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FEMA - Case Laws
Showing 661 to 680 of 1378 Records
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2009 (10) TMI 1001
Issues:
Violation of Section 9(1)(d) of FER Act, 1973 - Contravention of payment to persons in India on behalf of a person resident outside India without RBI permission.
Analysis:
The judgment by the Appellate Tribunal for Foreign Exchange in New Delhi pertains to an appeal against Adjudication No.49/94/AD(KNS) imposing a penalty on Manoranjan Bank for contravening Section 9(1)(d) of the FER Act, 1973. The appellant was penalized for making payments to various individuals in India on behalf of a person from Bangladesh without RBI permission. The appellant did not appear, and the report confirmed that notice was served through affixation. The investigation revealed that the bank made payments to Indian individuals under instructions from a person outside India, with details coded in documents seized during a search. The appellant initially admitted to these payments but later retracted the statement, claiming coercion and threat during its recording.
The appellant argued that the statement was not voluntary and should not be considered against them. However, the burden of proof lay on the appellant to establish coercion or threat in obtaining the statement. Referring to legal precedents, the Tribunal emphasized the voluntary nature of statements crucial for validity. The retracted statement can be accepted if proven voluntary and corroborated by evidence. In this case, the documentary and circumstantial evidence supported the initial admission, indicating voluntariness. The Tribunal cited legal principles requiring subjective assessment of retraction before accepting an inculpatory statement as voluntary.
Considering the evidence and circumstances, the Tribunal upheld the Adjudicating Officer's decision, finding the appellant guilty of the contravention. The penalty imposed was deemed appropriate in relation to the amount involved in the violation. The judgment affirmed the correctness of the findings and upheld the penalty. The appeal was dismissed for lacking merit, with the penalty already adjusted from the seized amount towards payment. The decision highlighted the importance of voluntary statements and the need for corroborating evidence to support retracted confessions in legal proceedings.
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2009 (9) TMI 1090
Issues Involved:
1. Contravention of Section 9(1)(a) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973.
2. Validity and voluntariness of confessional statements.
3. Right to cross-examine witnesses.
4. Genuineness of gift transactions.
Issue-wise Detailed Analysis:
1. Contravention of Section 9(1)(a) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973:
The appellant, S.K. Mittal, was penalized for abetting the co-noticees in making payments to or for the credit of NRIs from NRE accounts without the general or special exemption of the Reserve Bank of India, thus violating Section 9(1)(a) of the FERA, 1973. The adjudicating orders imposed penalties for payments made against receipts from NRE accounts of NRIs Subhas Sethi, Narendra Nath Gupta, and Sudesh Kumar. The Tribunal found that the NRE accounts were fraudulently maintained and largely funded by foreign exchange locally, with crores of rupees distributed from these accounts under the guise of gifts.
2. Validity and Voluntariness of Confessional Statements:
The appellant argued that his confessional statements were not voluntary and were obtained under coercion and threat. However, the burden of proving coercion was on the appellant, which he failed to discharge. The Tribunal referred to the Supreme Court's observation in KTMS Mohd. v. UOI, stating that the maker of the statement must establish inducement, threat, or promise. The Tribunal found the statements of the appellant and his employee, Umesh Mendiratta, to be corroborated by other evidence and circumstantial details, thus rejecting the appellant's claim of coercion.
3. Right to Cross-examine Witnesses:
The appellant contended that he was not allowed to cross-examine third-party recipients of the NRE accounts. The Tribunal noted that cross-examination cannot be claimed as a matter of right, citing the Supreme Court's ruling in Surjit Singh Chhabra v. UOI. The Tribunal found no justifiable ground for the appellant's request for cross-examination and upheld the rejection of this request.
4. Genuineness of Gift Transactions:
The appellant claimed that the transactions were genuine gifts made out of love and affection by the NRIs to various recipients. However, the Tribunal found this contention unconvincing, noting that the transactions involved payments at a premium, indicating commercial transactions rather than genuine gifts. The Tribunal emphasized that a gift cannot involve consideration from the donee to the donor, as it would then be a commercial transaction. The statements of the appellant, Mendiratta, and other recipients raised significant questions that the appellant failed to answer, leading to the conclusion that the transactions were not genuine gifts.
Conclusion:
The Tribunal concluded that the appellant, S.K. Mittal, was guilty of abetting the recipients of the amounts from the NRE accounts in contravention of Section 9(1)(a) of the FERA, 1973. However, considering the appellant's role as an intermediary and the actual beneficiaries being the co-noticees, the Tribunal found the penalty amount excessive. The penalty was reduced to the amount already pre-deposited by the appellant in the three appeals. The appeals were partly allowed, and the pre-deposited amount was appropriated towards the penalty.
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2009 (9) TMI 1089
Issues Involved:
1. Penalty for contravention of sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973.
2. Unauthorized acquisition and transfer of foreign currency under section 8(1) of the Foreign Exchange Regulation Act, 1973.
