2005 (3) TMI 833 - AT - FEMA

Summary

Issues:
Violation of principles of natural justice due to non-service of show cause notice (SCN) on the appellant
Dispute regarding acceptance of alternative documents in lieu of bill of entry by RBI

Analysis:
1. The appeal was filed against an adjudication order imposing a penalty on the appellant for contravention of FERA provisions. The appellant argued that the SCN was not served due to a change of address, leading to a violation of natural justice as the appellant was not given an opportunity to be heard. The appellant also highlighted that the authorized banker informed the Enforcement Directorate of the new address, but the SCN was served at an old address. The appellant cited the judgment in Sangfroid Remedies Ltd. v. Union of India to support the argument that non-service of SCN denies the right to be heard.

2. The appellant further contended that the authorized banker had requested RBI to accept alternative documents in lieu of bill of entry for two remittances. However, RBI declined the request in a letter dated 4-9-2004, stating that it cannot accept alternative documents after the adjudication order was passed. The appellant emphasized that the requirement of importing goods against remittances can be proved through other sufficient evidence besides a bill of entry and exchange control copy.

3. On the other hand, the respondent argued that the adjudication order should be upheld as RBI, being the custodian of foreign exchange, did not allow acceptance of alternative documents. However, the Tribunal noted that the non-service of SCN on the appellant and the passing of the adjudication order without a hearing amounted to a violation of natural justice. The Tribunal emphasized that the RBI's letter did not imply that the goods were not imported as required by FERA provisions but only addressed the timing of accepting alternative documents.

4. The Tribunal concluded that the non-service of SCN and the absence of a hearing were fundamental violations of natural justice. As a result, the adjudication order was quashed, and the matter was remanded back to the adjudicating authority for a fresh decision after providing an opportunity for the appellant to be heard. The Tribunal directed the adjudicating authority to serve the SCN on the correct address and make a decision in accordance with the prevailing rules. Ultimately, the appeal was allowed, and the adjudication order was set aside.