2003 (10) TMI 701 - AT - FEMA

Summary

Issues:
- Appeal against order of adjudicating authority/Special Director of Enforcement under section 51 of Foreign Exchange Regulation Act, 1973 for contravention of section 18(2) and (3) of the Act
- Penalty imposed on firm and partners for contravention of Act
- Efforts made by the appellants for realization of outstanding export proceeds
- Validity of impugned findings and orders of adjudicating authority

Analysis:
1. The appeal was filed against the order of the adjudicating authority/Special Director of Enforcement, Mumbai, for contravention of section 18(2) and (3) of the Foreign Exchange Regulation Act, 1973. The appellants were found guilty and ordered to pay a penalty. The Enforcement Directorate issued a Show Cause Notice regarding outstanding export proceeds. The appellants claimed difficulties due to communal riots and efforts for extension of time for realization of dues. The appeal was jointly filed by all appellants against the findings and orders.

2. Although the appeal was jointly filed by three persons, it was entertained without noting the defect of multiple appellants. The appeal was dismissed for default but later restored for hearing on merits. The case proceeded with representation from both sides.

3. The main issue was whether the appellants had made reasonable efforts for realization of outstanding export proceeds and if the impugned findings and orders were legally sustainable.

4. The appellants argued that they made persistent efforts for realization of dues, with most amounts realized by November 1996. They relied on documents and submissions to support their claims. The DLA for the respondents contended that the appellants failed to realize the proceeds within stipulated time and lacked necessary permissions.

5. The records showed that export proceeds were delayed due to various reasons, including communal riots. The appellants made efforts to persuade buyers for remittance. Despite delays, all amounts were eventually realized. The impugned orders failed to consider the circumstances leading to delays and efforts made by the exporters. The findings of contravention were deemed unsustainable, and the penalty was set aside.

6. Consequently, the impugned findings were quashed, and the penalty order was set aside.

7. The appeal was allowed, and the impugned findings and penalty order were set aside based on the appellants' efforts and eventual realization of export proceeds beyond stipulated time.