JUDGMENT N. Ravi Shankar, J. 1. This miscellaneous second appeal is filed under the provisions of the Foreign Exchange Regulation Act, 1973 (for short Act) questioning the appellate order dated 15.09.2008 passed in Appeal No. 206 of 2002 by the appellate tribunal for foreign exchange under the said Act. To state the question of law raised in this appeal, the circumstances which led to the filing of this appeal should be noted and they can be stated thus. The second appellant is the Managing Director of the first appellant which is KPR Tele-products Limited, Hyderabad. They remitted foreign exchange to the extent of Rs. 69,02,727/- equivalent to Sw. Francs 2,43,660/- to the account of a Swiss company namely M/s. Buss-Ag-Bassel, Switzerland for import of certain machinery called Ko-kneader plant for the purpose of their business for a total price of Sw. Francs 16,24,400/-. The above remittance of the amount equivalent to Sw. Francs 2,43,660/- constitutes 15% of the price and for the balance of 85%, the appellants arranged for a loan from the concerned branch of the Andhra Bank and the payments were to be made under a deferred payment guarantee. 2. Subsequently, the Andhra Bank did not release the above amounts as the first appellant allegedly failed to meet some conditions. It is stated that when the first appellant wrote to the above Switzerland company for refund of the advance taken by them for the above machinery, the latter informed the first appellant that the machinery was manufactured to its (first appellant) specifications and it had no market and consequently it cannot refund the advance and on the other hand, it demanded the appellants to pay the balance. 3. The net result of the above circumstances was that the appellants could not import the goods or machinery by using the foreign exchange provided to them for paying the 15% of the value of the machinery to the above Switzerland company as contemplated under Section 8(4) of the Act. 4. The version of the Enforcement Directorate is that the above acts of the appellants in remitting the above foreign exchange to a foreign company and failing to import goods and also failing to inform the authorities concerned about their failure to secure the goods would amount to contravention of the provisions of Section 8(3) and Section 8(4) of the Act to the extent of the value of Sw. Francs 2,43, 660/- and therefore the appellants are liable for penalty under Section 50 of the Act. 5. Accordingly, a show cause notice was issued, and after hearing the appellants, the Deputy Director of the Enforcement Directorate, Bangalore, by his order dated 24.09.2001, held that the first appellant being the company and the second appellant being its managing director were liable to pay penalty under Section 50 of the Act for the above violations and imposed a penalty of Rs. 3,00,000/-. This was confirmed by the appellate tribunal in the appeal of the appellants. 6. It may be noted that before the Deputy Director and the appellate tribunal, both the appellants took the plea that they were through out keen, ready and willing to import the machinery, but the Andhra Bank unjustifiably went back on its promise and did not provide the finance and therefore they could not import the machinery and in that process, they also lost the advance which they paid to the aforesaid Switzerland company. 7. Their plea was that they never had any intention to mis-utilize and make a wrongful gain from the foreign exchange provided to them and they could not utilize it for the purpose for which it was given to them only for the fault of the Andhra Bank which was beyond their control. Therefore, they pleaded that they cannot be penalized and consequently the impugned order is bad. Both the authorities below rejected the above pleas of the appellants. 8. Sri D.V. Sitarama Murthy, the learned senior counsel appearing for the appellants on the above admitted circumstances, argued that the fault lay with the Andhra Bank in not providing the finance and when the appellants paid the foreign exchange to the Switzerland company and took steps to recover the foreign exchange paid to the said company, that company refused to refund the advance also for the reasons already referred to supra and therefore the appellants cannot be said to have violated sub-sections (3) and (4) of Section 8. 9. In the above admitted circumstances, the question of law raised is whether the appellants can be said to have not used the foreign exchange for the purpose for which it was given to them though they admittedly paid it to the aforesaid Switzerland company and therefore not liable for any penalty. 10. 9. In the above admitted circumstances, the question of law raised is whether the appellants can be said to have not used the foreign exchange for the purpose for which it was given to them though they admittedly paid it to the aforesaid Switzerland company and therefore not liable for any penalty. 