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CA Intermediate · Corporate and Other Laws · The Foreign Exchange Management Act, 1999

Sunrise Exports Ltd. contravened a FEMA provision involving a sum of Rs 10 lakh that is quantifiable. The Adjudicating Authority is considering the penalty. Which statement is correct under FEMA, 1999 about the penalty for a contravention where the amount is quantifiable?

Where the sum involved in a FEMA contravention is quantifiable, the penalty can extend up to three times that sum, so the penalty could reach Rs 30 lakh here. If the amount is not quantifiable, the penalty is up to Rs 2 lakh instead.

  1. APenalty up to three times the sum involved in the contraventionCorrect
  2. BPenalty is a fixed Rs 2,000 irrespective of the sum involved
  3. CPenalty up to ten times the sum involved in the contravention
  4. DPenalty equal to the sum involved only, with no further amount

Explanation

Under section 13, where the amount involved in the contravention is quantifiable, the penalty may extend up to three times the sum involved. Where the amount is not quantifiable, the penalty may extend to Rs 2 lakh, with a further daily penalty up to Rs 5,000 for continuing contraventions. Ten times and a fixed Rs 2,000 are not the statutory amounts, and the penalty is not limited to the sum involved.

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