2011 (3) TMI 1493 - AT - FEMA

Summary

Issues:
1. Imposition of penalties on three appellants by Assistant Director, Enforcement Directorate.
2. Death of one of the appellants and its impact on the appeal.
3. Allegations of outstanding amount of US dollars against the appellants for exporting goods to Hungary.
4. Contention regarding the outstanding amount being less than 5% of the invoice value.
5. Efforts made by the appellants to realize the outstanding amount.
6. RBI instructions regarding unrealized foreign exchange and their applicability in the case.

Analysis:

1. The judgment by the Appellate Tribunal for Foreign Exchange addresses the imposition of penalties on three appellants by the Assistant Director, Enforcement Directorate. The penalties were imposed based on an order dated 18-4-1991, with different amounts levied on each appellant.

2. Following the death of one of the appellants, N.K. Wasan, on 23-6-1998, the issue of abatement arose as no application for bringing his heirs was filed. Consequently, Appeal No. 253/91 was dismissed as abated.

3. The case involved allegations of an outstanding amount of US dollars against the appellants for exporting goods to Hungary. The Show Cause Notice detailed three invoices with outstanding amounts against each, leading to the initiation of the penalty proceedings.

4. A key contention raised by the appellants was that the outstanding amount was less than 5% of the invoice value, which they argued should be considered in light of RBI instructions not to take action for unrealized foreign exchange below this threshold. The appellants highlighted efforts made to recover the amount and pointed out the reduction in price by the Hungary government based on the quality of goods.

5. Efforts made by the appellants to realize the outstanding amount included approaching the RBI for writing off the said amount, sending letters to the Customs Department and Canara Bank, as well as sending fax messages. These actions were presented as evidence of the appellants' attempts to recover the outstanding sum.

6. Considering the argument that the outstanding amount was less than 5% of the invoice value and the efforts made by the appellants, the Appellate Tribunal set aside the impugned order against M/s. Ecco Wasan Shoes (P) Ltd. and Jatinder Wasan. Consequently, Appeal No. 253/91 was abated, while Appeal Nos. 254/91 and 261/91 were allowed based on the findings regarding the outstanding amount and the actions taken by the appellants in this regard.