2024 (9) TMI 70 - AT - FEMA

Not shipping the Indian Black Tea to the destination as per the Bills of Lading - violation of the RBI Scheme and contravention of the provisions of FERA - Four containers of Indian Black Tea were shipped to Moscow but the importer along with the shipping company designed it to ship the containers of Indian Black Tea to Dubai instead of Moscow HELD THAT - Right from issuing the Bills of Lading, the appellants were well aware of the facts that the containers were to be shipped for Dubai and thereby the appellant company facilitated M/s Century International to carry out transactions in violation of the provisions of the Act of 1973 and RBI guidelines. It is necessary to add that Shri Sanjay Agarwal in his statement denied any instructions to the shipping company to divert the consignment Shipping agent claims that the cargo was diverted at the request of the exporter, while the exporter claimed that the cargo were ultimately delivered to Moscow via Dubai and Bandarabbas and the shipping agent, to evade Income Tax to the Government of India, furnished documents showing disposal of the cargo at Dubai The exporter failed to furnish any documentary evidence to show that the buyer in Moscow received the cargo. However, in spite of non-delivery of the goods the sale proceeds were drawn against the letter of credit from Rupee Credit fund. There appears to be no action by the buyer in Moscow against the exporter or the shipping agent. The dispute between the exporter and shipping agent arose after initiation of enquiry by the Department. The detailed facts mentioned above shows role of the appellant in shipping the consignment to a destination different than mentioned in the Bills of Lading and other documents. It was in connivance of the exporter and the appellant not only actively participated in the contravention but abetted it and, therefore, we find no reason to cause interference in the impugned order. Accordingly, appeal would fail and is dismissed.

Summary

Issues:
1. Challenge to penalty imposed under Foreign Exchange Regulation Act, 1973.
2. Alleged contraventions by the shipping company.
3. Role of the shipping company in diverting shipment.
4. Interpretation of Bills of Lading and related documents.
5. Allegations of abetment against the shipping company.

Detailed Analysis:
1. The appeal was filed to challenge a penalty of Rs.8 lakhs imposed under the Foreign Exchange Regulation Act, 1973 for contravention of specific sections. The appellant, a leading sole agent for a shipping company, was accused of diverting containers of Indian Black Tea from Moscow to Dubai, violating RBI Scheme and the Act of 1973. The appellant argued that they followed exporter's instructions and should not be penalized.

2. The appellant contended that they acted on exporter's instructions to divert the shipment to Dubai, avoiding abetment allegations. However, the Deputy Director found the appellant actively involved in diverting the cargo based on evidence like Income Tax Returns showing Dubai as the destination. The appellant's role in facilitating the exporter's violation was highlighted.

3. The Deputy Director analyzed the Bills of Lading and other documents to establish the appellant's awareness of the diversion scheme. Despite the appellant's claim of innocence due to following exporter's instructions, detailed examination revealed their active participation in diverting the cargo to Dubai instead of Moscow. The appellant's knowledge of the scheme and their role in the diversion were crucial factors in the judgment.

4. The Deputy Director scrutinized the sequence of events, including the issuance of Bills of Lading showing Dubai as the destination, contradicting the actual diversion. The appellant's actions were deemed intentional as they continued with the diversion plan despite discrepancies in the shipping documents. The judgment emphasized the appellant's complicity in the diversion scheme.

5. The judgment concluded that the appellant not only participated but abetted the diversion of cargo, collaborating with the exporter to violate the Act of 1973 and RBI guidelines. Despite the appellant's denial of receiving diversion instructions, the evidence pointed to their active involvement in diverting the consignment. The appeal was dismissed, upholding the penalty and finding no grounds for interference in the Deputy Director's order.