2008 (7) TMI 1121 - AT - FEMA

Summary

Issues:
- Appeal against Adjudication Order imposing penalties for contravention of Foreign Exchange Regulation Act, 1973
- Compliance with pre-deposit order
- Waiver granted by RBI for unrecovered export price
- Interpretation of section 18(2) and section 18(3) of FER Act, 1973

Analysis:
The judgment by the Appellate Tribunal for Foreign Exchange, New Delhi pertains to three appeals challenging an Adjudication Order imposing penalties for contravention of the Foreign Exchange Regulation Act, 1973. The order imposed a penalty of Rs. 25,00,000 on the appellant-company and Rs. 2,50,000 each on two other appellants for failure to take reasonable steps for repatriation of export proceeds, as per section 18(2) read with section 18(3) of the FER Act, 1973. The Tribunal had earlier allowed the appellant-company to make a pre-deposit of 10% penalty, with full dispensation for the other appellants, and now the appeals were taken up for final disposal on merits.

The crux of the argument presented by the appellant's counsel was that the RBI had granted a waiver of the unrecovered export price in accordance with section 18(2) of the FER Act, 1973. The appellant submitted letters from Oriental Bank of Commerce to support this claim. On the other hand, the respondent's counsel contended that discrepancies in the letters from the bank regarding the description of GR numbers and amounts cast doubt on the waiver claim. The respondent supported the impugned order based on these discrepancies.

The Tribunal analyzed the provisions of section 18(2) and section 18(3) of the FER Act, 1973, which deal with payments for exported goods and restrictions on actions without RBI permission. The Tribunal noted that the legislation grants the RBI the power to waive unrecovered export prices. Upon examining the letters from Oriental Bank of Commerce, the Tribunal found that while there were discrepancies in the description of amounts in some letters, the overall consistency in GR numbers covered in the written-off amounts was maintained. Consequently, the Tribunal concluded that the discrepancies did not impact the essence of the waiver granted by the RBI.

In light of the above analysis, the Tribunal allowed the appeals on their merits and quashed the impugned order imposing penalties. The Tribunal held that the discrepancies in the bank letters did not invalidate the waiver granted by the RBI under section 18(2) of the FER Act, 1973. As a result, the penalties imposed on the appellants were set aside.