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FEMA - Case Laws
Showing 21 to 40 of 1378 Records
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2024 (9) TMI 1034
Order passed u/s 19(1) of FEMA imposing penalty for contravention of Section 42(1) of FEMA - transactions were carried out in violation of various provisions of FEMA - liability of person who, at the time of contravention, was in-charge of, and responsible to the company for conduct of business of the Company - HELD THAT:- There is a deeming Clause to hold in-charge to conduct the business of the Company liable for the punishment. The Proviso, however, exclude those who submit that the contravention was without their knowledge and due diligence to prevent such contravention was taken.
The case of the Appellant is that he was not Incharge for compliances rather it was Mohendar Ahuja. It was submitted that due safeguard was put in place for compliances and even comprehensive policy was prepared. It was to show that due diligence was exercised and otherwise contravention was not in his knowledge.
We find the order of the Adjudicating Authority is silent on the issue rather the cryptic order has been passed in reference to the role of the Appellant and none of the argument has been dealt with while recording finding and imposing penalty.
Adjudicating Authority should have dealt with the plea raised by the Appellant to the fact that contravention was not in his knowledge and otherwise he exercised due diligence to prevent the contravention. We find aforesaid to have been proved. Accordingly, we find the case in favour of the Appellant and thereby set aside the impugned order and with the aforesaid Appeal is allowed.
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2024 (9) TMI 1033
Confiscation of Foreign and Indian Currency recovered from the business premises - Imposition of penalties for contravention of FEMA, 1999 - Allegations of illegal dealings in foreign exchange - FFMC failed to apply with the conditions laid down by RBI in terms of Section 10&47 of FEMA, 1999 - penalty of Rs.5 lakhs was imposed on appellant Sumesh Duggal and Rs.15 lakhs on M/s Duggal Forex Pvt. Ltd
HELD THAT:- As far as cash of Rs. 11,00,000/- is concerned, the same is duly explained by the appellants by way of tendering the statement of account of M/s Duggal Forex Pvt Ltd. which shows drawal of Rs. 5,00,000/- by way of cheque no. 343741 for sum of Rs. 8,00,000/- by way of cheque no. 343746. The sum of Rs. 11,00,000/- is stated to be out of the said drawn amount of Rs. 13,00,000/-. Accordingly, the said cash of Rs. 11,00,000/- is not an unaccounted money in any manner and is wrongly seized and ordered to be confiscated.
Coming to the various foreign currency notes found in the premises of M/s Duggal Forex Pvt Ltd. and not tallying with the record, appellant has stated that the said amount is duly accounted for and produced the record in support of his contention (as referred by him in para no. 3 above), which reflects that there is no contravention on the part of M/s Duggal Forex Pvt Ltd. Perusal of the impugned order reflects that the Adjudicating Authority has not considered the said record and is silent on this aspect. Therefore, on the basis of record submitted by M/s Duggal Forex Pvt Ltd., the said company has not committed any contravention, as there is no irregularity in the account of the said company.
Now, coming to Sumesh Duggal, the evidence on record clearly reflects that he used to sell US $ on premium rate to the officials/officers of Nigerian High Commission.
In sequel to my findings in the preceding para, the appeal filed by M/s Duggal Forex Pvt Ltd is hereby allowed and the appeal filed by Sumesh Duggal is hereby dismissed. The Indian and foreign currency seized from the premises of M/s Duggal Forex Pvt. Ltd. is hereby directed to be released. Appellant Sumesh Duggal has already deposited the penalty of Rs. 5,00,000/- as pre-deposit of penalty for admitting his appeal. Hence, appellant Sumesh Duggal is not liable to pay any additional amount.
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2024 (9) TMI 1032
Applicability of FERA provision to not resident in India - transfers to non-resident convertible rupee accounts enabled payments to be made in Foreign Exchange to a person resident outside India - Appellant Bank has been charged for contravention of Section 64 (2) read with Section 6 (4), Section 6 (5) and Section 49& 73 (3) of FERA - Contraventions in terms of Section 64 (2) of FERA for having abetted the Standard Chartered Bank, Mumbai.
HELD THAT:- Section 6 (4) and 6 (5) and 49 & 73 (3) of FERA require that the banks which are ADs shall not engage in any transaction involving any foreign exchange which is not in conformity with the terms of its authorization as AD and to obtain necessary declarations in this regard from the person on whose behalf it undertakes such transactions as well as shall comply with the conditions of such permission.
It is on 20 different occasions that the non-resident convertible rupee accounts of the Appellant Bank were credited. 19 transactions of credit occurred in its account with the ANZ Grindlays Bank between 24.07.1991 and 22.08.1991 and 1 transaction of credit happened in its account with the Standard Chartered Bank on 28.02.1991. The credits which happened in the ANZ Grindlays Bank were in a short period of about a month.
The record reveals that there were telex messages from the Appellant Bank to the ANZ Grindlays Bank for ensuring that the impugned credits were made to its account with the ANZ Grindlays Bank. One of such specific instance has been brought out by the Ld. Adjudicating Authority in the paragraphs cited earlier. It is from the facts and circumstances of a case that the intention, instigation and engagement are to be ascertained. The facts of the present case speak for themselves.
The plea that the Appellant Bank was not part of the Bilateral Group but was included in External Group does not help its case. In fact, the Appellants should have been more careful in facilitating credits in their accounts with the ANZ Grindlays Bank and with the Standard Chartered Bank by virtue of not being part of the Bilateral Group. Repeatedly credits were being facilitated in non-resident convertible rupee account by the Appellant Bank.
The circumstances and the evidence in the present case reverse the burden on to the Appellant which it has failed to discharge. Therefore, the charge of the abetment against the Appellant Bank stands established as it contravened Section 64 (2) read with Section 6 (4), Section 6 (5) and Section 49 and Section 73 (3) of FERA.
Charge against the individual Appellant/CEO - Adjudicating Authority has observed in the Impugned Order that no evidence was placed before him that the contraventions by the Appellant Bank had taken place without the knowledge of the CEO or that he exercised all due diligence to prevent such contravention. Mr. John Baden, then CEO of the Appellant Bank paid penalty of Rs. 500 imposed on him in the Impugned Order dated 11.02.2010 and has not filed Appeal against the said Order. We therefore find that the charge against the individual Appellant for the aforementioned contraventions in terms of Section 68 (1) of FERA is established in so far as his Appeal No. FPA-FE-195/MUM/2008 is concerned.
