2014 (12) TMI 1225 - AT - FEMA

Waiver of penalty - Held that - The fact that the company has almost closed business and is incurring losses continuously has not been disputed by the respondent. Prima facie the audit reports are in conformity with the arguments advanced that the company is incurring financial losses regularly. Considering the facts and circumstances as discussed above and in view of the case laws Special Director of Enforcement v. Anil Aggarwal and Anr. 2009 (3) TMI 1011 - DELHI HIGH COURT and BHAVYA APPARELS PVT. LTD. Versus UNION OF INDIA 2012 (11) TMI 558 - GUJARAT HIGH COURT we are of the view that the prima facie case for partial waiver of penalty is made out. In this view of the matter, it appears to be appropriate that the appellants be directed to deposit 15% of the amount of penalty imposed against each appellant and further furnished bank guarantee for the balance 85%

Summary

Issues:
Non-realization of export bills, contravention of FERA provisions, imposition of penalties, appeal against adjudication order, application for stay and waiver of penalty.

Analysis:
1. The case involved allegations of non-realization of export proceeds by an appellant company, leading to contravention of provisions of the Foreign Exchange Regulation Act, 1973 (FERA). The Enforcement Directorate received information regarding the non-realization of export bills by the company within the prescribed period, amounting to significant sums in US dollars and Indian currency.

2. Notices were issued to the appellants, who were directors of the company, for contravention of FERA provisions. The appellants responded by stating that a substantial amount of the outstanding export value had been realized, and efforts were made to retrieve the remaining amounts. However, the Adjudicating Officer imposed penalties on the appellants for the alleged contraventions.

3. The appellants filed appeals against the adjudication order, challenging the penalties imposed. The appellants argued that they had taken reasonable steps to realize the export proceeds, including approaching relevant authorities and submitting necessary documents. They also highlighted the financial difficulties faced by the company, indicating continuous losses in the business.

4. The Tribunal considered the submissions of both parties and observed that while efforts were made by the appellants to realize the outstanding amounts, the adequacy of these efforts needed further examination. The financial position of the company, as evidenced by audit reports, supported the claim of financial constraints.

5. Citing relevant case laws, the Tribunal found a prima facie case for a partial waiver of the imposed penalties. Consequently, the Tribunal directed the appellants to deposit 15% of the penalty amount and provide a bank guarantee for the remaining 85% within a specified period. The realization of the penalty amount was stayed pending the disposal of the appeals.

6. In conclusion, the Tribunal disposed of the applications for stay and waiver of penalties, providing a structured approach for the appellants to comply with the directive while awaiting the final hearing. The decision balanced the enforcement of regulatory provisions with considerations of financial hardship faced by the appellants, ensuring a fair and just resolution of the matter.