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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

Sunrise Textiles Ltd. contravenes a FEMA direction where the amount involved cannot be quantified. The contravention continues for 11 days in all (day 1 to day 11). Under section 13(1), what is the maximum total penalty the Adjudicating Authority can impose?

The maximum is ₹2,00,000 plus ₹50,000, totalling ₹2,50,000. Section 13(1) allows up to ₹2 lakh where the amount is not quantifiable, and a further penalty up to ₹5,000 for every day after the first day, which here means 10 days.

  1. A₹2,00,000 plus ₹50,000Correct
  2. B₹2,00,000 plus ₹55,000
  3. C₹2,05,000 plus ₹5,000
  4. D₹2,00,000 only, as continuing penalties do not apply to unquantifiable amounts

Explanation

Up to ₹2 lakh applies for a non-quantifiable amount. The further penalty of up to ₹5,000 applies for every day after the first day, which is 10 days, giving ₹50,000. Total maximum is ₹2,50,000. Counting 11 days would wrongly give ₹55,000.

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