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2025 (4) TMI 16 - AT - FEMAOffence under FERA provisions by failing to ensure that goods exported under the Repayment of State Rupee Credits scheme actually reached Russia - Appellants have failed to establish that 500 MTs of Wheat Flour actually reached Russia which was required as per Scheme of Export of Goods and Services against Repayment of State Credits granted by the erstwhile Soviet Union - Failure to fulfill the specific requirement of the Scheme of Export of goods to Russia under Repayment of State Credits granted by the erstwhile Soviet Union HELD THAT - The arguments made by the Appellants that since they had exported the Goods on FOB basis they had no control over the destination where Goods would be unloaded does not cut ice in the facts of the present matter. In view of the observation afore it is clear that after having opted for the said Scheme they could not have agreed to adhere to only few terms of the Scheme and not to other terms. It is obvious that any exporter who did not want to take benefit of the Scheme is also required to realise the export proceeds in Foreign Currency directly from the foreign buyer. If the Exporter chose to realise the export proceeds in the Indian Currency then he had to ensure that the export is made within the bilateral framework of trade and the exports are made to the buyer in Russia. Appellants cited the order dated 02.08.2007 of this Tribunal. We observe that the order relates to the maritime agents/shipping lines and not to the exporters. Moreover the order has failed to take into account the responsibilities which are entailed from trading within the bilateral framework as enunciated under the Scheme of Export of Goods Services against Repayment of State Credits granted by erstwhile Soviet Union . The Judgment in Contship Container Lines Ltd. vs. D K Lall 2010 (3) TMI 992 - SUPREME COURT is in the context of the claim of the exporter with regard to the insurance cover if in case there is mis-delivery by the carrier. It is submitted with respect that this Judgment has no bearing in so far as the issue at hand is concerned. The decisions of the Hon ble Supreme Court in Nestle India Ltd versus Commissioner of Central Excise Chandigarh 2009 (2) TMI 22 - SUPREME COURT and Commissioner of Central Excise Mumbai versus Burroughs Wellcome (I) Ltd. 2006 (8) TMI 191 - SUPREME COURT cited by the Appellants is not applicable in view of finding that the impugned order is neither cryptic nor without reasoning. Ld. Special Director (Appeals) has made definite finding of reiteration of the Adjudication Order dated 16.07.2010 and goes on further to state the limited disagreement which resulted in reduction of penalties which shows application of mind. Thus we find that the impugned order dated 06.03.2013 cannot be intervened with.
ISSUES PRESENTED and CONSIDERED
The core issues considered in this judgment revolve around the alleged contraventions of the Foreign Exchange Regulation Act, 1973 (FERA), particularly Sections 48 and 73(3), and related provisions of the Foreign Exchange Management Act, 1999 (FEMA), by M/s Vishal Exports Overseas Ltd. and its Director, Shri Pradeep S. Mehta. The primary questions include:
ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: The legal framework involves Sections 48 and 73(3) of FERA, which deal with false statements and the Reserve Bank's authority to issue directions for compliance with the Act. The appellants relied on precedents such as Contship Container Lines Ltd. vs. D K Lall, and other Supreme Court judgments to support their arguments. Court's interpretation and reasoning: The Tribunal found that the appellants failed to provide evidence that the goods reached Russia, as required by the export scheme. The Tribunal emphasized the specific requirements of the "Repayment of State Rupee Credits" scheme, which necessitated that exports be made to Russia, and the appellants' reliance on the FOB basis was insufficient to absolve them of their obligations under the scheme. Key evidence and findings: The Tribunal noted the lack of documentary evidence from the appellants, such as Port of Discharge Certificates or Landing Certificates from Russian authorities, to substantiate their claim that the goods reached Russia. The investigation by the Enforcement Directorate suggested that the goods were offloaded in a third country. Application of law to facts: The Tribunal applied the provisions of FERA and FEMA, along with the relevant RBI circulars, to determine that the appellants had not complied with the scheme's requirements. The Tribunal rejected the appellants' argument that the FOB basis relieved them of their obligations, emphasizing the need for compliance with the specific terms of the export scheme. Treatment of competing arguments: The Tribunal considered the appellants' arguments, including their reliance on Supreme Court judgments and the FOB basis, but found them unpersuasive in the context of the specific export scheme requirements. The Tribunal also addressed the procedural aspects raised by the appellants, affirming the adequacy of the lower authorities' reasoning. Conclusions: The Tribunal concluded that the appellants failed to meet the obligations under the "Repayment of State Rupee Credits" scheme, justifying the penalties imposed. The Tribunal dismissed the appeals, affirming the findings of the Special Director (Appeals) and the Adjudicating Authority. SIGNIFICANT HOLDINGS The Tribunal upheld the penalties imposed on the appellants, albeit reduced by the Special Director (Appeals), finding that the appellants contravened FERA provisions by not ensuring the goods reached Russia. The Tribunal emphasized the importance of adhering to the specific requirements of the export scheme, stating: "Funds from repayments of State Credits are to be utilized for export of goods to Russian Federation only. No third country exports are permitted to be financed out of funds from such repayments of State Credits." The Tribunal reiterated the necessity for exporters under the scheme to ensure compliance with the bilateral trade framework, rejecting the appellants' reliance on the FOB basis as a defense. The Tribunal's decision underscores the principle that exporters opting for specific schemes must adhere to all stipulated conditions, not selectively comply with favorable terms. Ultimately, the Tribunal dismissed the appeals, finding them devoid of merit, and affirmed the penalties as valid and justified under the circumstances. The decision reinforces the obligations of exporters under government schemes and the importance of compliance with regulatory frameworks.
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