Issue-wise Detailed Analysis:
1. Penalty for Contravention of Sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973:
The appellants were penalized for failing to take reasonable steps for the repatriation of export proceeds after exporting goods worth US dollars 510,463.28. The appellants argued that the exports were actually made by Mines & Minerals Trading Corporation Ltd. (MMTC), who had an agreement with the appellants to manufacture goods. The appellants did not have an export code number, and the export proceeds were to be realized in MMTC's account. The appellants were only responsible for manufacturing the goods and were to receive 30% of the return as their wages.
The Tribunal noted that MMTC Ltd. was responsible for signing the GRIs, obtaining the export code number, and receiving the export proceeds. MMTC Ltd. also took all export benefits, such as duty drawback and income-tax exemption. The Tribunal concluded that MMTC Ltd. was the exporter and bore the responsibility for repatriation of export proceeds under section 18 of the FER Act, 1973. The legal obligation under sections 18(2) and 18(3) is cast on the exporter, and since the appellants did not file an undertaking under section 18(1), no adverse presumption under section 18(3) could arise against them.
The Tribunal emphasized that "reasonable steps" depend on the circumstances of each case and that MMTC Ltd., as the exporter, had the obligation to take such steps. The Tribunal found that the appellants could not be held responsible for the contravention of sections 18(2) and 18(3) of the FER Act, 1973, and quashed the penalties imposed on them.
2. Unauthorized Acquisition and Transfer of Foreign Currency under Section 8(1) of the Foreign Exchange Regulation Act, 1973:
Appellant J.B.S. Bakshi was penalized for unauthorizedly acquiring US dollars 1 lakh from M/s. Omran Italian Jewellery, Sharjah, UAE, and transferring the same to M/s. Al Abdulla Jewellery Trades, UAE, as well as acquiring and transferring Dhiram 168,000 to M/s. Omran Italian Jewellery, Sharjah. The Tribunal examined section 8(1) of the FER Act, 1973, which restricts dealing in foreign exchange without the previous permission of the Reserve Bank.
The Tribunal found that the appellant did not acquire the foreign currency for personal use but acted as a carrier for M/s. Omran Italian Jewellery, who paid the money to M/s. Al Abdulla Jewellery Trades for the release of shipment. The Tribunal concluded that mere possession of foreign currency as a carrier does not amount to acquisition or transfer under section 8(1). The Tribunal stated that the burden of proof beyond reasonable doubt lies with the Enforcement Directorate, which failed to provide viable proof of guilt against the appellant.
The Tribunal quashed the penalty imposed on appellant J.B.S. Bakshi, finding that the allegations of contravention of section 8(1) were not substantiated.
Conclusion:
The Tribunal allowed the appeals, quashing the penalties imposed on the appellants for contravention of sections 18(2) and 18(3) and section 8(1) of the Foreign Exchange Regulation Act, 1973. The Tribunal found that MMTC Ltd. was the exporter responsible for repatriation of export proceeds and that the appellant J.B.S. Bakshi did not unauthorizedly acquire or transfer foreign currency. The impugned order was based on wrong assumptions and was set aside.
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2009 (9) TMI 1088
Issues:
Violation of FERA provisions - contravention of Sections 9(1)(b) & 9(1)(d)
Non-compliance with pre-deposit of penalty amount for filing appeal
Analysis:
The appeal before the Appellate Tribunal for Foreign Exchange was filed against an Adjudication Order imposing a penalty for contravention of FERA provisions. The appellant, Shaikh Mohd. Ismail Adam, received and made payments without permission from RBI, leading to the penalty. The appellant failed to comply with the pre-deposit order despite being directed to pay 20% of the penalty amount. The respondent argued for dismissal of the appeal due to non-compliance with the High Court order as per Section 52(2) of the FER Act.
The FERA provisions require appellants to file an appeal along with the penalty amount unless dispensation is granted. The Tribunal cited a Supreme Court case, Navin Chandra Chhotelal v. Central Board of Excise & Customs, where non-compliance with deposit requirements led to rejection of the appeal. Although Section 52 does not explicitly mention rejection for non-compliance, the Tribunal asserted its authority to dismiss appeals for such reasons. Despite being given over 3 years and leniency in the deposit order, the appellant failed to comply, leading to the dismissal of the appeal based on statutory provisions and equity considerations.
In conclusion, the Tribunal upheld the dismissal of the appeal due to the appellant's persistent non-compliance with the pre-deposit order, citing statutory provisions and the Supreme Court's stance on such matters. The records of the appeal were to be archived as per the order issued.
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2009 (9) TMI 1087
The appellant challenged an adjudication order imposing penalties for contravention of FER Act. The order was based solely on the appellant's admissional statement without corroboration. The appellant pleaded mistake of fact, which is a valid defense. The impugned order was quashed due to lack of corroboration, following the judgment in Vinod Solanki v. Union of India 2009 (233) ELT 1571. The appeal was allowed in favor of the appellant.
