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2016 (2) TMI 480 - AT - FEMA


Issues Involved:
1. Non-realization of export proceeds within the stipulated period.
2. Contravention of Section 18(2) of the Foreign Exchange Regulation Act, 1973 (FERA) and associated Central Government notifications.
3. Adequacy of efforts made for realization of export proceeds.
4. Validity of adjudication orders and penalties imposed.
5. Post-adjudication realization of export proceeds and its impact.
6. Procedural fairness and principles of natural justice.

Issue-wise Detailed Analysis:

1. Non-realization of export proceeds within the stipulated period:
The appellants were involved in exporting goods but failed to realize the export proceeds within the prescribed six months or any extended period. This non-realization was considered a contravention of Section 18(2) of FERA, 1973. The adjudicating authority recorded that the appellants did not take effective steps to recover the export proceeds, leading to substantial amounts remaining unrecovered.

2. Contravention of Section 18(2) of FERA and associated Central Government notifications:
The adjudicating authority found that the appellants had contravened Section 18(2) read with Section 18(3) of FERA, 1973, and relevant Central Government notifications. The appellants' failure to realize the export proceeds within the stipulated period or extended period was deemed a violation, resulting in penalties being imposed.

3. Adequacy of efforts made for realization of export proceeds:
The appellants argued that they made consistent and persistent efforts to realize the export proceeds, including correspondence with buyers and applications to the RBI for extension of time. However, the adjudicating authority found these efforts inadequate, noting that the appellants did not approach the Indian Embassy, Chamber of Commerce, or take legal action against the buyers. The authority concluded that the appellants' efforts were not bona fide and were insufficient to comply with the requirements of Section 18 of FERA.

4. Validity of adjudication orders and penalties imposed:
The adjudicating authority imposed penalties on the appellants for their failure to realize the export proceeds. The penalties were challenged on the grounds of being excessive and arbitrary. The appellants contended that the penalties were imposed without considering the genuine efforts made for realization. The tribunal upheld the findings of the adjudicating authority but acknowledged that the penalties imposed were excessive and needed to be reduced.

5. Post-adjudication realization of export proceeds and its impact:
The appellants submitted affidavits and evidence showing that they had realized almost all the outstanding export proceeds after the adjudication orders were passed. The tribunal considered whether this post-adjudication realization should impact the findings of contravention. It concluded that while the realization of export proceeds was significant, it did not negate the fact that the appellants had initially failed to comply with the stipulated period. Therefore, the contraventions were still valid, but the penalties were reduced in light of the subsequent realization.

6. Procedural fairness and principles of natural justice:
The appellants argued that the adjudication proceedings were conducted ex parte, without providing them with adequate opportunity to present their case. They claimed that no enclosures or relied-upon documents were supplied, and no personal hearing was afforded. The tribunal found that sufficient time and opportunities were given to the appellants to contest the proceedings. However, considering the appellants' subsequent realization of export proceeds and the excessive nature of the penalties, the tribunal decided to reduce the penalties imposed.

Conclusion:
The tribunal affirmed the findings of the adjudicating authority that the appellants had contravened the provisions of FERA, 1973, by failing to realize the export proceeds within the prescribed period. However, considering the subsequent realization of export proceeds and the excessive nature of the penalties, the tribunal reduced the penalties imposed on the appellants by half in each case. The appellants were directed to deposit the modified penalties within one month from the receipt of the judgment.

 

 

 

 

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