1996 (2) TMI 603 - AT - FEMA

Summary

Issues:
1. Imposition of penalties on two appellants for contravention of the Foreign Exchange Regulation Act, 1973.
2. Request for waiver of pre-deposit by the appellants.
3. Allegation of the impugned order being passed ex parte without proper opportunity for defense.
4. Defense arguments against the contravention and penalties imposed.
5. Consideration of mitigating factors for penalty determination.
6. Applicability of penalties on partners of a partnership firm.
7. Decision on the appeals and penalty amounts.

Detailed Analysis:
1. The judgment deals with appeals against penalties imposed on two appellants for contravention of the Foreign Exchange Regulation Act, 1973. The first appellant was penalized Rs. 1,50,000 for contravention of section 18(2) read with section 18(3, while the second appellant faced a similar penalty under section 68(1) of the Act.

2. The appellants requested a waiver of pre-deposit, arguing their financial inability to pay the penalties. The first appellant, a partnership firm, ceased operations in 1986 with no assets or bank balance. The second appellant, a consultant, claimed insufficient income to cover the penalty amount.

3. The appellants contended that the impugned order was passed ex parte without adequate opportunity to present their defense. They argued that the penalties were unjustified, given their compliance history and the circumstances leading to the outstanding export proceeds.

4. The defense argued against the contravention, stating that the appellants had regularly received payments from foreign buyers and had taken necessary steps to recover outstanding amounts. They highlighted the impact of DRI actions on the delayed remittances and the lack of culpable acts or omissions on their part.

5. Mitigating factors were considered for penalty determination, with the defense emphasizing the lack of intention to retain export proceeds outside the country. The Chairman acknowledged the appellants' past compliance and reduced the penalty amount for the first appellant to Rs. 35,000.

6. The judgment addressed the imposition of penalties on partners of a partnership firm, noting that penalizing partners in addition to the firm might be unjust. The penalty on the second appellant was set aside based on this principle.

7. Ultimately, the appeals were partly allowed, upholding the contravention for the first appellant but reducing the penalty amount. The impugned order concerning the second appellant was set aside, and a 30-day period was granted for penalty payment.

This detailed analysis covers the issues, arguments, and the Chairman's decision regarding the penalties imposed under the Foreign Exchange Regulation Act, 1973.