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2009 (9) TMI 1086
Issues:
1. Reduction of penalty imposed under FEM Act, 1999.
2. Interpretation of Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000.
3. Claim of ownership and possession of seized foreign currency.
4. Residency status of the appellant under FEM Act, 1999.
5. Contravention of section 4 of FEM Act, 1999.
6. Quantum of penalty imposed and its justification.
Analysis:
1. The appeal was against the reduction of penalty from Rs. 15,000 to Rs. 5,000 under the FEM Act, 1999. The tribunal directed the appellant to deposit 40% of the reduced penalty amount within 45 days, which was complied with. The appeal was taken up for final disposal on merit.
2. The appellant argued that the seized foreign currency was within the permissible limit as per the Foreign Exchange Management Regulations, 2000, allowing residents of India to retain foreign currency worth not exceeding USD 2000. The appellant claimed joint ownership with his wife, citing his work history abroad and the absence of a currency declaration form during entry to India.
3. The respondent contended that the appellant's statements indicated sole ownership of the seized foreign currency, acquired abroad and declared as his hard-earned money, despite initial claims of joint ownership with family members. This established contravention of the FEM Act, 1999, leading to justified confiscation.
4. The appellant's residency status was confirmed under the FEM Act, 1999, as a resident of India based on the duration of stay prior to the search date. The regulations allowed possession of foreign currency not exceeding USD 2000, with no evidence presented to prove ownership by family members.
5. The possession of foreign currency beyond the statutory limit of USD 2000 was deemed a contravention of the FEM Act, 1999, as confirmed by the appellant's admission of ownership of the seized currency. The confiscation of the foreign currency was upheld by both adjudicating authorities.
6. The quantum of penalty imposed was reduced to Rs. 5000 by the first appellate authority, considered reasonable compared to the contravention involved. The tribunal dismissed the appeal, directing the appellant to deposit the balance penalty amount within 7 days, failing which the Enforcement Directorate would realize it in accordance with the law.
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2009 (9) TMI 1085
Issues Involved: Contravention of Section 10(4), 10(5) read with Section 42 of the Foreign Exchange Management Act (FEM Act) 1999; Validity of the adjudication orders; Requirement of due care and caution by authorized money changers; Applicability of the standard of care and caution; Legality of penalties imposed.
Issue-wise Detailed Analysis:
1. Contravention of Section 10(4), 10(5) read with Section 42 of the FEM Act 1999:
The appellants, licensed full-fledged money changers (FLM), were found guilty of contravening Section 10(4) and 10(5) read with Section 42 of the FEM Act 1999. The adjudicating authority held that the appellants released foreign currency to individuals sponsored by a non-existent firm, M/s. Leather Crafts and Goods Exports. The applications were signed by Manas Kumar Moitra, and the same individuals were sponsored multiple times within a short period, indicating a lack of due diligence by the appellants.
2. Validity of the Adjudication Orders:
The Tribunal initially affirmed the adjudication orders dated 15-12-2005, which were remanded back for reconsideration. However, the Madras High Court quashed the Tribunal's order and directed it to dispose of the appeals on merits. Upon review, the Tribunal found no merit in the appeals and upheld the adjudication orders, emphasizing the appellants' failure to act with due care and caution.
3. Requirement of Due Care and Caution by Authorized Money Changers:
The appellants argued that their possession of a valid RBI license negated any contravention of the FEM Act. However, the Tribunal emphasized that the license implicitly required the appellants to act with due care and caution. The Tribunal highlighted that the appellants failed to notice glaring discrepancies, such as the same person being sponsored twice within a short period and multiple sponsorships by the same firm within overlapping dates.
4. Applicability of the Standard of Care and Caution:
The Tribunal referred to various legal precedents to underline the expectation of a higher standard of care and caution from authorized dealers. The appellants, being experienced money changers, were expected to scrutinize transactions diligently to prevent fraud. The Tribunal cited the Bombay High Court's observation that the standard of care must be judged according to the capacity and intelligence of the person, and the Orissa High Court's ruling that higher standards are expected from authorized dealers.
5. Legality of Penalties Imposed:
The Tribunal found that the penalties imposed were not harsh or excessive. The appellants were held responsible for their conduct and the conduct of their company. The penalties were deemed appropriate given the appellants' failure to adhere to their legal duties. The Tribunal dismissed the appeals, affirming the adjudication orders and sustaining the penalties.
Conclusion:
The appeals were dismissed, and the adjudication orders were upheld. The appellants were found guilty of contravening Sections 10(4) and 10(5) read with Section 42 of the FEM Act 1999. The Tribunal emphasized the need for authorized dealers to act with due care and caution and upheld the penalties imposed, finding them neither harsh nor excessive. The pre-deposit amounts were ordered to be appropriated towards the penalties, with the remaining amounts to be deposited within one week.
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2009 (9) TMI 1084
Issues:
Violation of Section 9(1)(e) of FER Act, 1973 - Placing amount to the credit of a non-resident without RBI permission.
Analysis:
The judgment by Km. Vijay Laxmi, Member of the Appellate Tribunal for Foreign Exchange, pertains to appeals against a penalty imposed on a company and its directors for contravening Section 9(1)(e) of the FER Act, 1973. The penalty was for placing Rs. 95,000 to the credit of a non-resident without RBI permission. The appellants argued that the transaction was a local financial one, denying any foreign exchange involvement. They claimed ignorance of the non-resident status of the individual involved. However, it was established that the amount was indeed credited to a non-resident without seeking RBI permission, a clear violation of the law.
