2018 (9) TMI 1150 - AT - FEMA

Order passed u/s 37(A)(3) of FEMA, 1999 - Competent Authority (CA) has confirmed the seizure of mutual funds as equivalent to US 16,00,000 held outside India by the appellant - whether as per Section 37(A)(4) proviso, the seizure can be set aside which was confirmed by the impugned order dated 18.05.2018? - Appellate Tribunal s power - Held that - CA or Adjudicating Authority has the power to deal with this seizure order only, and not review its own order once passed under Section 37(A)(3). Hence, the contention of the appellant that it has the powers to review, is not borne out by this legal provision. Coming to the Appellate Tribunal s power, Section 37(A)(5) clearly mentions that any person aggrieved by any order passed by the Competent Authority under Section 37(A)(3) may prefer an appeal to the Appellate Tribunal. Hence, the Appellate Tribunal jurisdiction is limited only to the orders passed by the Competent Authority under Section 37(A)(3). He does not have any original jurisdiction to get into any issues which have not been dealt by the original authority or are subsequent developments to the passing of the order by the Competent Authority. The law is very clear in as much as the Competent Authority has the power only to confirm or otherwise, the seizure done under Section 37(A)(1). The Appellate Tribunal s powers are only limited to hearing of appeals against these orders. In any case, the adjudication proceedings will have to be gone through as Section 37(A)(4) clearly lays down that the seizure will continue till the disposal of adjudication proceedings. Hence, no merits in the application asking for setting aside the seizure on the above grounds. It is therefore disallowed. Reply be filed in the main appeal within four weeks time and rejoinder within four weeks thereafter.

Summary

Issues:
1. Confirmation of seizure of mutual funds under Section 37(A)(3) of FEMA, 1999
2. Application for setting aside seizure based on subsequent developments
3. Jurisdiction of the Tribunal to review seizure orders
4. Interpretation of Section 37(A)(4) proviso regarding setting aside seizure
5. Appellate Tribunal's limited jurisdiction in appeals against Competent Authority's orders

Analysis:

1. The judgment deals with the confirmation of the seizure of mutual funds under Section 37(A)(3) of FEMA, 1999, amounting to ?10,35,20,000 or US $16,00,000 held outside India by the appellant. The Competent Authority (CA) confirmed the seizure through an order dated 18.05.2018.

2. The appellants filed an application to set aside the seizure based on subsequent developments, specifically the repatriation of foreign exchange back to India after the passing of the impugned order. The appellant argued that as per Section 37(A)(4) proviso, the Competent Authority had the power to review its own order upon disclosure of bringing back foreign exchange into India.

3. The tribunal examined whether it had jurisdiction to review the seizure orders and considered the arguments presented by both parties. The respondent contended that the Tribunal cannot delve into new issues not addressed in the impugned order and highlighted the provisions of Section 37(A)(4) regarding the continuation of seizure until adjudication proceedings.

4. The Tribunal analyzed the provisions of Section 37(A)(4) and the power granted to the Competent Authority or the Adjudicating Authority to set aside the seizure upon the disclosure of bringing back foreign assets into India. The Tribunal clarified that the Competent Authority or Adjudicating Authority has the power to deal with the seizure order and not review its own order under Section 37(A)(3).

5. The Tribunal emphasized the limited jurisdiction of the Appellate Tribunal in hearing appeals against orders passed by the Competent Authority under Section 37(A)(3). The Tribunal concluded that the Competent Authority has the power to confirm or reject seizures under Section 37(A)(1), and the Appellate Tribunal's powers are restricted to hearing appeals. The judgment disallowed the application to set aside the seizure based on subsequent developments.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's interpretation of relevant legal provisions in the context of the case.