Quantum of penalty imposed on the Appellant - In the facts and the circumstances of the case we do find that that amount of penalty is disproportionate to the allegation made against the Appellants. We accordingly reduce the penalties of Rs. 13,28,82,000/- on the Appellant Bank and Rs. 6,64,41,000/- on the individual Appellant in the Impugned Order dated 09.07.2008 to Rs. 1,00,00,000/- (Rupees One Crore Only) on the Appellant Bank and to Rs. 5,00,000/- (Rupees Five Lakhs Only) on the individual Appellant, which would meet the ends of justice.
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2024 (9) TMI 1031
Contravention of Sections 8 (3) r/w 8(4) and 9(1) (b) of FERA - illegal foreign exchange remittance abroad in the garb of charges being paid for the imports of the goods which never occurred - Composite penalty for contraventions.
HELD THAT:- We find that Sections 8(3) and 8(4) of FERA are worded in terms of a ‘person’ and there is no usage of ‘importer’. Similarly, Section 9(1)(b) is also worded in terms of a ‘person’.
In the present case the Respondent Directorate had various statements before it, which conveyed that more than one concern was being controlled and owned by the Appellant Shri R.K. Verma. The investigations evoked suspicions as to fraud having been committed in filing of forged bills of entry with the bank. Hence, it became imperative to unearth the truth. It is, therefore, important for us to determine whether the remittances which were actually released were by Shri Verma, either directly or indirectly, and whether he was the ‘person’ as has been referred to in the aforementioned Sections.
Whether the bills of entry to demonstrate that the goods had actually been imported against the remittances made, were deposited or not with the bank? - Appellants have claimed that these bills were in fact deposited with the bank but went missing. The Appellants have also maintained that the bills were not available since the prescribed period for its retention was over and in any case the bills had already been audited. However, the bank lodged a FIR with the Police for the missing import documents. The counter allegation is that the theft of the missing import documents was caused so to prevent detection of forgery. The Police failed to bring the case to conclusion. In fact, to raise this issue so as to contend that the bills of entry could have demonstrated that the imports of the goods occurred is to deviate from the correct evaluation of evidence on record. The documents from the bank clearly demonstrate that the amounts were remitted in the name of M/s. MICO Enterprises and M/s. Diamount. The reports from the Customs Department show that no diamonds were imported against the impugned remittances. Hence the question about the availability of the bills of entry is not germane to determine whether imports occurred against the impugned remittances.
From the statements of Shri Vinod A. Shah it is clear that Shri R.K. Verma met him in Antwerp in the last quarter of 1990 and requested him to open a Company for him. He therefore opened a firm by name M/s. Diamblue in which major shareholder was Shri Rajesh Verma, a person introduced by Shri R.K. Verma. It therefore appears that M/s. Diamblue which received the remittances made by M/s. Diamount was in fact under the control of the Appellant Shri R.K. Verma. The inference that follows is about the key role that the Appellant Shri R.K. Verma played in the entire modus operandi to illegally remit the foreign exchange abroad in the garb of charges being paid for the imports of the goods which never occurred.
Thus, we find that the contraventions of Sections 8 (3) read with 8(4) and 9(1) (b) of FERA are established against the Appellant Shri R.K. Verma and contraventions of Sections 8 (3) read with 8(4), 9(1) (b) and 64(2) of FERA are established against Shri R.A. Soni. We therefore, find no merit in the two Appeals.
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2024 (9) TMI 1030
Imposition of penalties under FEMA - Foreign currency confiscation as seized from the premises of the Appellant - Tribunal directed the Appellant to deposit 15% of the amount of penalty imposed and furnish bank guarantee for the remaining 85% as pre deposit - Appellant argued that the principles of natural justice have been violated in as much as cross examination of the Departmental Officers and witnesses was not permitted
HELD THAT:- During the search of the residential premises a deposit slip of an overseas account along with a blank cheque book of HSBC Bank, Hongkong were seized. The seized deposit slip showed a deposit of US$ 100 in the said account. The Appellant deposed in his statement that he had not taken permission from RBI to open the account. However, he had subsequently produced a letter requesting the HSBC Bank to close the account.
Notebook marked B seized from the resident of the Appellant on which there was an entry relating to one Jazer, the Ld. Adjudicating Authority inferred that it revealed illicit purchase of foreign currency of US$ 16000 by the Appellant. He in his statement on 07.03.2005 attributed this entry to the transaction of 160 optical frames sold by him at the price of Rs. 48.60 per piece to the said Jazer. In view of this statement tendered by the Appellant under Section 37 of FEMA, we are inclined not to accept the finding of Ld. Adjudicating Authority that the contravention of Section 3(a) of FEMA has happened for the said transaction.
Therefore, we are inclined to uphold the finding of the Ld. Adjudicating Authority that the Appellant indulged in contravention of Section 3(a) of FEMA but for a reduced amount of US$ 99,770 & not US$ 1,15,770 as the charge for the contravention of US$ 16000 is not found sustainable. 17. Ld. Adjudicating Authority found no contravention of FEMA for the seized Indian currency of Rs. 9.29 Lakh which has not been confiscated.
We set aside the confiscation of the foreign currencyWe order the release thereof to the Appellant.
We also order, as prayed by the Appellant, to release the seized Indian currency of Rs. 9.29 Lakh which was not confiscated. We find that the contravention of Section 3(a) of FEMA for an amount of US$ 99,770 by the Appellant is established. We also find that the contravention of Sections 3(a) & 3(d) of FEMA for amounts US$ 5,95,738.4 and RMB 5,78,079.8 by the Appellant are established.
Penalties imposed on the Appellant and for the aforementioned contraventions are disproportionately higher. We therefore reduce the consolidated penalty for the aforementioned contraventions to Rs. 15,00,000/- (Rupees Fifteen Lakh Only) on the Appellant.
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2024 (9) TMI 939
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.
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2024 (9) TMI 938
Contraventions of FERA - request for separate hearing due to non-membership in Kamani family - Violation of natural justice in passing the order - Denial of opportunity of hearing to A.P. Parekh - HELD THAT:- The perusal of the record does not show that the appellant was ever given an opportunity of hearing subsequently. It is in a given case where his case was separated thus we find that the plea taken by the appellant in his appeal is partly corroborated by the impugned order.
A case is made out to remand the matter back to the Adjudicating Officer/Authority for hearing of the case afresh so that the appellant may get appropriate opportunity of hearing.
It is necessary to clarify that the Show Cause Notice was in reference to FERA 1947 and FERA 1973 which have been repealed by FEMA 1999 thus the issue would be that who can provide an opportunity of hearing. It is required to be clarified to avoid any complications and accordingly while remanding the case back after quashing the order dated 20.09.2000 in regard to the appellant A.P. Parekh, the Department is directed to place the matter of the appellant before the appropriate authority of equivalent rank either under FERA or FEMA for providing him an opportunity of hearing which may be even the Adjudicating Authority under FEMA for which Notification has been issued by the Government of India.
