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

Under FEMA, an authorised person receives a contravention matter involving Rs 10 lakh of unauthorised foreign exchange dealing. Which statement correctly reflects the penalty position under section 13 of FEMA for a contravention where the sum is quantifiable?

Where the amount involved in a FEMA contravention is quantifiable, the adjudicating authority may impose a penalty up to three times that amount. If it is not quantifiable, the penalty is up to Rs 2 lakh. FEMA is essentially civil, so the penalty is monetary.

  1. APenalty up to three times the sum involved in the contraventionCorrect
  2. BPenalty only of imprisonment up to ten years
  3. CPenalty of a fixed Rs 1,000 irrespective of the amount
  4. DNo penalty; only a warning can be issued

Explanation

Section 13 provides that where the amount involved in a contravention is quantifiable, the penalty can be up to thrice that sum; where it is not quantifiable, up to Rs 2 lakh, with a further daily penalty for continuing contravention. FEMA is a civil law, so imprisonment is not the primary penalty, making B wrong.

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