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

Zenith Pharma Pvt. Ltd. contravened a FEMA provision involving a sum that is quantifiable. The Adjudicating Authority imposes a penalty. Which statement most accurately states the FEMA position on the quantum and the appeal route?

The penalty can extend to three times the sum involved where the amount is quantifiable, and the aggrieved person first appeals to the Special Director (Appeals), with a further appeal to the Appellate Tribunal. A fixed penalty or direct appeal to higher courts is not the FEMA scheme.

  1. APenalty may be up to three times the sum involved, where quantifiable; appeal lies to the Special Director (Appeals) and then to the Appellate TribunalCorrect
  2. BPenalty is always a fixed Rs. 10,000 and no appeal lies
  3. CPenalty may be up to ten times the sum involved and appeal lies directly to the Supreme Court
  4. DPenalty is limited to the sum involved and appeal lies to the High Court first

Explanation

For a quantifiable contravention, FEMA provides a penalty up to three times the sum involved. An aggrieved person appeals to the Special Director (Appeals) and then to the Appellate Tribunal for Foreign Exchange. The other options misstate the multiple and the appeal hierarchy.

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