2005 (8) TMI 754 - AT - FEMA

Summary

Issues:
- Contravention of section 8(3) and 8(4) of FERA, 1973
- Imposition of penalty
- Loss of bill of entry
- Acceptance of alternative documents by RBI
- Procedural irregularity
- Pre-deposit of penalty amount

Analysis:

The case involves an appeal against an adjudicator order where the appellant was found guilty of contravening section 8(3) and 8(4) of FERA, 1973, and a penalty of Rs. 5,00,000 was imposed. The appellant imported medical equipment valued at US $1,50,000 in August 1995 against two bills of entries, which were later lost in transit after being sent to the authorized dealer. The appellant contended that they had sent photocopies of the bill of entries to the authorized dealer, but they went missing. The adjudication proceedings were initiated based on this incident. The appellant's reply included photocopies of the bill of entries and stated that the relevant exchange control copy was sent to the authorized dealer for onward transmission to RBI but might have been lost in transit. The appellant also sought verification and attestation of the bills of entry from the Customs authorities. Despite these efforts, the adjudicating authority, relying on RBI's letter, found the appellant guilty and imposed the penalty. An appeal was filed against this order, requesting a dispensation of the pre-deposit of the penalty amount.

During the appeal hearing, it was revealed that the authorized dealer's letter dated 7-2-2005 and RBI's letter dated 14-2-2005 accepted the alternative documents submitted by the appellants. The acceptance by RBI came after the adjudicating authority's order, making it impossible to produce earlier. The appellant argued that since the imported goods were used for their intended purposes, there was no contravention of the relevant sections. Citing the case of Sunil Engineering Corporation v. UOI, where a similar lapse led to the quashing of an order under section 8(3) and 8(4) of the Act, it was argued that the appellant's omission was a mere procedural irregularity. As RBI accepted the alternate documents as proof of import, there was no substantive violation of the Act. Consequently, the impugned order was quashed, and the appeal was allowed, leading to the appellant's favor.