2018 (2) TMI 579 - AT - FEMA

Abetting one Sh. P.G. Rawal in transferring foreign exchange in contravention of Section 8(3) read with 8(4) and Section 48 read with Section 64(2) - Held that - While the order in original has passed a very detailed order, however the adjudicating authority has not given any evidence or facts to state as to how the appellant has abetted with Sh. P.G. Rawal, in the said contravention. It appears that he has based his judgment on an inference from the conduct of the appellant since in spite of ample opportunities given to him, the appellant has failed to file a reply or appear for the personal hearing. With regard to the contention that the appellant was the proprietor of two firms, i.e. M/s Vikram Sales Corporation and M/s Valifan Sales Agency, the adjudicating authority mentions at para 25 (vii) that the appellant in his statement, stated that both these firms belonged to Sh. Nitin Shah but the latter appointed him as the proprietor of the above two firms. It is not clear as to how a proprietor can be appointed. This fact has not been gone into by the original authority at all and no investigation has been conducted to establish the link between the appellant and the firms. Most importantly , no basis has been given by the adjudicating authority as to how he was involved in the entire case of fraudulently transfer of foreign exchange. This is a case where remittances were sent abroad by way of bogus imports. In order to penalize someone for contravention of various provisions of law, clear cut evidences have to be there with regard to his/their involvement. The adjudicating authority has made no efforts to provide the same. Instead, he has gone ahead and levied penalty of ₹ 7,50,000/- on the basis of mere inferences as recorded by him.

Summary

Issues:
1. Abetment in transferring foreign exchange contravening specific sections of the law.
2. Validity of penalty imposed on the appellant.
3. Relevance of evidence and inferences in adjudication proceedings.

Analysis:
1. The appellant was accused of abetting in transferring foreign exchange in contravention of the law. The adjudicating authority found the appellant guilty and imposed a penalty of &8377; 7,50,000. The appellant argued that he was merely following instructions from his superior, had no decision-making authority, and was acquitted in related criminal proceedings. The appellant contended that the penalty was based on inference without concrete evidence of abetment or common intention to commit a crime. The appellant emphasized his junior position and lack of involvement in decision-making processes, citing the principle of vicarious liability under the Law of Torts.

2. The respondent countered by highlighting the appellant's ownership of multiple firms and the independent nature of prosecution and adjudication proceedings. The respondent pointed out the appellant's previous statement acknowledging his involvement, which was not retracted. The respondent emphasized the broad definition of "abetting" under the law, encompassing aiding, conspiring, or instigating. However, upon thorough examination, the tribunal found that the adjudicating authority failed to provide concrete evidence linking the appellant to the contravention of foreign exchange laws. The tribunal noted the lack of factual basis for the abetment charges and criticized the reliance on inferences without substantial proof. The tribunal also questioned the adjudicating authority's oversight in investigating the appellant's alleged ownership of firms and its connection to the fraudulent transfer of foreign exchange.

3. The tribunal concluded that the adjudicating authority's decision lacked merit due to insufficient evidence and reliance on mere inferences. The tribunal emphasized the necessity of clear-cut evidence to penalize individuals for violations of the law, especially in cases involving fraudulent activities like bogus imports and foreign exchange transfers. As the adjudicating authority failed to establish a direct link between the appellant and the contravention of laws, the tribunal set aside the penalty imposed on the appellant, ruling in favor of the appellant's appeal.