the said imported goods; or

(iii) Where the person importing the goods has not fulfilled the export obligation and has not misutilised the said imported goods.

(2) Where a person has opted for settlement under sub-rule (1), the settlement made by the adjudicating authority shall be final.

17.Confiscation and redemption.—

(1) Any imported goods or materials in respect of which –

(a) Any condition of the licence , or letter of authority under which they were imported, relating to their utilisation or distribution ; or

(b) Any condition, relating to their utilisation or distribution, subject to which they were received from or through an agency recognised by the Central Government; or

 (c) Any condition imposed under the policy with regard to the sale disposal of such goods or materials, has been, is being, or is attempted to be , contravened, shall together with any package, covering or receptacle in which such goods are found, be liable to be confiscated by the adjudicating authority, and where such goods or materials are so mixed with any other goods or materials that they cannot be readily separated, such other goods or materials shall also be liable to be so confiscated:

 Provided that where it is established to the satisfaction of the adjudicating authority that any goods or materials which are liable to confiscation under this rule, had been imported for personal use, and not for any trade or industry, such goods, or materials shall not be ordered to be confiscated.

(2) The adjudicating authority may permit the redemption of the confiscated goods or materials upon payment of redemption charges equivalent to the market value of such goods or materials.

 18. Confiscation of conveyance. —

(1) Any conveyance or animal which has been, is being, or is attempted to be used, for the transport of any goods or materials that are imported and which are liable to confiscation under rule 17, shall be liable to be confiscated by the adjudicating authority unless the owner of the conveyance or animal proves that it was, is being, or is about to be so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance or animal and that each of them had taken all reasonable precautions against such use.

(2) The adjudicating authority shall permit redemption of the confiscated conveyance or animal used for the transport of goods or passengers for hire upon payment of redemption charges equivalent to the market value of such conveyance or animal

 ( See rule 5 )

The following fee shall be leviable in respect of the application for an import licence, etc.:-

SCALE OF FEE

ParticularsAmount of fee
(1)(2)
1. Where the value of goods specified in application does not exceed rupees fifty thousand.2. Where the value of the goods specified in the application exceeds rupees fifty thousand, but does not exceed rupees one crore.3. Where the value of the goods specified in the application exceeds rupees one on crore. 4. Application for grant of duplicate licence. 5. In case where import licence and other correspondence are required by speed post. 6. Application for issue of an identity card. 7.Application for issue of duplicate identity card in the event of loss of original card. 8.Extension of the period of shipment of an import licence.9. Application for grant of split up licneces.Rupees two hundredRupees two per thousand or part thereof subject to a minimum of rupees two hundred.Rupees two per thousand or part thereof subject to a maximum of rupees one lakh and fifty thousand. Rupees two hundred Rupees two hundred Rupees two hundred Rupees one hundred Rupees two hundredRupees on thousand per split up licence