2006 (1) TMI 674 - AT - FEMA

Summary

Issues:
Challenge to Adjudication Order imposing penalty for contravention of Foreign Exchange Regulation Act, 1973.

Analysis:
The Appellate Tribunal heard an appeal challenging an Adjudication Order imposing a penalty against an appellant-firm for failing to repatriate export proceeds, as per sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973. The appellant argued that total export proceeds were repatriated, but the authorized banker's lack of cooperation hindered their defense. The Tribunal granted dispensation of the pre-deposit of the penalty amount and proceeded to hear the appeal on merits.

A Show Cause Notice was issued to the appellant-firm for failing to repatriate export proceeds, leading to ex parte adjudication proceedings and the imposition of the penalty. The appellant contended that they had taken sufficient steps for recovery, with two consignments fully recovered and the third consignment not exported, as certified by Customs Authority. The appellant argued they should not be held guilty, while the respondent argued the burden of proof lay with the appellant, who failed to discharge it.

The impugned order detailed three consignments, with discrepancies noted in the evidence presented. The appellant argued that one consignment's amount was repatriated, supported by a letter from Centurion Bank. However, the Tribunal found uncertainties regarding the repatriation of the other two consignments, leading to difficulty in challenging the guilt against the appellant.

Section 18(2) of the Act imposes an obligation on exporters to make reasonable efforts to repatriate export proceeds. The Tribunal found the appellant's claims of taking reasonable steps unsubstantiated, leading to the sustained guilt against the appellant for two consignments and a reduction in the penalty amount imposed.

Ultimately, the Tribunal quashed the guilt regarding one consignment but upheld it for the other two, reducing the penalty amount against the appellant-firm to Rs. 1,00,000. The appeal was partly allowed based on the findings and analysis presented.