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2024 (9) TMI 707
Validity of detention order of the detenu - Detenu was engaged in illegal transactions by way of purchase and sale of illegally collected foreign currencies from NRIs and other foreign exchange dealers - as argued the material against the detenu could not have led any reasonable person to come to the conclusion that there was a case made out against the detenu to detain him AND Detaining Authority has not applied his/her mind to the material in proper perspective resulting in an unsustainable order of preventive detention.
Whether non-supply of the statements of Ms. Preetha Pradeep has affected the right of the detenu to make an effective representation under Article 22(5) of the Constitution of India? - HELD THAT:-There can be no doubt that it is not necessary to furnish copies of each and every document to which a casual or passing reference may be made in the narration of facts and which are not relied upon by the Detaining Authority in making the order of detention. Failure to furnish copies of such document/documents as is/are relied on by the Detaining Authority which would deprive the detenu to make an effective representation would certainly amount to violation of the fundamental right guaranteed under Article 22(5) of the Constitution of India.
This Court reiterated that, primarily, the copies which form the ground for detention are to be supplied and non-supply thereof would prejudice the detenu. It has been further held that the documents which are merely referred to for the purpose of narration of facts in that sense cannot be termed to be documents without the supply of which the detenu is prejudiced.
It is thus a settled position that though it may not be necessary to furnish copies of each and every document to which a casual or passing reference has been made, it is imperative that every such document which has been relied on by the Detaining Authority and which affects the right of the detenu to make an effective representation under Article 22(5) of the Constitution has to be supplied to the detenu.
No doubt, as has been reiterated time and again by this Court, it may not be necessary to supply each and every document to which a passing or casual reference is made. However, all such material which has been relied on by the Detaining Authority while arriving at its subjective satisfaction will imperatively have to be supplied to the detenu.
In our view, the documents relied on by the Detaining Authority which form the basis of the material facts which have been taken into consideration to form a chain of events could not be severed and the High Court was not justified in coming to a finding that despite eschewing of certain material taken into consideration by the Detaining Authority, the detention order can be sustained by holding that the Detaining Authority would have arrived at such a subjective satisfaction even without such material.
In that view of the matter, we have come to a considered conclusion that non-supply of the statements of Preetha Pradeep has affected the right of the detenu to make an effective representation under Article 22(5) of the Constitution of India and as such, the detention is vitiated on the said ground.
Whether non-receipt of the representation and the delay in deciding the representation by the Detaining Authority and the Central Government would also affect the right of the detenu under Article 22(5) of the Constitution? - We find that the Superintendent of the Central Prison & Correctional Home has acted in a thoroughly callous and casual manner. In spite of there being catena of judgments by this Court that it is the duty of the transmitting authorities to transmit the representation of the detenu promptly and it is the corresponding duty of the concerned authorities to consider the said representation and to decide it swiftly, the same has been followed only in breach in the present matter.
In the present case, it has been casually stated that though the Jail Authorities had informed that the representations of the detenu were sent through ordinary post, the same were neither received by the Detaining Authority nor the Central Government. We deprecate the practice of the Prison Authorities in dealing with the valuable right of the detenu in such a casual manner.
In spite of this Court clearly observing in the case of Vijay Kumar (supra) that the State Government must gear up its own machinery to ensure that the representation is transmitted quickly; it reaches the Central Government as quickly as possible and is decided expeditiously. In the present case, the law laid down by this Court has been given a go-bye.
Jail Authorities ought to have ensured that the representation of the detenu reaches the concerned Authorities at the earliest. In the present era of technological advancement, the Jail Authorities could have very well sent the copies of the representation to the Detaining/Appropriate Authority either by email or at least a physical copy could have been sent by Speed Post (acknowledgment due) so that there could have been some evidence of the said being sent to the competent authority and could have been tracked.
Merely because there has been a casual or callous and, in fact, negligent approach on the part of the Jail Authorities in ensuring that the representation of the detenu is communicated at the earliest, the valuable right available to the detenu to have his representation decided expeditiously cannot be denied.
There has been a delay of almost about 9 months in deciding the representations made by the detenu. Even otherwise, from the Memoranda dated 12th June 2024, as already discussed herein above, there would be at least 27/20 days’ delay on the part of the Central Government and the Detaining Authority in deciding the representation of the detenu after it reached them subsequent to the filing of the present appeal.
In the present era of technological development, the said representation can be sent through email within a day. It is further needless to reiterate that the Competent Authority should decide such representation with utmost expedition so that the valuable right guaranteed to the detenu under Article 22(5) of the Constitution is not denied. In the matters pertaining to personal liberty of the citizens, the Authorities are enjoined with a constitutional obligation to decide the representation with utmost expedition. Each day’s delay matters in such a case.
In the present matter, we find that on account of casual, callous and negligent approach of the Prison Authorities, the representation of the detenu could not reach to the Detaining Authority and the Central Government within a reasonable period. There has been about 9 months’ delay in deciding the representation. Even otherwise, accepting the stand of the respondents as made in the counter affidavit, there has been a delay of 27/20 days on the part of the Central Government and the Detaining Authority in deciding the representation when it was called from the Prison Authorities after notice was issued in the present matter. We further find that the detention order is liable to be quashed and set aside on this ground also.
Thus, order passed by the Joint Secretary (COFEPOSA) to the Government of India directing the detention of the detenu is quashed and set aside.
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2024 (9) TMI 706
Offence under FERA - contravention of Section 8(3) read with (r/w) Section 8(4) and Sections 8(3) r/w 8(4) r/w Section 64 of FERA - penalty has been imposed on him for the over-invoicing of the imported books and unauthorised remittances in foreign exchange made abroad through his alleged proprietorship firms -
It is contention of the Appellant that the main accused Shri Kamlesh Shah placed the order for the import of the books, made the payment for the consignments for the imported books and the subsequent remittance in foreign exchange abroad and the only act committed by the Appellant was that he allowed Shri Kamlesh Shah to use the name of his proprietorships for import of books.
HELD THAT:- We observe that the Appellant had the knowledge that Shri Kamlesh Shah had placed orders for the books, effected the consignment imports and made payment of remittances in foreign exchange to give effect to the fraudulent scheme. Further, based on the said recorded statements under Section 40, we are not inclined to believe the assertion of the Appellant that he was not aware that Shri Kamlesh Shah had opened the bank. Moreover, we observe that any inconsistencies in the statement of Shri Kamlesh Shah do not cast doubts on the veracity of the recorded statements and records available before us for drawing inference about the involvement of the Appellant.
