2001 (8) TMI 1461 - AT - FEMA

Summary

Issues:
1. Imposition of a consolidated penalty on the appellant for contravening provisions of the Foreign Exchange Regulation Act, 1973.
2. Allegation of failure to take reasonable steps for realization of export proceeds.
3. Challenge regarding the correctness of claims made by the appellant's counsel.
4. Consideration of statutory presumption and actions taken by the appellant company.
5. Imposition of a consolidated penalty on the appellant company and its directors without proper regard to the provisions of the Act.

Detailed Analysis:
1. The appeal challenged an Adjudication Order imposing a consolidated penalty on the appellant for contravening the Foreign Exchange Regulation Act. The penalty was based on the failure to realize export proceeds from a German buyer, leading to a charge under section 18(2) read with section 18(3) of the Act.

2. The appellant admitted non-realization but contended they took reasonable steps for recovery. The adjudicating authority found the initial efforts insufficient, leading to the penalty imposition. The appellant argued diligent pursuit of payment, including legal action and court decree against the buyer, justifying their actions. The court's order for recovery and subsequent liquidation of the importer impacted the realization of the full amount.

3. The appellant's counsel challenged the correctness of claims made by the respondent, highlighting extensions obtained from the Reserve Bank of India for recovery. The appellant provided evidence of extensions and partial realization of the outstanding amount, refuting the allegation of lack of efforts in recovering the export proceeds.

4. The appellate tribunal considered the appellant's submissions and found that they had sufficiently discharged their obligations under the Act. The tribunal noted that the company had taken reasonable steps for realization, rebutting the statutory presumption of non-realization. The tribunal criticized the undue emphasis on initial inaction and emphasized the need for a holistic view of the actions taken by the exporters.

5. The tribunal also criticized the imposition of a consolidated penalty on the appellant company and its directors without proper consideration of the Act's provisions. It noted that not all directors may have been responsible for the contravention at the time, highlighting the lack of evidence to support the penalty imposition on all directors. Consequently, the tribunal set aside the impugned order and allowed the appeal based on the above reasons.