2018 (11) TMI 367 - AT - FEMA

FERA violation - cases against a number of exporters for presenting forged copies of shipping bills, GR-I Forms, invoices etc. where no shipment had actually taken place - denial of principle of natural justice - violation confirmed on statement taken during investigation - relying upon statements made under the Customs Act for the purpose of the adjudication proceedings under FEMA - Held that - Principles of natural justice has been duly followed and the appellant have failed to avail of the opportunities given to him. Moreover, his silence over receipt of the relied upon documents afresh in 2008 after the Tribunal‟s remand order of 16.11.2007 also casts shadow on his intentions except that he appears to be trying to delay the decision. On merits as discussed above, his 3 statements which are voluntarily and the investigations done by the Customs brings out the offence as well as his involvement. A decided in Vinod M. Chitalia vs. UOI 2012 (5) TMI 157 - BOMBAY HIGH COURT the investigations done under Customs Act, can be used for the purpose of FERA/FEMA also, as the transaction in this case also is the same. The court further held that in assessing these findings, the Court cannot be oblivious of the fact that clandestine transaction of the nature involved in the present case, are within the peculiar knowledge of persons such as the appellant who are parties to those transactions. The burden which is cast upon the adjudicating authority to establish a violation must be assessed from a robust and common sense perspective. Clandestine violations take place under the cloak of secrecy. To impose a burden of establishing in an adjudication proceeding, every conceivable link of an unlawful transaction would result in a manifest failure of justice and would defeat the underlying purpose of the Act. Appeal dismissed.

Summary

Issues:
1. Adjudication order challenged by the appellant.
2. Allegations of FERA violation against the appellant.
3. Denial of opportunity for personal hearing and challenge to show cause notice.
4. Preliminary objection raised by the respondent regarding jurisdiction.
5. Compliance with principles of natural justice.
6. Reliance on statements made by the appellant.
7. Use of investigations under Customs Act in FERA proceedings.

Analysis:

1. The appellant challenged an adjudication order dated 16.12.2013, which was a result of investigations into fictitious exports by Customs Authorities. The Enforcement Directorate found FERA violations, with the appellant admitting to receiving foreign exchange remittances without actual exports taking place.

2. The appellant contested the show cause notice invoking Section 9(1)(f)(i) of FERA, alleging delays in adjudication and coercion in obtaining statements. The respondent argued that the appellant's involvement was established through statements and transactions, justifying the application of FERA provisions.

3. The appellant claimed denial of personal hearing and non-supply of relied-upon documents, while the respondent highlighted multiple opportunities given for hearings. The appellant's reliance on natural justice principles was countered by the respondent's assertion of compliance with procedural requirements.

4. The respondent raised a jurisdictional objection, stating the appeal should lie with the Special Director (Appeals) as per FEMA provisions. However, a previous tribunal order allowed the appeal to be heard, settling the jurisdictional issue.

5. The adjudicating authority maintained that principles of natural justice were followed, with documents provided to the appellant on multiple occasions. The appellant's failure to acknowledge receipt of documents and attend hearings raised doubts about intentions to delay proceedings.

6. The appellant's statements, voluntarily given thrice, were considered incriminating, as they admitted to the offenses. The tribunal emphasized the importance of the investigations conducted by Customs Authorities in establishing the appellant's involvement.

7. The tribunal referenced a Bombay High Court case to support the admissibility of Customs Act investigations in FERA proceedings. It emphasized the burden on adjudicating authorities to establish violations in clandestine transactions, dismissing the appeal based on the evidence presented.

In conclusion, the tribunal dismissed the appeal, upholding the adjudication order based on the appellant's statements and Customs investigations, while affirming compliance with principles of natural justice and rejecting jurisdictional objections.