Based on the materials before us, we do not consider the Appellant to be main mastermind to over-value the imported book consignments and send remittances abroad in foreign exchange for the said import. From the role played by the Appellant in the entire scheme, we hold that the contravention of Section 8(3) r/w Section 8(4) as well as of the said Sections r/w Section 64(2) of FERA are established against the Appellant.
We reduce the total penalty on the Appellant to Rs. 2 Lakhs. We note that Rs. 2 Lakhs has already been pre-deposited by the Appellant and therefore, the amount is to be adjusted towards the reduced penalty. We also observe that the Ld. Adjudicating Authority has directed Rs. 60,859.52 lying in the bank account of M/s Vishal Internationals, the proprietorship firm of the Appellant to be adjusted against the total penalty of Rs. 8 Lakhs imposed on the Appellant in the impugned order. In view of the reduction in penalty to Rs. 2 Lakhs, which has already been deposited by the Appellant as pre-deposit, we direct that the amount of Rs. 60,859.52 blocked in the account of M/s Vishal Internationals in the Corporation Bank be released to the Appellant, along with interest thereupon, if any.
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2024 (9) TMI 562
Order passed by the Special Director imposing the penalty - contravention of Section 6(3)(a) of FEMA - HELD THAT:- As explained that the omissions to give particulars of the step-down WOSs were shown to be unintentional and occasioned only for the reason that the Company had disclosed its business plans to the entities named above and it was to prevent the Company from the local laws applicable in different countries where the entities were situated. It thus became clear that though the appellant company was having letter of clearance from the RBI dated 22.11.2001, certain omissions were found but it cannot be said that the appellants were not vigilant to seek clearance/approval before making investments.
As also a fact that on 20.07.2005, the RBI accorded its approval on the Company’s application for closure of the WOS and advised the Company to surrender its holding license, if issued, and to produce evidence of repatriation towards realization of equity investment. Therefore, some justification in reference to the facts of this case and the act of the appellant has been given though contested by the respondent. The facts aforesaid are relevant only for the purpose of considering the quantum of penalty otherwise the contravention of Section 6(3)(a) of the Act of 1999 and Regulations 5,6 and 13 of the Regulations, 2000 has not been contested
Taking into consideration the overall facts which include the initial permission of RBI, we find penalty amount to be disproportionate and accordingly the penalty of M/s Tips Industries is reduced from Rs.70 lakhs to Rs.35 lakhs and for Shri Kumar S. Taurani, it is reduced from Rs.28 lakhs to Rs.8 lakhs. The reduction of the penalty is even looking to the amount involved and the reason of contravention. Accordingly, it would not be taken as an order on the proportionality groundbut the reduction of the amount is in the peculiar facts and circumstances of the case.
We cause interference in the impugned order only in regard to the imposition of penalty which seems to be disproportionate and, therefore, the penalty of Rs.70 lakhs is reduced to Rs.35 lakhs on the appellant company while the penalty of Rs.28 lakhs is reduced to Rs.8 lakhs on the individual and with the aforesaid the impugned order is modified.
As clarified that the appellant had approached Bombay High Court where certain issues were framed for adjudication. However, appellant did not press the appeal in reference to those issues, rather volunteered for adjudication of the appeal only in reference to the amount of penalty. Hence, he has not pressed for an order in reference to the judgment of Bombay High Court.
It is on his agreement and when he did not press the appeal to answer the issues framed by the Bombay High Court that we have disposed of the appeal. The learned counsel was otherwise fair enough to state that legal issues framed by Bombay High Court are not made out on the facts of the case and accordingly we proceeded to dispose of the appeal in reference to the rival arguments. Thus, with the reduction of the penalty amount, appeal is disposed of.
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2024 (9) TMI 561
Penalty imposed under the Foreign Exchange Management - non-convertible amount was transferred out of India not on one occasion but on many occasions - Negligence vs. connivance of appellants - HELD THAT:- Appellants had acted in contravention of the provisions of the act of 1973 to make non-convertible amount to be convertible without prior permission of the RBI. Subsequently, if the amount was brought back, the contravention of the provisions of the Act of 1973 cannot be ignored. It may be due to inadvertence. The officers of the bank transferred the non-convertible amount to make it convertible. If we go deep into the issue and refer the facts, even connivance of the officers would come on record but in view of the order of the Delhi High Court, we are considering the issue whether there was negligence on the part of the appellant.
We find that the appellants were negligent in making non-convertible amount to be convertible. It cannot occur due to inadvertent error because the non-convertible amount was transferred out of India not on one occasion but on many occasions. Thus, negligence on the part of the appellants gets well proved on the facts of the case.
Appellants submitted that there is no loss of foreign currency as it was brought back to India. It has already been clarified that contravention of the provisions of the Act of 1973 would not get nullified if the currency was subsequently brought back to India. In fact, if the negligence of the appellants is ignored, then it would be nothing but to endorse their action in contravention of the provisions of the Act of 1973. If such arrangements are permitted and ignored, it may have serious consequence. Only for the reason that the money was alleged to have been brought back, no penalty could have been imposed, we do not find aforesaid ground to be tenable.
Whether respondent/Adjudicating Authority is justified in imposing the penalty of Rs.65 lakhs on the appellant bank and Rs. 10 lakhs each on its officers - We have gone through the record and also the judgment of the Delhi High Court [2010 (1) TMI 1313 - DELHI HIGH COURT] The Delhi High Court has restricted the case in reference to allegation of negligence and not for any other issue. Adjudicating Authority ought to have decided the Show Cause Notice in reference to the aforesaid.
We find that the learned Adjudicating Authority has taken into consideration each aspect of the matter raised before it and thereupon passed a detailed speaking order. In doing so, it did not become judge of its own cause, rather order was passed based on material and otherwise the appellants themselves have admitted their error in transferring of non-convertible funds making it convertible. The Adjudicating Authority has meticulously considered each aspect of the matter and finding contravention of the provisions of the Act of 1973, appropriate penalty was imposed but has been questioned.
As emphatically argued that without there being any representation of ED, the Adjudicating Authority has passed the order. We find no substance in the argument aforesaid. As per the procedure for passing Adjudication Order, the entire material issent to the Adjudicating Authority who cause a Show Cause Notice to invite reply of the person contravened the provisions of the Act of 1973. After receipt of the reply and the material, the Adjudicating pass an appropriate order. In the instant case, the procedure aforesaid was adopted thus we do not find that the Adjudicating Authority became judge of its own cause.
