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TMI Blog2013 (7) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... The above remittance of the amount equivalent to Sw. Francs 2,43,660/- constitutes 15% of the price and for the balance of 85%, the appellants arranged for a loan from the concerned branch of the Andhra Bank and the payments were to be made under a deferred payment guarantee. 3. Subsequently, the Andhra Bank did not release the above amounts as the first appellant allegedly failed to meet some conditions. It is stated that when the first appellant wrote to the above Switzerland company for refund of the advance taken by them for the above machinery, the latter informed the first appellant that the machinery was manufactured to its (first appellant) specifications and it had no market and consequently it cannot refund the advance and on the other hand, it demanded the appellants to pay the balance. 4. The net result of the above circumstances was that the appellants could not import the goods or machinery by using the foreign exchange provided to them for paying the 15% of the value of the machinery to the above Switzerland company as contemplated under Section 8(4) of the Act. 5. The version of the Enforcement Directorate is that the above acts of the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether the appellants can be said to have not used the foreign exchange for the purpose for which it was given to them though they admittedly paid it to the aforesaid Switzerland company and therefore not liable for any penalty. 11. Sub-sections (3) and (4) of Section 8 of the Act which deal with restrictions on dealings in foreign exchange are relevant here and they read as follows. "Section 8(3) : When any foreign exchange is acquired by any person, other than an authorized dealer or a moneychanger, for any particular purpose or when any people has been permitted conditionally to acquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or, as the case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or the conditions cannot be complied with the said person shall, within a period of thirty days from the date on which he comes to know that such foreign exchange cannot be so used or the conditions cannot be complied with, sell the foreign exchange to an authorized dealer or to a moneychanger. (4) :& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 85% of the price of the machinery without any sufficient cause and the Andhra Bank was at fault. 16. The learned counsel for the appellants also filed two sets of papers here. The first set deals with the correspondence of the first appellant with Andhra Bank, Sultan Bazar Branch, Hyderabad and the second set of papers pertains to the first appellant's correspondence with the Switzerland Company. The correspondence with Switzerland company would show that the appellants' plea as concluded by the authorities below that they paid the foreign exchange to that company can be accepted as true and this may not show misutilisation. That is not however the end of the matter. 17. The other set of papers which are the correspondence of the first appellant with Andhra Bank would show what went on between them regarding the loan for the 85% of the price of the machinery. It appears that the Andhra Bank went back and refused to give the guarantee and disburse the amount because of the failure of the first appellant company and its Managing Director to clear the existing loans of a sister concern of the first appellant and comply with certain conditions. This is also discussed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at foreign exchange. 22. In other words, sub-section (4) deals with only those cases or situations where goods of a lesser quantity or lesser quality or some other goods are brought. In such cases, the person charged with its violation is permitted to explain that he brought the goods for which he acquired foreign exchange and rebut the presumption. Sub-section (4) however cannot be understood to include a case where goods are not imported or brought at all for whatever reason. Sub-sections (3) and (4) of Section 8 do, not to repeat, speak about mens rea also or a deliberate intention. The mere violation of both the above provisions in not importing the goods also for whatever reason it is, is treated as a violation. 23. The above provision may look harsh. It may be noted that foreign exchange is a precious economic resource of the country and the policy of the Government or the object of the Act is to protect it and see that it is used for the purpose for which it has been given and is not misused or even squandered away. The Act can be said to be a fiscal statute which should be construed strictly for determining the liability and in the present case, it does not admi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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