1996 (2) TMI 568 - HC - FEMA

Summary

Issues:
1. Penalty levied under Foreign Exchange Regulation Act, 1973.
2. Contravention charged by first authority but reversed by appellate Board.
3. Failure to repatriate a specific sum in foreign exchange.
4. Allowance of importer to take delivery without full payment.
5. Agreement to set off by respondent firm.
6. Reluctance to take legal action against consignee importer.
7. Interpretation of the first authority's findings.
8. Legal precedents supporting penalty imposition without proving mens rea.

Analysis:

1. The judgment concerns appeals by the Enforcement Director under the Foreign Exchange Regulation Act, 1973, involving a penalty issue. The contravention charged was initially upheld by the first authority but later reversed by the appellate Board.

2. The penalty was imposed due to the failure to repatriate a specific sum in foreign exchange after an export transaction. The respondent firm allowed the importer to take delivery without full payment, leading to the penalty imposition by the first authority.

3. The appellate Board reversed the first authority's decision, citing the firm's confidence in the foreign buyer based on past successful transactions. The Board found no fault in allowing the outstanding foreign exchange due to the importer's false claims.

4. However, the appellant argued that the Board's reasoning was erroneous as the respondent firm not only allowed delivery without a trust receipt but also agreed to the adjustment claimed by the importer for past defective goods supplied.

5. The first authority's observation regarding the respondent's agreement to the set off and the lack of legal action against the consignee importer further supported the penalty imposition.

6. The appellant referenced legal precedents to support the imposition of penalties without proving mens rea, emphasizing the violation of the Act's provisions justifying penalties for any act or omission.

7. Ultimately, the Court found the appellate Board's reasoning unacceptable and erroneous in law, setting aside the Board's order and confirming the first authority's decision to impose penalties on the respondent firm and its partner.