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2013 (11) TMI 1540 - HC - FEMAImposition of penalty - Non realization of export proceeds - Held that - The 2nd respondent in exercise of the powers under Regulation 13 of the Foreign Exchange Management Regulations, 2000, RBI issued the orders agreeing for condonation of non-realization of export proceeds and writing off the outstanding amount subject to the condition of the exporter should surrender to the proportionate amount of incentives. Further, the appellant cannot claim the benefit of condonation under the said order unless the condition namely, surrender a proportionate amount of incentives to the Commissioner of Customs has been complied with by the exporter concerned. However, the condition has not been complied with as stipulated in the order passed by the 2nd respondent, as such the appellant cannot seek to claim any benefit under the said order dated 23-2-2005 of the 2nd respondent. Firm constituted by the family members and out of them no one stated that the appellant is retired from the said firm since 1997, as such the appellant is not liable to pay any penalty. Further, one of the partners Shri Sharavan Kumar has stated in his statement before the 1st respondent herein that the appellant and two others are partners besides the appellant and another partner Shri Sharavan Kumar were looking after the business and the day to day affairs of the Company - Decided against appellangt.
Issues Involved:
1. Recovery of Duty Drawback Amount. 2. Non-Realization of Export Proceeds. 3. Liability of Partners. 4. Extension of Time by RBI. 5. Penalty Imposition and Appeal. Detailed Analysis: 1. Recovery of Duty Drawback Amount: The Deputy Commissioner of Customs, Chennai, ordered the recovery of Rs. 15,42,642/- as a drawback from M/s. Dhaneshwara Overseas and its partner, Mr. Sharavan Kumar, under the Customs and Central Excise Duties Drawback Rules of 1995 and Section 75(1) of the Customs Act, 1962, due to non-realization of export proceeds for shipping bills dated 18-12-2000. 2. Non-Realization of Export Proceeds: The Tamil Nadu Mercantile Bank Limited provided a list showing eight export bills with a total value of Rs. 1,64,90,623/- pending realization. Mr. Sharavan Kumar, upon examination, stated that seven bills worth Rs. 1,66,72,214/- were pending. He attributed the difference to exchange fluctuations and denied the existence of one bill in his records. He also mentioned that goods were not taken from bonded warehouses, leading to public auction, and had lodged a claim with ECGC. 3. Liability of Partners: Mr. Sharavan Kumar and Mr. Daman Prakash were held responsible for the firm's business conduct. Mr. Daman Prakash, in his statement, confirmed that the firm was a family concern and that Mr. Sharavan Kumar handled the export proceedings and interactions with RBI. The firm ceased operations on 31-3-2001. 4. Extension of Time by RBI: The Reserve Bank of India confirmed no extension of time beyond 10-11-2003 for realizing export proceeds and no waiver/write-off for the firm. Mr. Sharavan Kumar claimed that the RBI had granted extensions and that no further extensions were provided beyond the specified date. 5. Penalty Imposition and Appeal: The Original Authority imposed a penalty of Rs. 30,00,000/- on M/s. Dhaneswara Overseas and Rs. 8,00,000/- each on Mr. Sharavan Kumar and Mr. Daman Prakash under Section 13(1) of FEMA, 1999. The penalties were to be paid within 45 days. The Special Officer concluded that both partners were aware of the non-realization and failed to take effective steps, making them liable under Sections 7 and 8 of FEMA, 1999, and Regulations 9 & 13(i), (ii) of FEM (Export of Goods and Services) Regulations, 2000. Mr. Daman Prakash appealed to the Appellate Tribunal, Foreign Exchange, which dismissed the appeal. In the present appeal, the counsel argued that the RBI had condoned the non-realization and that the appellant was not involved in the firm's day-to-day operations. The appellant had withdrawn from the firm in 1997-1998 and had no nexus with the firm during the relevant period. The respondent's counsel argued that the appellant was a partner responsible for the firm's conduct and that the show cause notice was not replied to within the specified period. The appellant's firm was a family partnership, and the appellant was liable for the penalty. The RBI granted an extension of time and condoned non-realization subject to the surrender of proportionate incentives, which the appellant did not comply with. Conclusion: The court found no discrepancy in the impugned order dismissing the appeal. The appellant was held liable as a partner, and the appeal was dismissed, confirming the penalty. The connected miscellaneous petition was closed.
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