Penalty could have been imposed after taking note of the judgment of the High Court. However, in the instant case, a penalty disproportionate to the default and the contravention has been imposed. It is a fact that non-convertible currency was made convertible in violation of the Act of 1973 but for the aforesaid contravention, the penalty is disproportionate. The Delhi High Court has taken it to be a case of negligence thus the penalty should have been restricted to the allegation of negligence.
We are not in agreement with the argument raised by the appellants that there was no contravention of the provisions of the Act of 1973, we find the penalty to be on the higher side. When the non-convertible amount was brought back, the fact aforesaid could not have been ignored by the Adjudicating Authority though bringing the currency back to India does not absolve the appellant for contravention of the provisions of the Act of 1973. Thus, while we find contravention of the provisions of the Act of 1973, the penalty imposed for different contravention is disproportionate.
We find reasons to cause interference in the quantum of penalty which is reduced from Rs.65 lakhs to Rs.30 lakhs on the appellant bank and Rs.10 lakhs to Rs.3 lakhs on the individual appellant. The amount of pre-deposit has been satisfied by depositing 50% of the amount by appellant Standard Chartered Bank and 30% each by its officers/other appellants. Therefore, the appellants have already satisfied the equivalent amount or even deposited higher amount pursuant to the order for pre-deposit. Since the amount has been satisfied by the appellants, no other amount would be recoverable, rather if any amount received by the respondent is in excess to the penalty imposed by this Tribunal, it would be refundable.
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2024 (9) TMI 560
Violation of Section 8(1) and and (9) (1)(a) of FERA - officers of the Directorate of Revenue Intelligence, Hyderabad seized foreign exchange of various denominations equivalent to Rs.54,20,854 at Hyderabad Airport on 11.12.1999 from Bala Ravi Kishore - reliance on statement recorded u/s 108 of the Customs Act - validity of reliance on the statement though retracted by the appellant - HELD THAT:- The facts on record shows that there was no retraction of the statement and otherwise in absence of reason and without justifying the delay mere retraction cannot be accepted. The Apex Court in the case of Bharat v. State of UP [1970 (3) TMI 183 - SUPREME COURT (LB)] has ruled on the retraction of the statement as an afterthought.
We are unable to accept the argument of the learned counsel for the appellant that retraction has been relied though no document has been produced to prove it and otherwise there was material available to prove the case which was mainly the currency recovered though from Shri Bala Ravi Kishore but he was carrying it at the instance of the appellant. We are unable to accept that merely for the reason currency was not recovered from the appellant, a case would not be made out.
The facts available on record are sufficient to prove the contravention. It is not only that the currency recovered was meant for its delivery to a person out of India but there was no permission to carry the currency. Director of Enforcement has thus rightly concluded about the contravention of the provisions to impose penalty on the appellant.
The appellant has made a reference of Section 49(3) of the Act of 1999 to submit that the adjudication was not initiated within the sunset period of two years. It is only on the ground that notices were not served before the expiry of the period of two years while the notice was issued prior to the period of two years. Thus, we are unable to accept the argument that the proceedings were initiated after the sunset period of two years, rather issuance of Show Cause Notice itself shows initiation of the proceedings and that too within the sunset period. Accordingly, we are unable to accept the aforesaid argument also.
Appellant lastly made a reference of the acquittal of the appellant in the prosecution under the Customs Act with an argument that once the appellant is acquitted in the prosecution, the penalty should not sustain. The argument aforesaid has been made in ignorance of the fact that the appellant was exonerated by the Metropolitan Sessions Judge, Hyderabad on the ground that the sanction for the offence under Section 135(1)(b)(ii) of the Customs Act was not taken and, therefore, the prosecution therein failed. It is, however, after recording the finding that the appellant and others attempted and abetted the smuggling of foreign currency - The appeal therein by the respondent was dismissed.
The perusal of the order would reveal two issues framed by the court and answered accordingly. Metropolitan Sessions Judge concluded that the conviction could not be made in absence of sanction for conviction under Section 135(1). It is otherwise to be clarified that mere acquittal in the prosecution case would not have bearing unless the issue is decided on merits. In the instant case, the acquittal in the prosecution case is on technical ground thus it will not have bearing on the present case. Appeal dismissed.
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2024 (9) TMI 559
Proceedings under the FEMA, 1999 - black money in foreign bank, i.e., HSBC Zurich, Switzerland - use of information received under the India-France Double Taxation Avoidance Agreement - main argument that S. 37A of FEMA, 1999 is inapplicable, it is submitted by the appellant that even assuming S. 37A to be applicable, the section only authorizes seizure of assets, and not confiscation of the same - HELD THAT:- An appeal having been filed before us under the aforesaid Section 37A(5), we propose to dispose of the same on the basis of the material before us. Furthermore, we do not find anything in the language of the statute which states categorically that the Appellate Tribunal must necessarily pass its order on the basis of outdated facts, which would remain frozen in time as they were at the time when the Ld. Competent Authority passed its order. Being the order of a judicial authority, in the appellant's own case, and underlying facts in that case being substantially the same as in the present case, we deem it appropriate in the interest of justice to take the discharge order passed by the Ld. ACMM in the prosecution case filed by the Income Tax Department on record.
Entire proceedings under FEMA, 1999 were initiated on the basis of the prosecution case launched by the I-T Department and the appellant stands discharged in the aforesaid case - To invoke the provisions of Section 37A, therefore, there is no requirement of proof "just below reasonable doubt". In fact, there is no requirement even to have the reason to believe that any foreign exchange, foreign security, or any immovable property, situated outside India, is held in contravention of section 4 but merely the reason to believe that it is suspected to have been so held. From the above, it is evident that a very low threshold has been set by the legislature under Section 37A.
It appears that the threshold for initiating action under section 37A has been kept low deliberately since the section provides for multiple avenues of redress to the affected person, including adjudication, appeal to the Appellate Tribunal, and also an opening to have the seizure set aside at any stage of the proceedings by disclosing the fact of such foreign exchange or foreign security or immovable property, bringing it back into in India and, thereafter, making an application to the Competent Authority or the Adjudicating Authority.
We do not agree with the appellant that the action taken under section 37A in the present case no longer has any legs to stand because the appellant stands discharged in the prosecution case filed by the I-T Department.
