2019 (3) TMI 1518 - AT - FEMA

Offence u/s 3(a) of FEMA - domestic supply of goods in India against amount received in foreign exchange from the overseas buyer - no general or special permission of Reserve Bank dealt in receipt of foreign exchange - Proof of compilation of conditions prescribed under Regulation 12 - HELD THAT - It is the obligation of the Authorised Dealer to ensure compliance of all conditions before acceptance of documents for negotiations. It is a matter of fact that Letter of credit opened by the overseas buyer was negotiated by the Authorised Dealer against Shipping Bill No. 1862349 dated 30.07.2002, therefore presumption must be that all conditions prescribed under Regulation 12 has been duly complied including the condition with respect to SDF. In absence of any evidence, it cannot be assumed that Authorised Dealer has accepted the shipping documents without SDF. And even no action was taken against the Authorised Dealer if there was no compliance of about SDF. Once the said stand is taken, the onus is on the on the Directorate that Padmaja was allowed export without filing of SDF, and also documents were negotiated by the Authorised Dealer without SDF. In the present case, export proceeds to the full extent of value of shipping bill were realised and repatriated and even penalty amount of ₹ 23 Lakhs has been deposited on behalf of Padmaja in case of any breach. It is a settled principle of law that the procedures have been prescribed to facilitate verification of substantive requirement, as long as a fundamental requirement is met other procedural deviation can be condoned. As far as the Appellant No. 2 is concerned, Appellant No. 2 guilty although there is no evidence against him. As the burden of proof to show contravention of a particular statutory provision is on the Respondent and not the Appellants. In the impugned order, the understanding between the two set of parties and evidence produced have not been dealt properly. On August 2018, the Hon‟ble Tribunal desired to know as to whether Shri Gangadharan Manari, proprietor of M/s Padamja Impex has deposited the penalty amount of ₹ 23,00,000 (Rupees Twenty Three Lakhs Only) or not. Appeals filed by the appellants are allowed. The impugned order against the appellants is set-aside.

Summary

Issues:
1. Imposition of penalties under FEMA, 1999 against appellants.
2. Liability of appellants to pay penalties imposed on them.
3. Compliance with FEMA regulations regarding export of goods.
4. Alleged contravention of Section 3(a) of FEMA by the appellants.
5. Interpretation of Regulation 12 allowing a person other than the exporter to receive foreign exchange.
6. Burden of proof in showing contravention of statutory provisions.
7. Proper consideration of evidence and understanding between parties in the judgment.

Analysis:

1. The judgment involves the imposition of penalties under FEMA, 1999 against the appellants. The penalties were imposed for contravention of provisions related to foreign exchange management, as specified in the order issued by the Directorate of Enforcement. The penalties were imposed on the proprietor of one company and the company itself for different contraventions.

2. The issue of the liability of the appellants to pay the penalties imposed on them was raised before the Tribunal. The Tribunal was informed that one of the appellants had already deposited the penalty amount. The question arose whether the other appellants were also liable to pay the penalties totaling a specific amount.

3. The case involved compliance with FEMA regulations concerning the export of goods. The investigation by the Directorate of Enforcement focused on certain exporters, including one of the appellants, for alleged contraventions of FEMA provisions in the export of humanitarian goods. The investigation included statements from company officials and a Show Cause Notice was issued.

4. The alleged contravention of Section 3(a) of FEMA by the appellants was a key issue in the case. The Notice alleged that one of the appellants received foreign exchange without proper permission, leading to a violation of FEMA provisions. The appellants denied the allegations and cited Regulation 12 to support their position.

5. The interpretation of Regulation 12, which allows a person other than the exporter to receive foreign exchange, was crucial in the case. The appellants argued that the Authorized Dealer should ensure compliance with conditions before accepting documents for negotiations. The Tribunal considered the compliance with Regulation 12 and the role of the Authorized Dealer in the transactions.

6. The burden of proof in showing contravention of statutory provisions was discussed in the judgment. The appellants argued that the Directorate failed to provide evidence regarding the alleged non-compliance with regulations. The Tribunal emphasized the importance of proper evidence and compliance with procedural requirements.

7. The judgment highlighted the need for proper consideration of evidence and understanding between parties. It was noted that the impugned order did not adequately address the evidence presented by the appellants. The Tribunal emphasized the importance of dealing properly with evidence and understanding the roles of the parties involved in the case.

In conclusion, the Tribunal allowed the appeals filed by the appellants, setting aside the impugned order against them without imposing any costs.