2024 (12) TMI 1148 - HC - FEMA

Penalty imposed - failure take reasonable steps for repatriation of export proceeds of US 5,36,759.50 for the goods exported in the year 1997-98 - Ground of limitation - It would clearly reflect that respondent No. 2 had in fact issued the first show cause notice to the appellants on 23.01.2001 and the said date is well within the sunset period of two years prescribed u/s 49 (3) of the Act of 1999. The appellants have also submitted reply to the said notice on 01.12.2001, which again is within the sunset period itself, as in terms of Section 49 (3) of the Act of 1999 the proceedings could had been initiated up to 31.05.2002 which in the instant case was initiated on 23.01.2001 to which the appellant has also given his reply on 01.12.2001. Hence, keeping in view the judgments of Mohd. Mustafa Ahmed Alvi and Others vs. Union of India and Others 2005 (11) TMI 257 - HIGH COURT OF ANDHRA PRADESH and Binod Agarwal 2006 (12) TMI 587 - DELHI HIGH COURT and M/s. Kitti Steels Limited and Others 2023 (6) TMI 1458 - TELANGANA HIGH COURT the ground of proceedings being vitiated on the ground of limitation is not available in the instant case. Merits of the case RBI s write off was subject to the condition that the appellants would return the export incentive already availed by them. This in other words means that unless the return of the export incentive was testified by the appellants, the RBI s write off will not come into play. The entire correspondence of RBI while granting write off has to be read in consonance and in altogether and therefore the claim of the waiver of contravention of Section 18 (2) of the Act of 1973 cannot be accepted on the submissions made by the learned counsel for the appellants on its face value. What is also reflected is that the Appellate Tribunal has already duly considered the contentions put forth by the appellants as also the Special Director of Enforcement Directorate and have held that since the Special Director of Enforcement Directorate did not point out the actual amount of export incentive availed by the appellants, they are also to some extent reasonable for non-compliance of the order of the RBI so far as the write off is concerned. Appellate Tribunal had substantially reduced the burden of penalty imposed in the Order in original to 1/3rd of what was imposed. This in the opinion of this Bench also is a sufficient indication of proper consideration of the contentions put forth by the appellants before the Appellate Tribunal. A plain reading of the order of the Appellate Tribunal would also show that the Appellate Tribunal had passed a reasoned and a speaking order dealing with all the aspects raised before it by the appellants. Since there was a non-compliance on the part of the appellants so far as the condition imposed while granting write off, the appellants undoubtedly have contravened the provisions of Section 18 (2) and (3) of the Act of 1973. We do not find any substantial merits made out by the appellants calling for an interference to the impugned orders. The three appeals therefore being devoid of merits, deserve to be and are accordingly dismissed.

Summary

Issues:
Challenging common order under Foreign Exchange Regulation Act, 1973; Reduction of penalty by Appellate Tribunal; Appellants' contentions on RBI policy and write off; Allegation of proceedings being vitiated under Act of 1999; Grounds of limitation; Merits of the case regarding RBI waiver and export incentive return; Consideration by Appellate Tribunal; Compliance with RBI conditions; Contravention of Act of 1973; Appeal dismissal.

Analysis:

The judgment involves three appeals challenging a common order under the Foreign Exchange Regulation Act, 1973. The Appellate Tribunal had partly allowed the appeals by reducing the penalties imposed by the Special Director of Enforcement Directorate. The appellants contended that the penalties were not justified as they had followed the RBI policy on write-offs for unrecovered export proceeds. They argued that the entire proceedings were vitiated under the Act of 1999 and that RBI's permission for write-offs should have precluded further prosecution under the Act of 1973.

The appellants also claimed that they had taken all reasonable steps for recovery of export proceeds, involving diplomatic channels for assistance. The issue of limitation was raised, but the court found that the proceedings were initiated within the prescribed period. The judgment cited various High Court cases to support the dismissal of the limitation argument.

Regarding the merits of the case, the appellants relied on RBI's waiver of contravention under the Act of 1973. However, the court noted that RBI's write-off was conditional on the return of export incentives already availed. The Appellate Tribunal had considered this aspect and reduced the penalties based on the lack of clarity on the actual export incentives availed by the appellants.

The court found that the appellants had contravened the Act of 1973 by not complying with RBI's conditions for write-offs. The judgment emphasized that the Appellate Tribunal had provided a reasoned order addressing all contentions raised. Ultimately, the court concluded that the appeals lacked substantial merit and dismissed them, with no order as to costs. Any pending miscellaneous applications were to be closed accordingly.