The tribunal noted that the appellants failed to seek RBI permission before crediting the amount to a non-resident individual. It was emphasized that no one would deposit a significant sum without some acquaintance with the company, placing the burden on the appellants to verify the individual's residential status. The association between the company and the non-resident individual indicated the appellants' knowledge of the individual's status, reinforcing the charge against them.
The judgment highlighted the importance of regulatory mechanisms under the FER Act to prevent economic offenses. It cited a case emphasizing the need to administer justice impartially to protect the national economy and interests. Despite the appellants' arguments, the tribunal found the impugned order to be correctly passed. The penalty amount was deemed appropriate considering the contravention's seriousness and the quantum involved. The tribunal upheld the penalty and directed the appellants to pay within 15 days, warning of legal action if the amount was not deposited promptly. Overall, the appeal was dismissed for lacking merit, affirming the penalty imposed for violating Section 9(1)(e) of the FER Act, 1973.
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2009 (9) TMI 1083
Issues:
Non-compliance with pre-deposit order under Section 19(1) of FEM Act, 1999.
The judgment delivered by the Appellate Tribunal for Foreign Exchange pertains to appeals filed against an Adjudication Order imposing penalties for contravention of the Foreign Exchange Management Act, 1999. The penalties were imposed on an appellant company and three other individuals for failure to take reasonable steps for repatriation of export proceeds, as per the Foreign Exchange Management Regulations. Despite being served notice, the appellants did not comply with the pre-deposit order issued on 29.1.2009, leading to the appeal being taken up ex parte for further decision.
The Respondent argued that the appeals should be dismissed due to the non-compliance with the pre-deposit order dated 29.1.2009, as mandated by Section 19(1) of the FEM Act, 1999. This section requires the deposit of the penalty amount while filing an appeal against an order imposing a penalty. The Tribunal is empowered to dispense with such deposit only in cases of undue hardship, subject to conditions it deems fit to impose to ensure penalty realization.
The Tribunal highlighted the statutory obligation under Section 19(1) of the FEM Act, 1999, which necessitates the pre-deposit of penalty while filing an appeal unless the Tribunal permits otherwise based on undue hardship. The Tribunal emphasized that it cannot interpret the law differently to avoid harsh consequences, citing a Supreme Court judgment. The Tribunal reiterated that statutory laws must be applied as prescribed by the legislature without introducing sympathy or leniency.
The judgment concluded that the appellants failed to make the pre-deposit of the penalty within the stipulated period, despite clear consequences outlined in the pre-deposit order. The Tribunal, based on the non-compliance with the pre-deposit order, dismissed the appeals. The decision was made in adherence to the provisions of Section 19(1) of the FEM Act, 1999, emphasizing the importance of complying with legal obligations and orders in such matters.
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2009 (9) TMI 1082
Issues:
1. Whether the appellants can be held guilty for contravention of section 9(1)(c) FER Act 1973 or the appeals are required to be allowed?
2. Whether certain background facts not part of the Show Cause Notice can be considered for holding the appellants guilty?
3. Whether anything outside the Show Cause Notice can be brought into the impugned order to hold the appellants guilty?
Analysis:
1. The case involves a dispute where an amount of Rs. 10570000/- was accepted by the appellant firm as deposits from 7 NRIs, leading to the issuance of a Show Cause Notice alleging contravention of section 9(1)(c) FER Act. The RBI had allowed the appellants to accept deposits with certain conditions. The impugned order discussed the manner in which the deposits were generated in the name of 7 NRIs.
2. The Senior counsel for the appellant argued that the RBI permission and Exchange Control Manual provisions allowed deposits from NRIs for a limited period, contending that no contravention of section 9(1)(e) occurred. It was emphasized that the allegations in the SCN must be specific and not vague, citing legal precedents to support the argument.
3. The Enforcement Directorate argued that the deposited amount did not originate from NRIs, supporting the impugned order. The legal principle was discussed that adjudication proceedings require a proper Show Cause Notice to be served, and the adjudicating officer cannot go beyond the allegations in the SCN without violating principles of natural justice.
4. The judgment highlighted the importance of adhering to the contents of the Show Cause Notice during adjudication proceedings. It was noted that the RBI permission exempted the appellants from contravention of section 9(1)(e) FER Act, as permitted transactions are not subject to the restrictions outlined in the Act.
5. The conclusion favored the appellants on the first issue, stating that the contravention of section 9(1)(e) did not occur due to RBI permission. It was emphasized that anything not alleged in the SCN cannot be considered in the adjudication order, ensuring adherence to procedural fairness and the principles of natural justice.
This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the reasoning behind the decision rendered by the Appellate Tribunal for Foreign Exchange in New Delhi.
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2009 (9) TMI 1081
Issues: Violation of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973; Validity of confessional statement; Burden of proof for coercion in statement; Corroboration of evidence in retracted confessional statement.
