2003 (5) TMI 545 - AT - FEMA

Summary

Issues:
1. Alleged contravention of section 8 of the Foreign Exchange Regulation Act, 1973.
2. Under-invoicing of consignments of fragrances exported to a foreign buyer.
3. Seizure of foreign currencies and documents during a search operation.
4. Statements recorded under section 40 of FERA 1973.
5. Show-cause notices issued for contraventions of various provisions of FERA 1973.
6. Denial of charges and violation of natural justice.
7. Liability of the company for the acts of its executives.
8. Adequacy of the Special Director's order and imposition of penalties.
9. Review of the case by the Appellate Tribunal.

Analysis:
The judgment involves appeals against an order passed by the Special Director of Enforcement regarding contravention of section 8 of the Foreign Exchange Regulation Act, 1973. The case revolves around the under-invoicing of fragrances exported to a foreign buyer, leading to a search operation where foreign currencies and documents were seized. Statements recorded under section 40 of FERA 1973 implicated the Chairman and other executives in under-invoicing and fund transfers. Show-cause notices were issued based on these findings, with parties denying the charges and alleging a lack of specificity in the notices.

The defense argued that the company should not be held liable for the actions of individual executives and that the show-cause notices lacked specificity. The Special Director relied heavily on statements and documents to find the company guilty and imposed significant penalties. The Appellate Tribunal noted that the defense presented was substantial and raised important legal issues regarding the company's liability and the adequacy of the order.

The Tribunal found that the order was not in accordance with the law as crucial issues were not properly addressed, and the defense raised in the replies to the show-cause notices was not adequately considered. The Tribunal decided to remand the case for fresh adjudication, emphasizing the need for a thorough review of the defense presented by the appellants. The Tribunal directed the Special Director to decide the proceeding within three months of receiving the order, highlighting the need for a fair and comprehensive reconsideration of the case.