1995 (2) TMI 481 - AT - FEMA

Issues Involved:

1. Alleged contravention of sections 8(3) and 8(4) of the Foreign Exchange Regulation Act, 1973.
2. Validity of the adjudicating officer's findings and conclusions.
3. Evidence regarding the valuation and import of books.
4. Consideration of statements under section 40 of the Act.
5. Legal implications of general malpractices in foreign exchange transactions.

Issue-wise Detailed Analysis:

1. Alleged Contravention of Sections 8(3) and 8(4):

The core issue in the appeals was whether the appellants contravened sections 8(3) and 8(4) of the Foreign Exchange Regulation Act, 1973. The adjudicating authority imposed a penalty of Rs. four lakhs on the first appellant for allegedly remitting money abroad for importing books under OGL without receiving equivalent value in return. The show-cause notice alleged that the appellants remitted Rs. 22,69,844.55, which they were entitled to get back, thus contravening the Act. However, the appellate tribunal found that the adjudicating officer's conclusions were not supported by concrete evidence and were contrary to the evidence submitted by the appellants.

2. Validity of the Adjudicating Officer's Findings and Conclusions:

The appellants argued that the adjudicating officer's findings were legally untenable and not based on evidence. The tribunal agreed, noting that the officer ignored significant evidence, such as the printed price list of books, which contradicted the allegations of over-invoicing. The tribunal emphasized that the burden of proof was on the department to establish that the invoice value was higher than the normal prices, which was not done. The tribunal found that the officer's reliance on letters from the Indian High Commission and Customs authorities did not constitute admissible evidence.

3. Evidence Regarding the Valuation and Import of Books:

The tribunal scrutinized the evidence related to the valuation of imported books. It noted discrepancies in the adjudicating officer's findings, such as the incorrect assertion that books did not bear prices at the time of import. The tribunal highlighted the availability of a published catalogue and price list, which showed that the invoice values were consistent with market prices. The tribunal criticized the lack of inquiry from publishers to ascertain market prices and the failure to consider evidence submitted by the appellants, such as insurance cover and European Community Certificate of origin, which indicated the books' value.

4. Consideration of Statements Under Section 40:

The tribunal addressed the use of statements recorded under section 40 of the Act. It found that the adjudicating officer erred in relying on these statements to determine book prices, as such determinations should be based on primary and documentary evidence. The tribunal noted that statements could not substantiate findings when documentary evidence was available, emphasizing the need for objective evidence to establish contraventions.

5. Legal Implications of General Malpractices in Foreign Exchange Transactions:

The tribunal criticized the adjudicating officer's consideration of general malpractices in foreign exchange transactions, stating that such considerations were not legally permissible. It emphasized that decisions should be based on the specific facts and circumstances of each case, without being influenced by extraneous considerations. The tribunal found that the officer's approach lacked objectivity and failed to investigate material facts adequately.

Conclusion:

The tribunal concluded that the findings of contravention of sections 8(3) and 8(4) were not sustainable due to the lack of admissible evidence and the failure to consider relevant evidence submitted by the appellants. Consequently, the tribunal set aside the impugned order, allowing the appeals and nullifying the penalties imposed on both appellants.

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