Analysis:
1. The appeal was filed against an adjudication order imposing a penalty for contravention of section 9(1)(b) of the FER Act and confiscating a seized amount. The appellant did not appear, and the case proceeded for final disposal.
2. The appellant was accused of receiving funds from a person resident outside India without RBI permission. Investigations revealed the appellant's receipt of funds and his admission of receiving the amount for business from his brother in Jeddah.
3. The appellant contested the confessional statement's voluntariness, claiming the seized amount belonged to another individual. However, the evidence, including recovered slips, corroborated the initial statement, and the appellant failed to explain the delay in retraction.
4. The statutory provision of section 9(1)(b) prohibits receiving payments from non-resident individuals without RBI authorization. The appellant's retraction lacked substantiation, and the burden of proving coercion was not met, as per legal precedents.
5. The retracted confessional statement was found voluntary and supported by circumstantial evidence, including the substantial amount received and the relationship between the appellant and the sender. The appellant failed to justify the source of the seized funds.
6. The judgment concluded that the appellant was rightly held guilty of contravening section 9(1)(b) of the FER Act. The penalty imposed was deemed appropriate and in line with the severity of the offense. The appeal was dismissed, and the pre-deposited amount was to be appropriated towards the penalty.
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2009 (9) TMI 1080
Issues:
Violation of provisions of section 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973 leading to penalty imposition.
Detailed Analysis:
Issue 1: Violation of FERA Provisions
The appeal was filed against an Adjudication Order imposing a penalty for contravention of section 9(1)(b) and 9(1)(d) of FERA. The appellant, along with a co-noticee, was found involved in a transaction where Indian currency was recovered, indicating a violation of FERA. The appellant was located and admitted to making payments as per the transaction details provided by the co-noticee. The appellant contested the confessional statements, claiming they were obtained under coercion and were not voluntary.
Issue 2: Legal Position of FERA Sections
Sections 9(1)(b) and 9(1)(d) of FERA prohibit receiving or making payments without authorization from RBI in cases involving persons resident outside India. The burden of proving coercion in the confessional statement rested on the appellant, as per legal precedents. The Supreme Court rulings highlighted the importance of voluntary and corroborated confessions in such cases.
Issue 3: Evaluation of Confessional Statement
The confessional statement of the appellant, recorded in 1992, detailed the transactions and payments made, implicating the appellant in the violation of FERA provisions. The appellant's claim of coercion lacked substantial evidence or timely retraction, leading to the conclusion that the statement was voluntary and truthful. The circumstantial evidence, including the involvement of a person residing outside India, supported the confessional statement.
Issue 4: Penalty and Judicial Scrutiny
After considering the evidence and circumstances, the Tribunal concluded that the appellant was rightly held guilty of contravening FERA sections. The quantum of penalty imposed was deemed appropriate and in line with the seriousness of the offense. The Tribunal upheld the impugned order, dismissing the appeal for lack of merit. The predeposited amount was to be appropriated towards the penalty, confirming the validity of the penalty imposition.
In conclusion, the Tribunal found the appellant guilty of violating FERA provisions, emphasizing the importance of voluntary confessions and the burden of proof in coercion claims. The penalty imposed was considered justified, and the appeal was dismissed, affirming the initial order.
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2009 (9) TMI 625
Cross-examination of co-noticees - during the span of 11 years 9 notices were sent to the petitioner - Held that: - Since conduct of the appellant shows that he was avoiding notices and not remaining present before the forum, question of allowing cross-examination of co-noticees does not arise. - Appeal dismissed
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2009 (8) TMI 1302
Issues Involved:
1. Contravention of provisions of section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973.
2. Failure to take reasonable steps for realization of export proceeds.
3. Adverse legal presumption under section 18(3) of the Foreign Exchange Regulation Act, 1973.
4. Adequacy of steps taken by the appellants to recover outstanding dues.
5. Quantum of penalty imposed.
Issue-wise Detailed Analysis:
1. Contravention of provisions of section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973:
The appeals were filed against the Adjudication Order imposing penalties for contravention of section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973. The appellant-company and its directors were penalized for failing to take reasonable steps to realize export proceeds amounting to US $2,53,429.99 from M/s. Bangladesh Power Development Board (BPDB), Dhaka. The exports were made during 1993-94, and 10% of the total invoice value remained unpaid.
2. Failure to take reasonable steps for realization of export proceeds:
The appellants argued that they took reasonable steps for the realization of the outstanding dues. They provided details of their efforts, including entering into a contract with BPDB, supplying goods as per specifications, and addressing objections raised by BPDB regarding the quality of materials supplied. Despite these efforts, BPDB did not release the remaining 10% of the proceeds and invoked bank guarantees.
3. Adverse legal presumption under section 18(3) of the Foreign Exchange Regulation Act, 1973:
Under section 18(3) of the Foreign Exchange Regulation Act, 1973, an adverse legal presumption is raised against the exporter if the export price is not repatriated within the prescribed period. The Tribunal noted that the export price was not repatriated, raising an adverse legal presumption against the appellants. The appellants were required to rebut this presumption by proving that they took all reasonable steps to recover the payments.
