2008 (7) TMI 1106 - AT - FEMA

Issues Involved:

1. Contravention of Sections 8(3) and 8(4) read with Section 68 of the Foreign Exchange Regulation Act, 1973.
2. Non-compliance with the pre-deposit order under Section 52(2) of the FER Act, 1973.
3. Limitation period for filing appeals under Section 52(2) of the FER Act, 1973.
4. Proof of import for remittance of foreign exchange.
5. Authority of the Reserve Bank of India (RBI) concerning write-offs.

Issue-wise Detailed Analysis:

1. Contravention of Sections 8(3) and 8(4) read with Section 68 of the Foreign Exchange Regulation Act, 1973:

The appellants were penalized for failing to make the import of goods and file proof thereof after taking remittances of USD 174,000 and USD 20,000. According to Section 8(3), the importer must either import the goods or sell back the foreign currency to the authorized banker if the import cannot be made. Section 8(4) presumes non-compliance if the goods are not imported within a reasonable time. The Tribunal found that the appellants did not provide clear proof of import, and the bill of entry alone was insufficient as it did not prove the payment of customs duty. The affidavit provided was also deemed self-serving and not acceptable as proof of import.

2. Non-compliance with the pre-deposit order under Section 52(2) of the FER Act, 1973:

The Tribunal emphasized that appeals are not maintainable without the pre-deposit of the penalty unless dispensation is granted on grounds of undue hardship. In Appeal Nos. 475/2004 and 543/2004, the appellants were directed to deposit 10% of the penalty, but the appellant company failed to comply. The Tribunal dismissed these appeals for non-compliance with the pre-deposit order, reiterating that the statutory requirement must be strictly followed.

3. Limitation period for filing appeals under Section 52(2) of the FER Act, 1973:

The Tribunal noted discrepancies in the dates of receipt of the adjudication order by the appellant company, rejecting the later date as untrue. Appeals must be filed within 45 days, extendable by another 45 days for sufficient cause, but not beyond 90 days. Appeal Nos. 475/2004 and 543/2004 were filed beyond this period and were dismissed as time-barred. The Tribunal referenced the Supreme Court judgment in State of Goa v. Western Builders, which supports strict adherence to statutory limitation periods.

4. Proof of import for remittance of foreign exchange:

The Tribunal held that the burden of proof lies on the appellant to demonstrate the actual import of goods. The bill of entry and other documents provided did not conclusively prove the import. The RBI's letter allowing waiver of filing proof did not exempt the appellants from the legal duty under Sections 8(3) and 8(4). The Tribunal underscored that proof of import and the act of importing goods are closely connected, and the appellants failed to meet this burden.

5. Authority of the Reserve Bank of India (RBI) concerning write-offs:

The Tribunal clarified that the RBI's authority under Sections 8(1) and 8(2) permits granting prior permission for foreign exchange transactions but does not extend to writing off amounts taken for import under Sections 8(3) and 8(4). The RBI's write-off letter did not supersede the Enforcement Directorate's order, as the legal duty to use the foreign exchange for the specified purpose remains absolute.

Conclusion:

The Tribunal dismissed all four appeals. Appeal Nos. 475/2004 and 543/2004 were dismissed for being time-barred and non-compliance with the pre-deposit order. Appeal Nos. 473/2003 and 488/2003 were dismissed due to non-compliance with the pre-deposit order and failure to provide proof of import. The appellants were directed to deposit their respective penalties within a week, failing which the respondent may recover the penalties in accordance with the law.

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