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TMI Blog2014 (5) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... ndering was the main motive behind the whole exercise of export "it is necessary to have on hand the export products, i.e., the cassettes." The report noted that "we do not have any representative sample of the export product and it is also not possible to get a representative sample of the export that is more than one and half year old." It was, therefore, stated that it may not be possible to establish a case of export of sub-standard goods and/or goods not matching the exact description. The report concluded that the non-clearance of goods "gives rise to doubts that the transaction may not be genuine and this indicates that there may be violations of provisions of FERA/FEMA." What is clear from the document is that there were only dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition No. 279 of 2005 filed by the Respondent, Directorate of Enforcement ( DoE ) and setting aside the adjudication order ( AO ) dated 12th October 2004 passed by the Additional Director General ( ADG ), Enforcement Directorate ( ED ) exonerating the Appellants of violation of Section 8 (1) of the Foreign Exchange Regulation Act, 1973 ( FERA ). 2. Appellant No.1, Negolice India Limited ( NIL ), received an export order from M/s Ace Plast Limited ( APL ), Sharjah, United Arab of Emirates ( UAE ) for 1,54,000 pieces of C-90 pre-recorded audio cassettes of the value of Rs. 35,92,512 (equivalent to US Dollar [ USD ] 83,160). The said consignment was dispatched by NIL to APL under shipping bill dated 23rd December 1999. Admittedly, NIL recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Investigation Wing of the CGI in Dubai to ascertain the reasons for the APL not lifting the consignment of the audio cassettes exported to it by NIL. 6. However, on the basis of the above letters, a Memorandum/Show Cause Notice ( SCN ) dated 16th May 2002 was issued to Appellant No.1 and to Appellants 2 to 5, being the Directors of Appellant No.1, asking them to show cause why they should not be proceeded against for violation of Section 8 (1) FERA. The principle allegation in the SCN was that NIL had exported the goods only for availing export benefits and the alleged problems expressed by APL with regard to the copyright of the cassettes were only excuses made by NIL to escape from the clutches of law. The other major allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 9. The AO dated 12th October 2004 found that the SCN was vague and incomplete and did not discuss any evidence in support of the allegations in the SCN. The Additional Director General, who was the Adjudicating Officer, observed as under: It is not in dispute that the payment for the exported goods has been received through banking channels. As stated by the noticees in the reply, the payment was to be made on receipt of the export documents by M/s. Ace Plast Sharjah and this has been duly done. No evidence has been given in the SCN as to when and how the amount was transferred to M/s. ACE Plast other than through banking channels. The two transactions appear to be independent and no evidence has been provided in the SCN to show th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above basis, it was concluded that the payment of the subject amount was made unauthorisedly in contravention of Section 8(1). The AT proceeded to set aside the AO and levied a penalty of Rs. 15,00,000 on Appellant No.1 and Rs. 5,00,000 each on Appellants 2 to 5 under Section 8(1) FERA. 12. This Court has heard the submissions of Mr. Sanjeev Sindhwani, learned Senior counsel for the Appellants and of Mr. Jatan Singh, Central Government Standing Counsel. 13. It is significant, as pointed out by the CGI Dubai in its letter dated 24th June 2001 to the DRI, that there is no evidence to prove the allegations that the transaction of export of pre-recorded cassettes by NIL to APL was not genuine. Yet, the entire case appears to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proof of suspicion to the Appellants by invoking Section 106 of the Evidence Act.The reasons for APL not lifting the consignment can, by no stretch of imagination, be said to be within the exclusive knowledge of the Appellants. APL was a different legal entity based in Sharjah, UAE. Inquiries could have easily been made with APL itself as to why it did not lift the consignment. 17. The major premise of the entire proceedings was that through non-banking channels NIL paid a sum of Rs. 35,92,512 to APL. There was absolutely no evidence of any kind to back this allegation. In the absence of proof of the above alleged transaction, it could not have been concluded by the AT that NIL had improperly received USD 83,160 and thereby contrav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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