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2019 (4) TMI 138 - AT - FEMAContravention of the provisions of Section 18(2) & 18(3) of FERA, 1973 - failure to realize the export proceeds - HELD THAT - Appellant neither has the finances to carry on a protracted litigation in Doha, Qatar. (Additional affidavit in this regard has also been filed). The Appellant has addressed numerous letters to its Advocate Ahmed Ali Morafi to enquire about the current status of the matter but unfortunately had not received any written response from him. The Appellant has also tried to contact the said advocate on his phone number mentioned in his letter head but is unable to reach him on the same. It has come on record that even after taking all reasonable steps, it is quite evident that the export proceeds could not be realized for reasons /due to circumstances which were beyond the control of the Appellant. Department has not been able to prove that certain acts on part of the Appellant resulted in the non-realization of the export proceeds. As submitted on behalf of appellant that the total number of Appellant during the period during the period during the financial year 1992-93 to 1995-96 was ₹ 5.61 crores. There is no outstanding bills of the Appellant with their Banker for the financial years 1997-98, 1998-99, 1999-2000) and the said fact has been certified by Global Trust Bank Ltd. The unrealized amount of ₹ 17,85,835/- does not constitute even 5% of the total turnover. The Appellant is entitled for write-off of the unrealized export proceeds as per RBI Circular No.88 dated 12.03.2013. Under these circumstances and in the light of above, it is evident that it is held that the Appellant has taken all sufficient, reasonable and timely steps which are legally permissible within their limited means and to realize the unpaid export value. The Appellant has discharged the burden cast upon him under Section 18(2) r.w. 18(3) of FERA, 1973. In this context the appellant seeks to rely upon the decisions of the Hon‟ble Delhi High Court in Ganesh Polytex Ltd. and Ors. Vs. Union of India (UOI) and Ors. 2010 (9) TMI 463 - DELHI HIGH COURT The appeal is allowed, the benefit is given to the appellant who should not be penalized for non-repatriation of the full export value within the prescribed period, the appellant is exonerated from the allegations made in the SCN dated 29.06.2001. The impugned order is set-aside.
Issues Involved:
1. De novo adjudication of Show Cause Notice and subsequent penalties. 2. Compliance with principles of natural justice. 3. Reasonable efforts to realize export proceeds. 4. Applicability of Section 18(2) and 18(3) of FERA, 1973. 5. Adequacy of steps taken by the appellant for recovery of export proceeds. 6. Pending applications with RBI for extension of time or write-off of export dues. Issue-wise Detailed Analysis: 1. De novo adjudication of Show Cause Notice and subsequent penalties: The case involves the de novo adjudication of Show Cause Notice No. T-4/65/AD (VKA)/B/2001 dated 29.06.2001, which resulted in a penalty of ?5,00,000 imposed on the appellant for contravention of Section 18(2) & 18(3) of FERA, 1973. This was due to the appellant's failure to realize export proceeds amounting to ?17,85,839. The initial adjudication order dated 17.10.2001 was contested and quashed by the Appellate Tribunal, leading to a fresh adjudication and the re-imposition of the same penalty on 27.09.2013. 2. Compliance with principles of natural justice: The appellant argued that the impugned order was an ex-parte order passed without considering additional documents filed by the appellant, violating the principles of natural justice. The Tribunal had previously remanded the matter for fresh adjudication with a directive to grant a full opportunity of hearing to the parties, which was not adhered to in the subsequent proceedings. 3. Reasonable efforts to realize export proceeds: The appellant exported garments worth ?5.61 crores during 1992-93 to 1995-96, with ?17,85,835 remaining unrealized from M/s. Gulf Cooperative Factory, Qatar. Despite several efforts, including legal action and communication with the Indian Embassy in Doha, the export proceeds could not be realized. The appellant argued that they took all reasonable steps to recover the payments, including filing a lawsuit in Doha and seeking assistance from the ruling family and the Indian Embassy. 4. Applicability of Section 18(2) and 18(3) of FERA, 1973: Section 18(2) of FERA prohibits exporters from delaying payment for goods beyond the prescribed period without RBI's permission. Section 18(3) presumes contravention if payments are not received within the prescribed period unless reasonable steps to recover the payments are proven. The appellant contended that they made all reasonable efforts, which should exempt them from penalties under these provisions. 5. Adequacy of steps taken by the appellant for recovery of export proceeds: The appellant demonstrated multiple efforts to recover the unpaid export proceeds, including: - Communicating with the overseas buyer and the ruling family. - Approaching the Indian Embassy in Doha. - Filing a lawsuit in Qatar and actively pursuing it. - Remitting funds for legal expenses with RBI's permission. - Regularly filing ETX applications for extension of time with RBI. These efforts were deemed adequate and reasonable under the circumstances. 6. Pending applications with RBI for extension of time or write-off of export dues: The appellant's applications for extension of time or write-off of export dues were pending with RBI. The Tribunal noted that initiating adjudication proceedings while these applications were pending was premature. The appellant relied on several precedents to support their argument that penalties should not be imposed while such applications are pending. Conclusion: The Tribunal concluded that the appellant had taken all sufficient, reasonable, and timely steps to realize the unpaid export value. The appellant discharged the burden under Section 18(2) r.w. 18(3) of FERA, 1973. Consequently, the appeal was allowed, and the appellant was exonerated from the allegations made in the Show Cause Notice dated 29.06.2001. The impugned order was set aside, and no costs were imposed.
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