2024 (9) TMI 939 - AT - FEMA

Contravention of Section 8(1) and 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973 - receiving payments in foreign exchange during 1996-97 through fake export documents and without any export of goods to overseas parties - Adjudicating Authority finding contravention in the hands of the appellant imposed the penalty of Rs.2 lakhs for contravention of Section 8(1) and Rs.3 lakhs for contravention of Section 9(1)(f)(i) of the Act of 1973. HELD THAT - Show Cause Notice was given in the year 2002 alleging contravention of the provisions of the Act of 1973. A period of more than 22 years has already passed from the date of Show Cause Notice and otherwise the appellant has deposited Rs.2 lakhs as against the total penalty of Rs.5 lakhs. Taking into consideration the peculiarity of the case and also that total penalty amount is of Rs.5 lakhs for which prayer is made to reduce it to Rs.2 lakhs, we find the prayer to be appropriate for which the counsel for the respondent left it open for the Tribunal to pass an appropriate order. We find it appropriate to reduce the penalty to Rs.2 lakhs out of which Rs.1 lakh each would be for the contravention of Section 8(1) and 9(1)(f)(i) of the Act of 1973. The amount aforesaid has already been deposited to satisfy the condition of pre-deposit thus on reduction of the penalty amount, the appellant would not be required to deposit the amount of Rs.2 lakhs, rather the amount deposited towards the pre-deposit be treated in satisfaction to the reduced penalty amount. Accordingly, we reduce the penalty from Rs.5 lakhs to Rs.2 lakhs.

Issues:
Challenge to order under Foreign Exchange Management Act, 1999 for contravention of Sections 8(1) and 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973.

Detailed Analysis:

1. Allegations and Show Cause Notice:
- The appellant was accused of receiving foreign exchange payments through fake export documents without actual export of goods.
- Allegations under Sections 8(1) and 9(1)(f)(i) of the Act of 1973.
- Adjudicating Authority imposed penalties of Rs.2 lakhs and Rs.3 lakhs for contraventions.

2. Appellant's Defense:
- Appellant claimed signatures on documents were forged at the instance of another individual, Paresh Dave.
- Dispute arose due to familial relations with Paresh Dave.
- Appellant argued penalties were disproportionate to allegations and sought reduction to Rs.2 lakhs.

3. Respondent's Argument:
- Respondent contended appellant's involvement as signatory of the firm.
- Mentioned Paresh Dave's role in the transactions.
- Opposed reduction of penalties, citing established contravention.

4. Tribunal's Decision:
- Tribunal reviewed submissions and records.
- Found appellant's excuse of being forced to sign documents unacceptable.
- Acknowledged the age of the case (over 22 years) and appellant's deposit of Rs.2 lakhs.
- Reduced penalty to Rs.2 lakhs, with Rs.1 lakh each for contraventions under Sections 8(1) and 9(1)(f)(i).
- Accepted the deposited amount as satisfaction of the reduced penalty.

5. Conclusion:
- The appeal was disposed of with the penalty reduced from Rs.5 lakhs to Rs.2 lakhs.
- Tribunal considered the circumstances and the appellant's deposit in reaching the decision.

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