9911796707
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Issues Involved:
1. Waiver of pre-deposit requirement. 2. Contravention of section 29(1)(a) and 29(4)(a) of the Foreign Exchange Regulation Act, 1973. 3. Contravention of section 9(1)(d) and 9(1)(e) of the Act. 4. Contravention of section 16(1)(a) of the Act. 5. Contravention of section 8(1) of the Act. 6. Contravention of section 73(3) of the Act. 7. Contravention of section 9(1)(a) and 9(1)(c) of the Act. Issue-wise Detailed Analysis: 1. Waiver of Pre-Deposit Requirement: The Tribunal waived the requirement of pre-deposit for penalties, citing that the impugned order was made ex parte without giving due opportunity to the appellants to defend themselves. The adjudicating authority treated the replies to the show-cause notices as written arguments and passed the impugned order without a personal hearing, violating rule 3(3) of the Adjudication Proceedings and Appeals Rules, 1974. Additionally, penalties were imposed on H.S. Duggal without serving show-cause notices on him, violating rule 3(1). 2. Contravention of Section 29(1)(a) and 29(4)(a) of the Act (Show-Cause Notices II & III): The charge against the appellants was holding shares without RBI permission, violating section 29(1)(a), which actually pertains to carrying on business. The correct provision was section 29(4)(a). The Tribunal found that the adjudicating authority wrongly assumed the appellants' non-resident status without evidence. The appellants, who were initially resident Indians, went abroad for specific purposes and returned, thus not qualifying as non-residents under section 2(q). Consequently, the penalties imposed were set aside. 3. Contravention of Section 9(1)(d) and 9(1)(e) of the Act (Show-Cause Notice IV): The appellant company was accused of making payments on behalf of certain individuals without RBI permission. The Tribunal found that the individuals were not non-residents at the relevant time, nullifying the contravention of sections 9(1)(d) and 9(1)(e). The penalties imposed were set aside. 4. Contravention of Section 16(1)(a) of the Act (Show-Cause Notices V, VII, XI, XIII): - Show-Cause Notice V: The Tribunal found that the company did not have a right to receive the claimed amount of JD 1.5 million, as it was a disputed claim, not an admitted debt. The penalty was set aside. - Show-Cause Notice VII: The claim of ID 4.8 million was also a disputed amount, and the company made efforts to pursue it. The penalty was set aside. - Show-Cause Notice XI: The claim of US $1.3 million was for compensation, which was paid directly to the staff by TROCON. The penalty was set aside. - Show-Cause Notice XIII: The amount of Rs. 2,53,366.11 was not realisable due to a ban by the Republic of Yemen. The penalty was set aside. 5. Contravention of Section 8(1) of the Act (Show-Cause Notice VI): The appellant company was accused of borrowing JD 2,29,120 without RBI permission. The Tribunal found that the company had the necessary permission from the Working Group and subsequently from the RBI. The penalty was set aside. 6. Contravention of Section 73(3) of the Act (Show-Cause Notice X): The company was accused of shifting equipment without RBI permission. The Tribunal found no evidence of sale or hiring out of equipment, thus no contravention of para 11E.6 of the Exchange Control Manual. The penalty was set aside. 7. Contravention of Section 9(1)(a) and 9(1)(c) of the Act (Show-Cause Notices XII & XIV): - Show-Cause Notice XII: The company was accused of making payments to Wafa Dajani & Sons without RBI permission. The Tribunal found that the payments were within the approved limit, and the company had complied with the necessary approvals. The penalty was set aside. - Show-Cause Notice XIV: The company was accused of making payments to R.S. Duggal without RBI permission. The Tribunal found that the payments were part of the approved expenses for the London office. The penalty was set aside. Conclusion: All the appeals were allowed, and the impugned order was set aside. The appellants were exonerated of all charges.
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