4. Adequacy of steps taken by the appellants to recover outstanding dues:
The Tribunal examined whether the steps taken by the appellants were reasonable. The appellants claimed to have rectified the defects in the supplied goods and initiated legal proceedings against BPDB. However, the Tribunal found that there was no documentary evidence to support the rectification of defects and that the legal proceedings were not effective. The Tribunal concluded that the steps taken by the appellants were routine and casual, and did not constitute reasonable efforts to recover the outstanding dues.
5. Quantum of penalty imposed:
The Tribunal considered the quantum of the penalty imposed against the appellants. It noted that the penalty amount was commensurate with the violations and was not harsh or excessive. The Tribunal upheld the penalty against the appellant-company but absolved the partners from any penalty, citing a ruling by the Hon'ble High Court of Kolkata that a partnership firm and its partners cannot be held guilty for the same contravention simultaneously.
Conclusion:
The Tribunal upheld the penalty imposed against the appellant-company for contravening the provisions of section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973. It found that the appellants failed to take reasonable steps to realize the export proceeds and could not rebut the adverse legal presumption raised against them. The partners of the appellant-firm were absolved from any penalty, and the appellants were directed to deposit the balance amount of the penalty within 15 days.
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2009 (8) TMI 1301
Issues:
Jurisdiction of Appellate Tribunal for Foreign Exchange under section 52(4) FER Act, 1973; Legality, propriety, and correctness of adjudication order; Authorization for filing revision petition by Deputy Legal Adviser; Abuse of process by Enforcement Directorate; Service of notice on respondents; Delay in filing revision petition.
Analysis:
The Appellate Tribunal for Foreign Exchange was tasked with examining the legality, propriety, and correctness of an adjudication order issued by the Additional Commissioner of Central Excise exonerating a party from allegations of contravening the FER Act, 1973. The Enforcement Directorate filed a revision petition challenging this order, invoking the tribunal's jurisdiction under section 52(4) of the Act. The revision petition was filed after about 6 months, raising questions about the timeliness of the appeal.
The revision petition was signed by the Deputy Legal Adviser, Shri T.K. Gadoo, without clear authorization from the Central Government under Article 77 of the Constitution of India. The Enforcement Directorate argued that the impugned order was perverse and warranted revision, even though the authorization for filing the petition was not established. The tribunal, however, noted that it possessed suo moto powers of revision, which could be exercised in the absence of explicit authorization.
The respondent contended that the filing of the revision petition was an abuse of process and challenged the legality of the petition. The tribunal delved into the constitutional provisions governing executive actions of the Government of India, emphasizing the need for proper authorization for such actions. It was highlighted that the filing of the revision petition under the signature of the Deputy Legal Adviser lacked the necessary delegation of authority, rendering it procedurally flawed.
Furthermore, issues regarding the service of notice on respondents and the delay in filing the revision petition were raised. The tribunal observed that all respondents were not effectively served, casting doubts on the maintainability of the petition. Additionally, the unexplained delay of 6 months in filing the petition was deemed unjustified, especially in the absence of complex factual considerations necessitating such a delay.
Ultimately, the tribunal dismissed the revision petition on grounds of procedural irregularities, lack of proper authorization for filing, failure to serve all respondents, and unjustified delay. The decision highlighted the importance of adhering to procedural requirements and timely filing of appeals in legal proceedings.
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2009 (8) TMI 1300
Issues Involved:
1. Contravention of provisions of Section 3(b) and 3(c) of the Foreign Exchange Management Act, 1999.
2. Legality of the confessional statements and their retraction.
3. Seizure of Indian Currency and documents.
4. Admissibility of confessional statements as evidence.
5. Opportunity of cross-examination of witnesses.
6. Standard of proof required in quasi-criminal proceedings.
Issue-wise Detailed Analysis:
1. Contravention of Provisions of Section 3(b) and 3(c) of FEMA, 1999:
The appellant was penalized for contravention of Section 3(b) and 3(c) of the Foreign Exchange Management Act, 1999. The investigation revealed that the appellant made payments totaling Rs. 51 lakhs to various bookies for the credit of persons resident outside India without RBI's permission, thus violating Section 3(d) of FEMA, 1999. Additionally, the appellant received Rs. 2,50,000/- from Ashok Kamdar on behalf of a Pakistani national, contravening Section 3(c).
2. Legality of the Confessional Statements and Their Retraction:
The appellant argued that the confessional statements were forcibly recorded and retracted them immediately. The Tribunal, however, found the retraction to be an afterthought, unsupported by evidence of coercion. The Tribunal emphasized that the voluntary nature of any statement is critical, referencing the Supreme Court's ruling in Vinod Solanki v. Union of India, which mandates that confessional statements must be corroborated by independent evidence.
3. Seizure of Indian Currency and Documents:
The Enforcement Directorate seized Rs. 2,50,000/- from the appellant's residence and Rs. 4,00,000/- from his business premises. The Tribunal noted that the seized currency and documents corroborated the appellant's involvement in hawala transactions. The appellant's failure to explain the large sums involved led to an adverse inference against him.
