2012 (12) TMI 557 - HC - FEMA

Whether the Tribunal was justified in directing the appellant to deposit 50% of the penalty Rs. 35 lacs imposed by the Adjudicating Authority for the purposes of hearing the appellant s appeal under the Foreign Exchange Regulation 1973 ( FERA 1973 ) on merits? - held that - The emphasis before the Tribunal on the part of the appellant appears to have been financial hardship and for that purpose had filed an affidavit contending that he is in no position to deposit the penalty amount and in support thereof contends that he is even not an Income Tax assesee. This is difficult to accept in the light of the appellant s contention that he was an independent person and was carrying on import business on his own and in that regard had remitted and amount of US 29,91,100/- during the period January to April 1991 on his own. The order of the Tribunal dated 25/1/2008 directing the appellant to deposit 50% of the penalty amount i.e. Rs.17.50lacs out of Rs.35lacs imposed upon him is reasonable.

Summary

Issues:
- Whether the Tribunal was justified in directing the appellant to deposit 50% of the penalty imposed by the Adjudicating Authority for the purposes of hearing the appeal under the Foreign Exchange Regulation Act, 1973 (FERA 1973)?
- Whether the appellant abetted the contravention of FERA Act, 1973 by causing remittances of Foreign Exchange without import of goods based on bogus documents?
- Whether the appellant's claim of independently carrying out import business was credible, especially considering his admission of being an employee acting on instructions?
- Whether the appellant's financial hardship claim and inability to deposit the penalty amount were justified, given his previous financial status and lack of evidence supporting his dire financial condition?

Analysis:
1. The main issue in this case was whether the Tribunal's direction for the appellant to deposit 50% of the penalty imposed for the appeal was justified. The appellant had been penalized for abetting the contravention of FERA Act by causing remittances of Foreign Exchange without actual imports. The Adjudicating Authority found the appellant guilty based on evidence that he acted at the instance of his employer and not independently as claimed.

2. The appellant argued that he independently carried out the import business, contrary to being an employee following instructions. However, during the Tribunal hearing, the appellant's advocate contradicted this claim by stating that the appellant was indeed an employee of his employer, discrediting the appellant's earlier assertions. The appellant failed to rectify this contradictory submission, raising doubts about his credibility.

3. Despite claiming financial hardship and inability to deposit the penalty amount, the appellant did not provide substantial evidence supporting his dire financial condition. The court found it hard to believe his claims of being financially unstable, especially considering his past financial standing and the significant remittances made during the import business period.

4. Ultimately, the court upheld the Tribunal's order for the appellant to deposit 50% of the penalty amount for the appeal to proceed. The court extended the time for the deposit and directed the Tribunal to dispose of the appeal on merits upon the appellant's compliance. The appellant's failure to provide convincing explanations or evidence led to the dismissal of his appeal without any cost orders.