2010 (12) TMI 1079 - AT - FEMA

Summary

Issues:
Violation of Section 8(3) and 8(4) of FERA - Failure to submit Exchange Control Copy of Bill of Entry for imports - Service of Show Cause Notice at the correct address - Principles of natural justice - Burden of proof on the appellant - Remand and opportunity to produce required documents - Penalty amount deposited by the appellant.

Analysis:
The appeal challenges the penalty imposed on the appellant for violating Section 8(3) and 8(4) of FERA by failing to submit Exchange Control Copy of Bill of Entry for imports. The appellant contended that the Show Cause Notice was not served at the correct address, leading to an ex parte order. The appellant argued that the order violated principles of natural justice as the notice was not served at the registered office. However, it was found that under FERA, the notice can be served at the place of business or residence of the person concerned, as per Rule 3 of the Foreign Exchange Regulation Rules, 1974.

The appellant relied on judgments related to natural justice, but it was clarified that those judgments do not apply when ex parte orders are issued after issuing notices. The key issue was whether the notice was served on the appellant as per the law. The appellant claimed to have changed the address before the Show Cause Notice was issued, but as per Section 71 of FERA, the burden of proof that the foreign exchange was used for the permitted purpose lies on the appellant. To ensure justice, the appellant was granted an opportunity to produce the required documents, specifically the Bill of Entry, to prove compliance with the Exchange Control Manual.

In the interest of justice, the matter was remanded back to the Director of Enforcement for further inquiries upon the appellant's production of the necessary documents. The appellant was directed to pay a cost of Rs. 10,000 for not updating the address with the authorized dealer. The penalty amount deposited by the appellant would be subject to the final order passed by the Director of Enforcement and refunded accordingly. The Director of Enforcement was instructed to make inquiries and pass an appropriate order within two months from the appearance of the parties.

In conclusion, the appeal was disposed of with the appellant given a chance to meet the allegations by producing the required documents, subject to further proceedings by the Director of Enforcement.