Information shared under the India-France DTAA could not have been shared with any other authority or court other than authorities dealing with Income Tax proceedings - We find merit in the contention put forward by the respondent that as per the plain language of Section 37A, the Respondent Directorate could invoke the said provision "upon receipt of any information or otherwise" and it is not relevant as to where the department gained knowledge of such contravention. He further pointed out that Article 28 of the said DTAA provides that any information received by any contracting state shall be treated as secret in the same manner as information obtained under the domestic laws of the contracting state and further provides that the information may be disclosed in public court proceedings or in judicial decisions. In any case, this Appellate Tribunal is not the appropriate forum to look into issue of violation of DTAA, if any. In view of the facts stated above, we do not find any merit in the aforesaid contention of the appellant.
Even assuming that the provisions of Section 37A are applicable, the said section only authorises seizure of the assets but not confiscation of the same - We find that under section 37A the Authorized Officer has been empowered to 'seize' value equivalent in India to the foreign exchange/foreign security/immovable property outside India. The word "seize" is not defined under the Act, being a commonly used of word of general parlance.
The common meaning of the word is to take possession of something, especially property. Needless to say, possession of financial instruments which are held in a dematerialized form can only be taken by transfer of the same to the demat account of the Respondent Directorate. The learned counsel for the respondent has pointed out that this is all that has been done in the present case. The Directorate has merely seized the bonds and the same have not been confiscated. Confiscation will happen only after the adjudication proceedings are concluded. Having considered the facts before us and the clarification provided on behalf of the respondents, we find no merit in the argument of the appellant regarding confiscation of the property.
Section 37A of FEMA, 1999 was introduced by way of an amendment in the year 2015, it came into effect from 09.09.2015 - On the issue of 'continuing offence', the contention of the appellant essentially is that in the first instance there is no offence/contravention whatsoever in this case. At no stage of the proceedings did the appellant make any admission of continuing to hold any account abroad and the Directorate also does not have any evidence to support that conclusion. The Directorate had relied solely on the Income Tax prosecution case in which the appellant now stands discharged based on the categorical finding that there was no evidence even to charge him. In support of his contention, the learned counsel for the appellant relied heavily upon the language of the letter dated 30.08.2011 addressed to the Director General of Investigation of the Income Tax Department written on behalf of the appellant and the other members of his family by their Authorised Representative, Shri Abhay K. Aggarwal.
The appellant's reliance upon the decision of Ganpati Dealcom Pvt. Ltd. [2022 (8) TMI 1047 - SUPREME COURT] would not assist him. It may also be pointed out that this Appellate Tribunal in the case of Prism Scan Express Pvt. Ltd. [2024 (1) TMI 203 - APPELLATE TRIBUNAL FOR SAFEMA AT NEW DELHI] had held that a property which was transferred' prior to 2016, could still constitute benami property if it continued to be 'held' after the Amendment Act of 2016 came into force, since definition of 'benami transaction' under Section 2 (9) (A) of the amended Act covers not only property "transferred to" but also property "held by" a person the consideration for which has been provided by another person. In such cases, the question of retrospectivity would not arise as action was initiated on the ground that the property was 'held' in contravention of the amended Act after it came into force. Similar is the situation with respect to application of S. 37A in the present case. Accordingly, we do not find any grounds to interfere with the impugned order at this stage of the proceedings under Section 37A.
We do not find merit in the appeal or the application for restitution of the seized property and accordingly, dismiss the appeal with all pending applications.
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2024 (9) TMI 558
Offence under FEMA - enhancement of penalty - information was received that out of the 21 foreign remittances, the export obligations were not completed within the prescribed period of financial year - HELD THAT:- On reading of Section 13 (1) FEMA it is obvious that the maximum amount of penalty which can be imposed under the Section is three times the amount of contravention involved. From the language of the section, it is clear that the section has not prescribed either a fixed amount of penalty or minimum amount of penalty. It therefore, follows that the amount of the penalty which is to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before him.
As per the admitted fact, export proceeds are already realized by the respondent, though with delay of two years & eight months and three years & two months, from the date of exports. The fact that export proceeds are already realized, we agree with the view of Ld. Adjudicating Authority that this case pertains to only technical contravention, on account of delay in realizing the export proceeds. The said contravention of delay in realizing the export proceeds does not amount to quantifiable contravention equivalent to the proceeds of exports in any manner, asthere was no intention on the part of the respondents to indulge in contravention of the substantive provisions, as remittances against exportsare already realised.
As decided in Hindustan Steel Ltd. vs. State of Orissa [1969 (8) TMI 31 - SUPREME COURT] reading of the Adjudication Order reflects judiciousness on the part of the Adjudicating Authority, in not having imposed penalty which is commensurate with the amount of foreign remittance against exports, particularly so when the contraventions were technical in nature as the substantive provisions of the Regulations have been complied with, even though with some delay. The Adjudicating Authority has imposed separate penalty of Rs. Two Lakh each on both the Noticee(s) on account of delay for the compliances/remittances against exports. Where the contraventions are not of substantive provisions, the penalties of Rs. Two Lakh each on both the Noticee(s), imposed by the Adjudicating Authority meet the ends of justice.
As reasons relied upon by the Adjudicating Authority for the imposition of the penalties, we observe that the order of the Adjudicating Authority cannot be interfered with.
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2024 (9) TMI 557
Unauthorised transactions in foreign exchange - search was conducted at the business and residential premises of the appellant which yielded foreign currencies pertaining to various countries, including US $, Singapore $, Euro, Hong Kong $ and Australia $, in addition to a large amount of Indian currency - prima facie corroborate the information on the basis of the Directorate had initiated action against the appellant - HELD THAT:- Joint Director has pointed out a number of discrepancies in the so-called agreements to sell and fabrication of said agreements is not ruled out. We find that very cogent issues have been raised therein for which no explanations are forthcoming from the appellant's side. Further, there is nothing to show that the transactions for the sale of land as claimed by the appellant materialized as balance payments were not received till date and no sale deeds were executed in favour of vendees.
It cannot be believed that any vendee will give huge part- payment in cash. The said vendees have not filed their claims in any court or before ED. It is also not explained whether the so-called advances were refunded to the intending buyers after the sale transactions failed to fructify. Even the very contention that four different and almost identical transactions were entered into within a span of 10 days for sale four immovable properties owned by the members of his family are not credible to say the least especially as the appellant had failed to advance any such explanation in his earlier statement wherein very specific claims had been made.
Thus, we are in full agreement with the Ld. Joint Director that explanations provided subsequently to justify the Indian currency seized as well as the documents produced to substantiate the explanations are the result of an afterthought and suffer from deep contradictions. Even otherwise, it is unlikely that any family will agree to sell most of its properties, without agreeing to purchase alternate better properties.
