2014 (12) TMI 1348 - HC - FEMA

Initiation of adjudicating proceedings - failure to furnish the exchange control copy of bill of entry in confirmation of having imported materials for which foreign exchange was remitted to the account of SACL at Punjab National Bank, Kasturba Gandhi Marg, New Delhi (PNB) - contravention of Sections 8(3) and 8(4) read with Section 68 of the Foreign Exchange Regulation Act, 1973 (FERA) - Time limitation - HELD THAT - In the present case, the AT was in error in holding that the appeals before it were barred by limitation since they were filed beyond the outer limit of 90 days. The AT ought to have considered the explanation given by the Appellants for the delay in filing the appeals - Having considered the explanation offered by the Appellants for the delay in filing their respective appeals, the Court is of the view that the delay was for bonafide reasons and ought to be condoned. The Court notes that the question of the consequences of the failure to make the pre-deposit has been considered by the AT in the context of FERA and not FEMA. Secondly, the merits of the appeals have been considered only in relation to one of the transactions of the paper division of SACL involving US 20,000 and not the other transaction at serial No.8 of the SCN, concerning the fertiliser division of SACL valued at US 174,000. Impugned order set aside - appeal allowed.

Summary

Issues:
1. Time-barred appeals under Section 52(2) FERA.
2. Failure to make pre-deposit for appeals.
3. RBI exemption and contravention of FERA.
4. Merits of appeals by different divisions of SACL and individuals.
5. Consequences of delay in filing appeals under FEMA.

Analysis:

1. The appeal was against an order passed by the Appellate Tribunal for Foreign Exchange (AT) concerning alleged contravention of FERA provisions by the appellants. The Enforcement Directorate (ED) issued a show cause notice to the appellants for not furnishing the exchange control copy of bill of entry for imported materials, leading to penalties imposed by the ED.

2. The AT dismissed the appeals on grounds of being time-barred under Section 52(2) FERA and failure to make the pre-deposit as directed by the AT. The appeals were treated under FERA, despite its repeal by FEMA. The AT held that the RBI exemption did not absolve the appellants from contravention of FERA provisions.

3. The Court found errors in the AT's judgment, citing recent Supreme Court decisions that appeals under repealed laws should be governed by the provisions of the new law, FEMA. The Court held that the AT should have considered explanations for the delay in filing appeals and condoned the delay if sufficient cause was shown.

4. The Court noted that the AT did not discuss the merits of all appeals thoroughly, especially concerning different transactions of SACL divisions. The Court set aside the AT's order and remanded specific appeals for a fresh decision on the consequences of failure to deposit and the merits of each appeal under FEMA.

5. In conclusion, the Court disposed of the appeal by remanding specific appeals for reconsideration by the AT, emphasizing the need to assess the consequences of the failure to deposit the pre-deposit amount and review the merits of each appeal under the provisions of FEMA.