10. Sub-sections (3) and (4) of Section 8 of the Act which deal with restrictions on dealings in foreign exchange are relevant here and they read as follows. "Section 8(3): When any foreign exchange is acquired by any person, other than an authorized dealer or a money-changer, for any particular purpose or when any people has been permitted conditionally to acquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or, as the case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or the conditions cannot be complied with the said person shall, within a period of thirty days from the date on which he comes to know that such foreign exchange cannot be so used or the conditions cannot be complied with, sell the foreign exchange to an authorized dealer or to a moneychanger. (4): For the avoidance of doubt, it is hereby declared that where a person acquires foreign exchange for sending or bringing into India any gods but sends or brings no such goods or does not send or bring goods of a value representing the foreign exchange acquired, within no reasonable time or sends or brings any goods of a kind quality or quantity different from that specified by him at the time or acquisition of the foreign exchange, such persons shall, unless the contrary is proved, be presumed not to have been able to use the foreign exchange for the purpose for which he acquired it or, as the case may be, to have used the foreign exchange so acquired otherwise then for the purposes for which it was acquired." 11. It may be noted that it is sub-section (3) of Section 8 which mandates that when a person other than an authorized dealer or a money changer acquires foreign exchange for any particular purpose, then he has to use it only for that purpose and if he fails to use it, he has to inform the authorities concerned. Then sub-section (4) further clarifies what is meant by "not using a foreign exchange" when it is obtained by a person for importing goods and it says that even if he fails to import the goods, he will be held to have violated sub-section (3). The burden is imposed upon him to explain to prove the contrary and what is the significance of the expression "to prove the contrary" will be dealt with a little later. 12. It is true that the order of the Deputy Director would show that he has considered the plea of the appellants and concluded that the appellants have utilized the foreign exchange provided to them for paying the 15% of the price of the machinery as advance to the aforesaid Switzerland company and this finding is not disturbed by the appellate authority. 13. To the above extent, it can of-course be said that technically there is no misutilisation of the foreign exchange as contemplated under Section 8(3) of the Act. It should however be noted that because of the inability of the appellants to pay the balance of the price, the Switzerland company informed them that it cannot supply the machinery and it cannot also refund the advance. 14. Tine only defence of the appellants is that they were unable to pay the balance as the Andhra Bank went back on its promise of providing bank guarantee/deferred payments for the 85% of the price of the machinery without any sufficient cause and the Andhra Bank was at fault. 15. The learned counsel for the appellants also filed two sets of papers here. The first set deals with the correspondence of the first appellant with Andhra Bank, Sultan Bazar Branch, Hyderabad and the second set of papers pertains to the first appellant's correspondence with the Switzerland Company. The correspondence with Switzerland company would show that the appellants' plea as concluded by the authorities below that they paid the foreign exchange to that company can be accepted as true and this may not show misutilisation. The correspondence with Switzerland company would show that the appellants' plea as concluded by the authorities below that they paid the foreign exchange to that company can be accepted as true and this may not show misutilisation. That is not however the end of the matter. 16. The other set of papers which are the correspondence of the first appellant with Andhra Bank would show what went on between them regarding the loan for the 85% of the price of the machinery. It appears that the Andhra Bank went back and refused to give the guarantee and disburse the amount because of the failure of the first appellant company and its Managing Director to clear the existing loans of a sister concern of the first appellant and comply with certain conditions. This is also discussed by the Deputy Director and the appellate authority. 18. The appellants say that the Andhra Bank was not justified in refusing the loan on the above ground. However that is not a matter which can be taken into account to examine whether there is violation of sub-sections (3) and (4) of Section 8 of the Act for which penalty is prescribed under Section 50. It should be noted that Sections 8(3) and 8(4) have already been extracted supra. 