Similarly, as regards the foreign currencies found, as already stated, the appellant had initially claimed that he had made six trips abroad to various countries, namely, Sri Lanka, Thailand, Hong Kong, Dubai, Singapore & Australia.
For undertaking the said trips, he used to purchase foreign exchange from different money changers and also the local market. He claimed that the foreign currencies seized were unspent balances of the foreign currencies which he had purchased in this manner. He undertook to furnish the details of his visits and purchases of foreign exchange made along with copies of his passport as evidence of his foreign trips and stated that he was not aware that after return from trips abroad he ought to have surrendered the unspent balance of foreign exchange to an authorized dealer within 180 days from the date of his return to India.
There were also several discrepancies in the documents produced by him in support of claim that the foreign currencies were leftover balances of foreign currencies purchased by him in connection with his visits abroad.
These have also been discussed in detail of the order Ld. Joint Director and are not being repeated here for the sake of brevity. When it was pointed out to him that there was no co-relation between the documents produced and the amounts of various currencies seized from his premises, he put forward a new claim that during his trips abroad, he visited many casinos and played various games and won prize money in various currencies including S $ 15,100, HK $ 12,100, US $ 600, Euro 500, Aus $ 1000 and UAE Dh 3350 and brought back various amounts of such foreign currencies to India.
No proof was adduced for the claims made. Even if the claims were correct, it would mean that he failed to surrender the same to an authorised person within 180 days from the date of his return to India in contravention of the provisions of Section 8 of FEMA, 1999 read with Regulation No. 6A of the Foreign Exchange Management (Realisation, Repatriation & Surrender of Foreign Exchange) Regulations 2000.
Furthermore, the Appellant failed to explain the source of US $ 6200 seized at his premises. It is pointed out by the Ld. Joint Director that as per Rule 3 of Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulation, 2015 a person can only hold US $ 2000 foreign currency notes and hence the Appellant was in violation of the provisions of this rule and possession of the said money was not justified by the Appellant.
32. Having considered the entire gamut of facts commencing with the initial information received, the findings from the search operation, the initial explanations put forward and the explanations advanced subsequently, the findings recorded in the impugned order upon appraisal of the evidence by the authority below, we are of the view that the arguments and contentions put forward on behalf of the appellant, are self- serving and lack credibility and the appellant has totally failed to explain the seizure of Indian and foreign currency from the premises by way of any cogent and reliable evidence and that the findings of the Authority below are well supported by the material on record. Accordingly, we hereby confirm the penalties levied by the Ld. Adjudicating Authority vide order dated 30.09.2013, impugned before us.
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2024 (9) TMI 556
Offence under FEMA - bogus purported exports (of sub-standard goods) to Russia with inflated invoices for the purpose of obtaining export benefits under DEPB and Duty Drawback Schemes - Reliance on statement of the witnesses recorded during investigation u/s 37 - Denial of Cross-Examination of Witnesses
HELD THAT:- In the present case, the Adjudicating Authority has not summoned any person to examine him on oath as per clause (a) of Section 28 (2) of FEMA, 1999. Even no evidence is led by respondent ED before the Adjudicating Authority by way of receiving evidence by way of affidavits as per clause (c) of Section 28 (2) FEMA, 1999. Respondent ED is relying upon the statement of persons recorded u/s 37 of FEMA, 1999 which are duly corroborated with documentary evidence collected from various sources during the investigation of this case.
The cross examination of any person will be material, if the whole case is based on the oral statement of different persons recorded u/s 37 of FEMA, without any corroborative documentary evidence, or when any witnesses summoned and examined before the Adjudicating Authority on oath.
Tribunals and Adjudicating Authorities are quasi-judicial bodies, which mostly adopts summary procedure for conducting the proceedings and the same cannot be equated with regular Courts. Moreover, the tribunals are not bound by the procedure laid down in Civil Procedure Code, 1908.
In the present case apart from the statement of the witnesses recorded during investigation u/s 37 of FEMA, there is huge documentary evidence, which corroborates the same, as pointed out by respondent in the preceding para.
As per the allegation against the appellant Suresh Saluja @ Pappy Saluja, he made the bogus purported exports (of sub-standard goods) to Russia with inflated invoices for the purpose of obtaining export benefits under DEPB and Duty Drawback Schemes - Said consignments never reached Russia, as per investigation conducted by DRI, however, appellant procured the remittances through unauthorised channels.
As also revealed during investigation that appellant Suresh Saluja instigated number of persons for floating bogus firms/concerns in order to show the purchase of material to complete the paper transactions without actual purchase. The bank accounts of said bogus firms/concerns were also opened at the instance of Suresh Saluja, but he retained the blank signed cheques of the said accounts to withdraw the bogus payments made to said firms/concerns.
Even otherwise, summoning Kabul Singh, Balwant Singh Maan, and Dr. Naginder Khera for purpose of cross examination is not going to demolish the investigation conducted by respondent ED, being based on documentary evidence and the other material evidence.
Appellant wants to cross-examine the witnesses, without filing his reply to the grounds of Show Cause Notice, which is also against the canons of court proceedings, as without going through the defnce taken by appellant, Ld. Adjudicating Authority can not appreciate whether the summoning of the said persons for cross-examination is really required during the Adjudication Proceedings in the interest of justice or the request for the same is made with a malafide intention to delay the proceedings and/or without any basis in view of documentary evidence on record.
It is apparent that the said application was moved by the appellant Suresh Saluja to delay the adjudication proceedings pending before the Adjudicating Authority, as he has not disclosed his defence till date and wants to play a blind game with the investigation agency/ED.
As pertinent to mention here that appellant Suresh Saluja without filing his reply to explain his defence to the show cause notice, challenged the Show Cause Notice, at premature stage before the Hon'ble High Court of Punjab and Haryana, Chandigarh by way of CWP-1371 of 2017, and thereafter filed the appeal before this Appellate Tribunal.
This points towards the direction that appellant is trying his best to stall the adjudication proceedings, as he is conscious of the fact that huge penalty is going to be imposed by the Adjudicating Authority on the basis of evidence on record, as and when any final order is passed, in absence any cogent defence in his favor.
The present appeal is hereby dismissed, being devoid of any merits, and thereby, adjudicating authority is hereby directed to conclude the adjudication proceedings as per law, if there is no stay by Hon'ble Punjab & Haryana High Court. Appellant is at liberty to file reply on merits to the grounds of SCN.
It is made clear that nothing expressed herein will affect the right of any party in the Adjudication proceedings. Further, Ld. Adjudicating Authority will be at liberty to examine and cross-examine any witness on oath, if so required, in the interest of justice.
