FTDR Penalties, Adjudication and Appeals

In one line

One section, section 11, carries the whole penal machinery of the FTDR Act. It states the obligation, fixes the penalty at not less than ten thousand rupees and not more than five times the value, whichever is more, provides for settlement on admission, gives four modes of recovery, allows confiscation and redemption, and permits the suspension of the code for non-payment. Sections 13 to 17 supply the adjudicating and appellate machinery, section 18 protects action taken in good faith, and section 20 repeals the 1947 Act with savings.

Section 11: the obligation and the penalty

Section 11(1) states the obligation in the widest terms. No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and Orders made thereunder and the foreign trade policy for the time being in force. Four sources of obligation are named, and a breach of any of them is a contravention: the Act, the rules, the Orders, and the policy.

Section 11(2) is the general penalty. Where any person makes or abets or attempts to make any export or import in contravention of any provision of this Act, any rules or Orders made under it, or the foreign trade policy, he shall be liable to a penalty of not less than ten thousand rupees and not more than five times the value of the goods or services or technology in respect of which the contravention is made or attempted, whichever is more.

Read the last four words carefully, because they are commonly misread. "Whichever is more" governs the maximum, not the minimum. The floor is ten thousand rupees. The ceiling is the greater of ten thousand rupees and five times the value. So on a consignment worth one thousand rupees, five times the value is five thousand, which is less than the floor, and the penalty is ten thousand rupees; on a consignment worth ten lakh, the ceiling is fifty lakh.

Note also that abetment and attempt are within the sub-section. A person who abets an unlawful import, or attempts one, is liable on the same scale as one who completes it, which is why the section reaches customs house agents and intermediaries.

Section 11(3) penalises false documents on the same scale. Where any person signs or uses, or causes to be made, signed or used, any declaration, statement or document submitted to the Director General or an authorised officer, knowing or having reason to believe that it is forged or tampered with or false in any material particular, he is liable to a penalty of not less than ten thousand rupees or more than five times the value of the goods, services or technology in respect of which it was submitted, whichever is more.