2018 (1) TMI 221 - HC - FEMA

Application for dispensation and directing appellant to deposit 10% of the penalty amount and to furnish a credible security for the balance 50% - Held that - On the one hand the appellant contends its financial credibility and on the other hand undue economic hardship. The Tribunal has waived off substantial pre-deposit and has directed only 10% of the penalty amount to be deposited with a surety for the balance 50% which cannot be said to be undue hardship on the appellant. Considering its own claim of financial stability, on the facts of the case this Court finds no error in the impugned order.

Issues:
1. Import of equipment and remittance of foreign exchange.
2. Allegations of non-submission of documentary evidence of imports.
3. Adjudication order imposing penalties.
4. Appeal before the Appellate Tribunal for Foreign Exchange.
5. Application for dispensation of pre-deposit of penalty.
6. Financial credibility and hardship of the appellant.
7. Interference with the impugned order of the Appellate Tribunal.

Analysis:

1. The appellant imported equipment from its parent company in the USA and applied for the release of foreign exchange for remittances against the imports. The appellant claimed that Citi Bank was responsible for filing exchange control copies with the Reserve Bank of India after remittance was made. The appellant filed Bills of Entry with Customs Authorities for clearance of goods upon receipt at the Indian Port.

2. After several years, the respondent issued a memorandum alleging non-submission of documentary evidence of imports. The appellant responded, citing non-receipt of necessary documents and applied to Citi Bank for certificates and copies of Bills of Entry. Despite efforts to comply, the respondent issued a memorandum holding against the appellant for alleged non-filing of Bills of Entry.

3. The respondent's Special Director imposed penalties on the appellant for failure to file Bills of Entry, despite the appellant's submissions and efforts to obtain necessary documents from Citi Bank. The appellant appealed this adjudication order before the Appellate Tribunal of Foreign Exchange, seeking dispensation of pre-deposit of penalties.

4. The application for dispensation of pre-deposit was initially dismissed due to the appellant's counsel's inability to reach the tribunal on time. However, after a recall application, the tribunal partly allowed the waiver, directing the appellant to deposit a portion of the penalty amount and provide credible security for the balance.

5. The appellant challenged the tribunal's order, citing financial hardship and credibility concerns. The court referred to precedents emphasizing that the tribunal, at the stage of deciding pre-deposit, is not required to delve into the merits of the appeal but consider whether the appellant has made a prima facie case and if undue hardship would result from the deposit.

6. The court found no error in the tribunal's decision to waive a significant portion of the penalty amount and require a partial deposit with security, considering the appellant's financial stability claims. The appeal and application were dismissed, upholding the impugned order of the Appellate Tribunal.

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