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2012 (5) TMI 157 - HC - FEMABogus exports - Fabricated Export - export under the DEPB Scheme - Violation of the provisions of Section 3(b) and Section 3(d) of the Foreign Exchange Management Act, 1999 ( the FEMA ) - Power of the settlement commission - held that - the immunity is only from penalty under the Customs Act and not in respect of any other Act including the FEMA. - the orders of the Settlement Commission are considered to be conclusive of the matters stated therein and cannot be challenged in any other proceeding under any other law including FEMA. Rights of third parties - held that - observations of the Tribunal cannot be construed as affecting the rights of any third parties who were not before the Court, since the Tribunal was and this Court is concerned only with the involvement of those who are parties to the appeal proceedings. Independently, the evidence against the Appellant is sufficient to sustain the finding of breach of Sections 3(b) and 3(d). The penalty is not disproportionate, but is commensurate with the gravity of the charge, the nature of the misconduct and the role attributed to the Appellant.
Issues Involved:
1. Whether the Tribunal was right in dismissing the appeal of the Appellant when a previous division bench allowed appeals on identical facts. 2. Whether the earlier order of the Tribunal on identical facts is a binding precedent. 3. Whether the order of the Tribunal lacked application of mind due to the absence of evidence linking the Appellant to the financial transactions in question. Detailed Analysis: 1. Dismissal of Appeal Despite Previous Tribunal Decision: The Tribunal dismissed the appeal of the Appellant, even though a previous division bench allowed appeals filed by the main noticees and beneficiaries on identical facts. The earlier order by the Tribunal, dated 31 August 2009, exonerated APL and its key directors, concluding that the retracted statement of Manoj Jain could not be relied upon without corroboration. The Appellant argued that these findings should bind the Tribunal in his case. However, the Tribunal found that the Appellant failed to prove coercion or threat and that the retraction was an afterthought. The Tribunal relied on the voluntary and detailed nature of the Appellant's statements, which were deemed to reflect exclusive knowledge. 2. Binding Precedent of Earlier Tribunal Order: The Appellant contended that the earlier Tribunal order should serve as a binding precedent. The Tribunal in the current case, however, determined that the findings against the co-noticees did not operate as res judicata or a binding precedent regarding the Appellant's culpability. The Tribunal was entitled to independently assess the evidence and determine whether the charges against the Appellant were established on a preponderance of probabilities. The Tribunal emphasized that even retracted statements could be relied upon if deemed voluntary and true. 3. Tribunal's Alleged Non-Application of Mind: The Appellant argued that the Tribunal's order lacked application of mind, as there was no evidence linking him to any financial transaction related to the alleged exports. The Tribunal, however, found substantial documentary evidence and statements implicating the Appellant. The evidence included fictitious purchase bills issued by a company controlled by the Appellant, statements from various individuals, and the role of the Appellant in facilitating the fraudulent export transactions. The Tribunal concluded that the Appellant's involvement in the scheme was sufficiently established. Additional Observations: The Tribunal noted several key points: - APL submitted 261 fictitious shipping bills, and no actual exports occurred. - The Customs Department confirmed that the shipping bills were not found in their system. - The Appellant provided APL with fictitious purchase bills and facilitated the fraudulent transactions. - The Settlement Commission's order dated 7 June 2006, which was accepted by the Appellant, corroborated his involvement in the fraudulent scheme. Conclusion: The Tribunal upheld the penalties imposed on the Appellant for violations of Sections 3(b) and 3(d) of FEMA. The Tribunal found that the evidence against the Appellant was sufficient to sustain the findings of breach. The appeal was dismissed on the grounds that no question of law arose, and the penalty was deemed commensurate with the gravity of the charges.
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