4. Admissibility of Confessional Statements as Evidence:
The Tribunal held that statements recorded by Enforcement Directorate officers are substantive pieces of evidence. The Supreme Court's judgment in Kanhaiyalal v. Union of India was cited, affirming that such statements are admissible if made voluntarily. The Tribunal found the appellant's statements to be voluntary and corroborated by other evidence, thus admissible.
5. Opportunity of Cross-Examination of Witnesses:
The appellant contended that the impugned order was passed without allowing cross-examination of witnesses. The Tribunal dismissed this argument, referencing the Supreme Court's ruling in Surjit Singh Chhabra v. UOI, which states that cross-examination is not a right and can be denied if not justified by specific reasons or circumstances.
6. Standard of Proof Required in Quasi-Criminal Proceedings:
The Tribunal emphasized that the standard of proof in quasi-criminal proceedings like this one does not require mathematical precision but a degree of probability that a prudent person would believe. The Tribunal cited the Supreme Court's judgment in Collector of Customs, Madras v. D. Bhoormull, which allows for an inference of guilt based on the probability of the case and the inability of the accused to explain incriminating facts within their knowledge.
Conclusion:
The Tribunal upheld the Adjudicating Officer's order, finding the appellant guilty of violating Sections 3(b) and 3(c) of FEMA, 1999. The penalty imposed was deemed commensurate with the violations, and the appeal was dismissed. The appellant was directed to deposit the balance penalty amount within 15 days, failing which recovery would proceed as per law.
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2009 (8) TMI 1299
Issues: Jurisdiction of the Appellate Tribunal under Section 52(4) of Foreign Exchange Regulation Act, 1973; Procedural irregularities in filing the revision petition; Authority to file the revision petition in the name of Union of India; Delay in filing the revision petition; Service of notice on respondents.
The judgment delivered by the Appellate Tribunal for Foreign Exchange, New Delhi pertains to a revision petition filed by the Enforcement Directorate against five respondents challenging an Adjudication Order exonerating the respondents from contravention of certain sections of the Foreign Exchange Regulation Act, 1973. The Enforcement Directorate invoked the revisional jurisdiction of the Tribunal under Section 52(4) of the Act to examine the legality of the Adjudication Order. The revision petition was filed after a significant delay of almost one year without any explanation for the delay, and certain discrepancies were noted in the filing. The respondents neither appeared nor were represented throughout the proceedings despite repeated notices and adjournments.
The Tribunal highlighted the procedural irregularities in the filing of the revision petition. It was observed that the petition lacked signatures and was filed under the name of an individual who was not authorized to represent the Union of India or the Enforcement Directorate. The Tribunal emphasized the necessity of proper authorization and delegation of power for filing such petitions on behalf of the government. Reference was made to constitutional provisions regarding the authority to sue or be sued in the name of the Union of India, emphasizing the need for adherence to established rules and procedures. The lack of delegation of authority to the individual filing the petition was considered a serious procedural flaw.
Another significant issue addressed in the judgment was the delay in filing the revision petition and the failure of the Enforcement Directorate to provide a valid reason for the delay. Despite multiple adjournments, no satisfactory explanation was presented for the delay exceeding 11 months. Additionally, the Tribunal noted the incorrect address provided for the respondents, who had reportedly moved from the stated address several years prior to the filing of the petition. This further highlighted the lack of diligence on the part of the Enforcement Directorate in pursuing the matter effectively.
In light of the procedural irregularities, lack of proper authorization, significant delay, and failure to serve notice on the respondents effectively, the Tribunal concluded that the revision petition was not maintainable and ordered its dismissal. The Tribunal emphasized the importance of adherence to procedural requirements and the necessity of valid authorization when filing petitions on behalf of governmental bodies. The judgment underscored the need for diligence and compliance with legal formalities in such matters to ensure the integrity and validity of legal proceedings.
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2009 (8) TMI 1298
Issues: Jurisdiction of Appellate Tribunal under FER Act, 1973; Validity of revision petition filed by Enforcement Directorate; Service of notice on respondents; Authority to file revision petition under the name of Union of India; Procedural correctness of filing revision petition by Assistant Legal Adviser; Maintaining addresses of respondents for service of notice.
In this judgment by the Appellate Tribunal for Foreign Exchange, New Delhi, the Tribunal was approached through a revision petition by the Enforcement Directorate challenging an adjudication order exonerating the respondents from allegations related to acquisition and deposit of foreign exchange in contravention of various sections of the FER Act, 1973 and the Exchange Control Manual. The Tribunal was tasked with examining the legality, propriety, and correctness of the adjudication order in question. The respondents, particularly respondent Nos. 1 and 3, faced issues with the service of notice and the correctness of their identification in the proceedings. Despite repeated attempts by the Tribunal to ensure effective service on the respondents, they remained absent and unrepresented throughout the proceedings, leading to doubts about the validity of the process.
