1996 (4) TMI 539 - AT - FEMA

Summary

Issues:
- Imposition of penalties under section 8(1) and section 16(1) of the Foreign Exchange Regulation Act, 1973.
- Allegations of contravention related to transfer of funds and payment of excess commission.
- Compliance with RBI regulations and permissions.
- Applicability of penalty under section 68(1) to directors of the company.
- Dispute regarding less payment of commission to agent in Syria.

Analysis:
The judgment by the Appellate Tribunal of the Foreign Exchange Regulation Appellate Board pertains to an appeal against an Adjudication Order imposing penalties for contravention of section 8(1) and section 16(1) of the Foreign Exchange Regulation Act, 1973. The penalties were imposed on the appellants for transferring funds between projects in Syria and paying excess commission without prior RBI permission. The Adjudicating Officer initially found the appellants guilty based on the allegations.

Upon detailed examination, the Tribunal found discrepancies in the allegations. Regarding the transfer of Syrian Pounds 6249.41, it was established that the transfer was accepted by the RBI, rendering the contravention charge invalid. Similarly, the payment of excess commission was deemed permissible as the manner of payment was in compliance with RBI regulations, as evidenced by the acceptance of the final statement of accounts by the RBI.

Furthermore, the Tribunal addressed the issue of less payment of commission to an agent in Syria. It was noted that the charge for this discrepancy was not appropriately included in the show-cause notice, and the appellants had engaged in legal proceedings with RBI approval to contest the matter. The interaction with RBI and the circumstances of the case led the Tribunal to conclude that no contravention had occurred in this regard.

Additionally, the Tribunal ruled on the applicability of penalties under section 68(1) to the directors of the company. Since the contraventions by the first appellant were not upheld, the penalties against the second, third, and fourth appellants, imposed under section 68(1), were also set aside.

In the final decision, the Appellate Tribunal allowed all appeals, setting aside the impugned order and directing the return of the penalty amount deposited by the appellants within 45 days. The judgment emphasized the importance of compliance with RBI regulations and permissions in foreign exchange transactions to avoid contraventions and penalties under the Act.