1995 (10) TMI 250 - AT - FEMA

Summary

Issues:
- Imposition of penalty for non-realization of export proceeds
- Contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973
- Justification for holding appellants guilty
- Realization of export proceeds for specific GRIs
- Evidence provided regarding non-realization of export proceeds
- Applicability of section 18(2) to specific GRIs
- Lack of evidence to support imposition of penalty under section 68(1)
- Allegations of suppression of information by the appellants
- Actions taken by the appellants in relation to export proceeds
- Decision to set aside the impugned order

Analysis:

The judgment pertains to an appeal filed against the imposition of a penalty on a firm for non-realization of export proceeds covered by 10 GRIs. The appellants, as surviving partners of the firm, contested the penalty, arguing that they were not liable as goods from most GRIs were warehoused abroad under the bank's control, with auction proceeds realized for some GRIs before 1988. The Chairman found it unjust to require the appellants to pre-deposit the penalty amount, considering the facts and evidence on record. He noted that the firm was held guilty without proper consideration, as goods from only two GRIs were delivered to the foreign buyer, and the remaining GRIs were under the bank's control, with approval for closure granted by the Reserve Bank. Consequently, the Chairman waived the pre-deposit and disposed of the appeal in favor of the appellants.

The judgment highlights that the provisions of section 18(2) of the Act apply only when goods are received by the foreign buyer, emphasizing the necessity of realizing export proceeds. It was noted that for specific GRIs where proceeds remained unrealized, the appellants provided evidence of correspondence with the foreign buyer, a criminal case against the buyer, and efforts made by the appellants' bank to recover the proceeds. The appellants' explanation of being deceived by the foreign buyer was deemed credible, especially considering the threat of legal action by the buyer, which could have led to civil litigation. The Chairman found the adverse conclusions drawn by the adjudicating authority unsustainable, supporting the appellants' contentions and ultimately setting aside the impugned order against them.

Regarding the imposition of penalties under section 68(1) of the Act, the judgment highlighted the lack of evidence supporting such penalties against the appellants. The Chairman criticized the adjudicating authority for rejecting the appellants' claim of being sleeping partners without sufficient evidence and for doubting the appellants' disclosures to the authorities. The judgment emphasized that the appellants did not take actions leading to non-realization of export proceeds for specific GRIs and did not retain the proceeds outside the country, leading to the decision to allow the appeal and set aside the impugned order against both appellants.