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2024 (9) TMI 509
Contravention with respect to Foreign Exchange Remittance and non-submission of import document along with Exchange Control Copy of Bill of Entry - penalty of Rs.2 crores was imposed on M/s Owens Brockway (I) Ltd. under Section 50 of FERA, 1973 and personal penalty of Rs.40 lakhs each on three in-charge of and responsible to the said company for the conduct of day-to-day business of the company - HELD THAT:- Appellant company is able to prove the import of consignment with respect to three remittances and the only contravention is with respect to two remittances of NLG 31764.12 and NLG 45149.15, totaling to NLG 76913.27. Therefore, the total contravention is not equivalent to NLG 43,503,43.27, but only NLG 769,13.27 i.e. only 1.76% to the alleged contravention, as inadvertently/wrongly mentioned in the impugned order.
Therefore, in the facts and circumstances of the case and in the interest of justice, the penalty amount needs to be reduced, instead of remanding it back to the Adjudicating Authority, as the matter is about 25 years old and the chances of tracing out the record by both the sides seems to be difficult.
In sequel to our discussion in the preceding para, the amount of penalty imposed on erstwhile M/s Owens Brockway India Pvt., now, Hindustan National Glass & Industries Ltd. is hereby reduced to Rs. 2.5 lakhs. The impugned order passed by the Adjudicating Authority is modified accordingly.
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2024 (9) TMI 122
Powers of investigation in relation to the contraventions of the FEMA - Power to compound contravention - Power of Reserve Bank to compound contravention - as decided by HC [2018 (6) TMI 1492 - BOMBAY HIGH COURT] while upholding the constitutional validity and legality of the proviso, particularly by reading it in the manner noted above, we are in agreement that in the facts of this case, the RBI was not bound to put an end to the compounding proceedings. We are of the opinion that the compounding proceedings initiated vide the compounding applications of the petitioner and pending before the RBI should proceed, but strictly in accordance with law.
Thus, the above discussion concludes this judgment. Rule is made absolute by quashing and setting aside the communication dated 1st December, 2017 and further directing the RBI to consider the compounding applications in accordance with law uninfluenced by the communication of the Enforcement Directorate dated 1st December, 2017 or any prior letters/communications, which are quashed and set aside by this judgment - We also proceed to direct the RBI to render the necessary guidance to the petitioner in the matter of compounding of the contraventions under the FEMA.
HELD THAT:- After having heard learned counsel appearing for the parties, we find no error with the effective order passed by the High Court which is in paragraph 109 of the impugned judgment. Paragraph 109 itself records that the applications for compounding shall be decided in accordance with law.
Hence, no case for interference under Article 136 of the Constitution of India is made out. The Special Leave Petition is accordingly, dismissed.
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2024 (9) TMI 121
Validity of order passed - violation of principles of natural justice - prayer for cross-examination was not granted - scope of retracted statement of the noticee - Adjudicating Authority failed to consider the opinion of the handwriting expert with respect to the matter written on the diaries and certain loose sheets recovered during the search. The statements which were recorded by the Appellants were retracted as during the custody they were tortured and beaten
HELD THAT:- We find that the contentions which have been reiterated during the present proceedings had been meticulously dealt with by the Ld. Adjudicating Authority. The relied upon documents were provided to the Appellants. It does not appear to be convincing that merely because hearing was not held just before the passing of the impugned Order, in-spite of a number of opportunities given to the Appellants earlier that the impugned Order is vitiated by the violation of the principles of natural justice.
The retractions have been dealt with by the Respondent Directorate from time to time as mentioned in the afore cited paragraphs. Since, the statements were explanatory in nature, providing explanation of the documents recovered during the search, the denial of cross-examination does not cause pre-judice to the interest of the Appellants. It is to be noted that since Sh. Samsul Huda was resident of Dhaka, the demand to cross-examine him was ab initio infructuous. The Appellant Sh. Liakat Ali failed to cooperate during the investigation and the adjudication proceedings. His belated participation through his Appeal at this stage cannot come to his rescue as to deny his involvement by raising the bogey of the alleged person being someone else other than him, without any corroboration.
After having served the SCN and having furnished the relied upon documents, even so during the proceedings of adjudication, there does not appear to be any prejudice caused to the interest of the Appellants by the denial of cross examination, which in any case may not have been necessary in the present proceedings. A number of hearings were given to the Appellants during the course of the Adjudication proceedings. No reason to cause intervention in the impugned Order. We accordingly dismiss the Appeals.
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2024 (9) TMI 120
Contravention of Section 8(1), 8(3), 8(4) read with Section 64(2) of the Foreign Exchange Regulations Act, 1973 - consignment exported from India to Singapore was re-exported under the Bill of Entry on a higher value - Restrictions on dealing in foreign exchange - re-shipment of the same machinery was on a higher value with the multiplication of amount to 40 times - HELD THAT:-The mastermind behind the transaction was Dr. N.M. Parthasarthy who played a key role with M/s ETKIF America and was having significant role to arrange for the import and export of the same machinery. It was not even worth manufacturing of electronic grade iron oxide of 5000 tons rather in one factory at Puddukotai, there was no electricity supply available and at the factory of M/s ORJ Electronic Oxides, the machines were capable of only producing 20 Kg. iron oxide. The purpose was to get release of foreign exchange.
The difference between the two amounts i.e. the first invoice for export from India to Singapore at the value of USD $ 1.71 lakh in two different consignments and reexport of the same machineries at the value of around 72 lakhs USD and 71,64,993USD totaling to an amount equivalent to USD 1,43,64,993 US Dopened that opportunity.
With the support of the financial institutions, the appellants remained successful to get heavy foreign exchange released in contravention of the provisions of the Act of 1973 which was nothing but substantial loss to the country in terms of the foreign exchange. The role of the Bank of Madura and M/s Sundaram Finance Ltd was such to support the misdeeds though allegations have been made that financial institutions had made import directly and they processed the documents. However, none of the financial institution has supported the aforesaid and even other appellants have failed to prove the aforesaid allegations.
The provisions quoted above are to indicate as to whether the facts disclosed above make out a case for contravention of the provisions referred above. We find that there is gross contravention of Section 8(1) read with section 48, 8(3) and 8(4) read with Section 64(2) of the Act of 1973.
Shri N.M. Parthasarthy died during the pendency of the appeal and his legal heirs were brought on record but his role has been discussed in the order and is sufficient to show that he was the kingpin and mastermind for getting foreign exchange through the financial institutions by over invoicing the same consignment. In the light of the discussion made above, we find no merit in the appeals and they are accordingly dismissed.
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