2008 (8) TMI 1039 - AT - FEMA

Summary

Issues:
Violation of FER Act, 1973 - Failure to realize and repatriate outstanding export products - Vicarious liability of appellant - Quantum of penalty.

Analysis:

Violation of FER Act, 1973:
The appeal was against an adjudication order imposing a penalty for the failure to realize and repatriate export proceeds, contravening sections 18(2) and 18(3) r/w section 68 of FER Act, 1973. The appellant argued that he was not responsible for the affairs of the noticee company during the relevant time, citing the Companies Act and a Supreme Court decision. The respondent contended that the appellant, as an executive director, was involved in export decisions. The tribunal noted the appellant's role in the company before 1997, supported by a letter, and emphasized the burden of proof on the appellant under the Evidence Act.

Vicarious Liability of Appellant:
The tribunal discussed the concept of "officer who is in default" under the Companies Act and the vicarious liability provision in section 68 of the FER Act. It highlighted that the appellant was an officer of the noticee company during the relevant period, emphasizing that the court will not interpret statutes with reference to unrelated laws. The tribunal rejected the appellant's argument that he was not responsible for the company's conduct, as the show cause notice clearly stated his role in the company's day-to-day business.

Quantum of Penalty:
Regarding the quantum of penalty, the tribunal found it neither excessive nor harsh considering the amount involved in the contravention. The tribunal dismissed the appeal, upholding the penalty imposed. The appellant was directed to deposit the balance amount of the penalty within a specified period, failing which the Enforcement Directorate could realize it in accordance with the law.

In conclusion, the tribunal dismissed the appeal, upholding the penalty imposed on the appellant for the violation of the FER Act, 1973. The decision was based on the appellant's vicarious liability and involvement in the company's affairs during the relevant period, as established by evidence presented. The tribunal found the penalty amount reasonable and directed the appellant to fulfill the payment within the stipulated timeframe to avoid further enforcement actions.