17. A perusal of the language of sub-sections (3) and (4) of Section 8 would show that the said language nowhere indicates that mens rea is necessary and that the person concerned therein should deliberately fail to import the machinery by putting the foreign exchange to misuse. It is enough to bring a person within the four corners of sub-sections (3) and (4) of Section 8, if he fails to import the machinery for a reason now pleaded by appellants. In my opinion, the mere violation of sub-sections (3) and (4) of Section 8 covers a situation even where a foreign exchange is used for the purpose for which it is meant, but the goods are not brought into the country by that person for a reason like this. 18. In my opinion, the mere violation of sub-sections (3) and (4) of Section 8 covers a situation even where a foreign exchange is used for the purpose for which it is meant, but the goods are not brought into the country by that person for a reason like this. 18. The learned counsel for the appellants placed much reliance upon the words "unless the contrary is proved" occurring in sub-section (4) of Section 8 and contended that in the circumstances of this case, the appellants can be said to have explained that they utilized the foreign currency for the purpose for which it was given but they could not import the goods because of the breach of promise by Andhra Bank and the refusal of the Switzerland company to supply the goods or return the foreign exchange. The words "unless the contrary is proved" create a rebuttable presumption and it is for the person charged to prove that he did not violate the provision. Thus the contention raised on behalf of the appellants may sound forceful but only apparently and cannot be accepted for these reasons. 19. Section 8(4) says in what situations a person who acquires foreign exchange for sending or bringing goods into India can be said to have not used the foreign exchange for that purpose. That provision says he can be said to have not used the foreign exchange for that purpose if he brings goods of a kind, quality or quantity different from that for which he acquired foreign exchange or does not bring goods of the value of that foreign exchange. 20. In other words, sub-section (4) deals with only those cases or situations where goods of a lesser quantity or lesser quality or some other goods are brought. In such cases, the person charged with its violation is permitted to explain that he brought the goods for which he acquired foreign exchange and rebut the presumption. Sub-section (4) however cannot be understood to include a case where goods are not imported or brought at all for whatever reason. Sub-sections (3) and (4) of Section 8do not, to repeat, speak about mens rea also or a deliberate intention. The mere violation of both the above provisions in not importing the goods also for whatever reason it is, is treated as a violation. 21. The above provision may look harsh. Sub-sections (3) and (4) of Section 8do not, to repeat, speak about mens rea also or a deliberate intention. The mere violation of both the above provisions in not importing the goods also for whatever reason it is, is treated as a violation. 21. The above provision may look harsh. It may be noted that foreign exchange is a precious economic resource of the country and the policy of the Government or the object of the Act is to protect it and see that it is used for the purpose for which it has been given and is not misused or even squandered away. The Act can be said to be a fiscal statute which should be construed strictly for determining the liability and in the present case, it does not admit of any doubt and the above provisions weigh against the appellants and can be said to be consistent with the above object. 22. The appellants should have entered into contract with the Switzerland company after making every arrangement with the concerned bank and making it doubly sure that they get the loan and when the bank fails, they cannot be expected to be heard to say that the bank was at fault and plead for exoneration. The learned counsel for the appellants did not cite any authority to show that mens rea is necessary to apply sub-sections (3) and (4) of Section 8 read with Section 50 of the Act and the appellants cannot be proceeded against in a situation like this. 23. For the aforesaid reasons, the question of law is answered against the appellants. It therefore follows that the impugned order of the appellate tribunal cannot, in principle, be disturbed though as will be presently seen there is, in my opinion, ground to reduce the penalty. 24. Now coming to the quantum of penalty, Section 50 says that it cannot exceed five times the foreign exchange involved. It is now well settled that Section 50 provides an outer limit for the penalty prescribed which is not mandatory. Even the Deputy Director and the appellate tribunal did not impose the maximum penalty. In other words, it follows that the authorities under the Act and this court have also the power to impose a lesser penalty. 25. The Deputy Director imposed a penalty of Rs. 3,00,000/- and this was confirmed by the appellate tribunal. Even the Deputy Director and the appellate tribunal did not impose the maximum penalty. In other words, it follows that the authorities under the Act and this court have also the power to impose a lesser penalty. 25. The Deputy Director imposed a penalty of Rs. 3,00,000/- and this was confirmed by the appellate tribunal. It should be noted that the appellants have even as per the findings recorded by the Deputy Director and the appellate authority, paid the 15% of the price of the machinery to the aforesaid Switzerland company. In view of the same, I am of the opinion that the penalty of Rs. 3,00,000/- is excessive in a case like this and it can be reduced by 50% and accordingly the penalty is reduced to Rs.1,50,000/-. This miscellaneous second appeal is party allowed modifying only the penalty as indicated above while confirming the impugned order in all other respects. All the miscellaneous petitions pending if any shall stand closed. No costs. Petition Partly Allowed.