2001 (7) TMI 1333 - AT - FEMA

Summary

Issues:
1. Representation by unauthorized person before the Appellate Tribunal.
2. Ex parte hearing due to non-appearance of appellant.
3. Challenge to penalty imposed for contravention of FERA provisions.
4. Allegations of contravention related to export proceeds realization.
5. Consideration of mitigating factors for penalty imposition.
6. Modification of penalty imposed by the impugned order.

Representation by Unauthorized Person:
The appellant, a commission agent, appointed a representative who was neither an advocate nor a Chartered Accountant, contrary to the rules. As per the Foreign Exchange Management Rules, only authorized representatives falling under these categories can make representations. Therefore, the unauthorized representative was not allowed to represent the appellant.

Ex Parte Hearing:
Despite notices and opportunities for the appellant to appear, there was no representation from the appellant or their counsel. The Tribunal decided to proceed ex parte based on the appellant's pleading in the memorandum of appeal and the available record material to ensure justice.

Challenge to Penalty Imposed:
The appeal challenged an order imposing penalties on the appellant firm and its managing partner for contravening FERA provisions related to export proceeds realization without RBI permission. The appellant explained the circumstances of allowing adjustments without seeking RBI approval.

Allegations of Contravention:
The appellant firm allowed a buyer to adjust their balance claim without RBI permission, leading to contravention of FERA provisions. The adjustment was made without proper authorization, even though there was a long business relationship and familial connections between the parties.

Mitigating Factors for Penalty Imposition:
Although the contravention occurred, the Tribunal considered the small amount involved and the appellant's business decisions based on commercial prudence. The bona fide intentions of the appellants were taken into account as mitigating factors.

Modification of Penalty Imposed:
After careful consideration, the Tribunal modified the penalty, reducing it to 50% of the amount involved in the contravention. A consolidated penalty of Rs. 17,000 was imposed on the appellant-firm, while no penalty was imposed on the managing partner. The impugned order was partly allowed, and the penalty was modified accordingly.