The Tribunal deliberated on the authority behind the filing of the revision petition by the Enforcement Directorate. It was noted that the revision petition was filed in the name of the Union of India but signed by an Assistant Legal Adviser (ALA) without clear authorization or delegation of authority on record. The Tribunal analyzed constitutional provisions regarding the expression of executive actions by the Government of India and the necessity for proper authorization for such actions. It was concluded that the filing of the revision petition by the ALA without demonstrated authority was procedurally incorrect and lacked the necessary support for such an executive action.
Furthermore, the issue of maintaining addresses of respondents for the service of notice was raised. The Enforcement Directorate failed to assert the availability of the respondents at the addresses provided in the revision petition, leading to doubts about the effectiveness of the service of notice. Despite requests for additional adjournments by the ALA, the Tribunal found it unjustified to delay proceedings when the addresses of the respondents were not confirmed. Ultimately, the Tribunal dismissed the revision petition as not maintainable and ordered its rejection, emphasizing the need for procedural correctness in such legal actions.
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2009 (8) TMI 1297
Issues:
- Contravention of provisions of section 9(1)(e) of the Foreign Exchange Regulation Act, 1973
- Contravention of provisions of section 8(1) of the Foreign Exchange Regulation Act, 1973
Analysis:
1. The appeals were filed against the Adjudication Order imposing penalties for contravention of FER Act provisions. The appellants initially challenged the pre-deposit order but complied with the High Court's directive to deposit 30% of the penalty amount. The appeals were now considered for final disposal on merits.
2. The Show-Cause Notices were issued for placing a sum to the credit of a company outside India and for acquiring and transferring foreign exchange in contravention of FER Act provisions. Investigations revealed the involvement of the director in contravention activities, leading to seizure of documents and statements recorded under FER Act.
3. The appellant argued that charges were wrongly imposed, explaining a consignment scenario and justifying the accounting entries. The written submissions emphasized misinterpretation of accounts, absence of RBI permission, and professional rivalry influencing complaints against the appellants.
4. Section 9(1)(e) prohibits placing sums to the credit of persons outside India without RBI permission. The appellant's waiver of the amount owed to a foreign entity raised questions, as unilateral actions without RBI involvement led to adverse inferences against the appellants.
5. Regarding foreign exchange acquisition and transfer, the appellant claimed to act as an agent for the company's interests. However, the documents and statements indicated direct involvement in remittances and transactions, violating FER Act restrictions under Section 8(1).
6. The maturity amount of an insurance policy was repatriated, providing relief to the appellant in one instance. Despite justifications, the tribunal found the charges under sections 9(1)(e) and 8(1) proven, emphasizing the seriousness of economic offenses and the need for justice in such cases.
7. The tribunal upheld the impugned order, deeming the penalty appropriate and not excessive. The dismissal of the appeal was based on the confirmed contraventions and the need for penalty payment within a specified timeframe to avoid further recovery actions by the respondent.
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2009 (8) TMI 1296
Issues:
Dismissal of appeals for non-compliance with pre-deposit order under Section 19(1) FEM Act, 1999.
Analysis:
The judgment by the Appellate Tribunal for Foreign Exchange involved the dismissal of six review petitions filed for recalling an order dated 26.3.2008 due to non-compliance with a pre-deposit order. The appeals were against Adjudication Orders imposing penalties under the Foreign Exchange Management Act, 1999. The Tribunal dismissed the appeals for failing to comply with the pre-deposit order, which was modified by the High Court of Madras. The appeals were filed under Section 19 FEM Act, 1999, and the Tribunal noted a typographical error in quoting Section 52(2) FER Act, 1973, instead of Section 19(1) FEM Act, 1999. The Tribunal highlighted the stringent pre-deposit scheme under Section 19(1) FEM Act, 1999, emphasizing the need to safeguard penalty realization.
The statutory scheme under Section 19(1) FEM Act, 1999, mandates every appellant to make a pre-deposit of penalty unless dispensation is granted by the Tribunal to prevent undue hardship. The Tribunal is empowered to allow dispensation with or without conditions. The judgment referenced legal precedents emphasizing that dispensation should be granted when the impugned order is legally flawed or when the appellant faces financial constraints. The Tribunal's duty is to ensure penalty recovery by imposing suitable conditions as per the Second Proviso of Section 19(1) FEM Act, 1999.
The factual scenario revealed that the appellants failed to comply with the pre-deposit order dated 14.3.2007, despite opportunities granted by the High Court of Madras and subsequent legal proceedings. The appellants did not make any pre-deposit as required, leading to the dismissal of their appeals. The Tribunal found no grounds for review, as the appellants failed to establish any errors apparent on the face of the record or present fresh evidence with a substantial impact on the decision. The dismissal of the review petitions was upheld, and the order was passed accordingly, maintaining the original decision to dismiss the appeals for non-compliance with the pre-deposit order.
In conclusion, the judgment underscores the importance of compliance with pre-deposit orders under the FEM Act, 1999, and the Tribunal's authority to grant dispensation in cases of undue hardship. The appellants' failure to adhere to the pre-deposit requirements resulted in the dismissal of their appeals, highlighting the significance of procedural compliance in legal proceedings before the Appellate Tribunal for Foreign Exchange.
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