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TMI Blog2015 (12) TMI 1695X X X X Extracts X X X X X X X X Extracts X X X X ..... convinced with argument that it was negligence/mistake on the part of the authorized dealers in not reporting the due compliances to the RBI and instead furnished wrong information. The basic fault appears to us on the part of the banks but since they are neither parties in these appeals nor they have been afforded any opportunity to place their version before the Tribunal, therefore, we are not making any observations against them. We would like to emphasize that Enforcement Directorate has not been created for the sole purpose of prosecuting the matters of alleged violations under FERA/FEMA but they are duty bound to assist the Tribunal and the Courts by placing the correct facts before them on the principle of fair play so that the parties get fair justice and the faith of the parties is not eroded from the judicial system. The Enforcement Directorate is an organ in the system of dispensation of justice and the way the matters in which no case was made out as per the communication of the RBI was persuaded, without discloser of the contents of the communication received by the Enforcement Directorate, the appellants had to suffer not only in terms of expenditure that might hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 49(3) and 49(4) of FEMA, 1999 and consequently imposed a penalty of ₹ 5,69,11,840/- on appellant M/s. Thirumalai Chemicals Ltd. 5. Since all the appeals have been filed by the same company against different adjudicating orders of the even dates involving identical facts and also alleging same contraventions and the grounds for challenge in all the four appeals are common, therefore, for the sake of convenience all the four appeals are being disposed of by a common order. 6. Brief facts necessary for the disposal of the appeals are that in appeal No. 787/2004 it is alleged that RBI had forwarded the list of importers who had acquired foreign exchange from authorized dealers for the purpose of import of Benzyne but had failed to submit the evidence of import to their bankers. It is alleged that the appellants had acquired foreign exchange equivalent to ₹ 1,41,90,175/- and had failed to submit the evidence of import as required in Appeal 7A. 20 (Chapter-7) of Exchange Control Manual (ECM). The Enforcement Directorate, in view of the above issued a show cause notice on 14-5-2002 to the appellant company for the alleged contraventions of Section 8(3) and 8(4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, in Appeal No. 790/2004, it has been alleged that the company had acquired foreign exchange equivalent to ₹ 5,69,11,840/- and had failed to submit any evidence of import as required and the Adjudicating Authority has held the company guilty of contravention of Section 8(3) and 8(4) of FERA, 1973 r/w 7A. 20 (Chapter-7) of ECM r/w Section 49 of FEMA, 1999 and has imposed a penalty of Rs. ₹ 5,69,11,840/ against the company. 10. Aggrieved from all the four Impugned Orders which are exactly true copies of one another except change in the figure of amount involved for the alleged transactions and amount of penalties, the appeals have been filed contending that the company had opened LC from ICICI and Standard Chartered Banks and after importing goods had submitted the exchange control copies of bills of entries to the respective authorized dealers well in time. The company had received letters acknowledging the submission of exchange control copies of bills of entries from the banks. However, since the appellant company had shifted its office from Mittal Tower, Nariman Point to Thirumalai House, Plot No. 101/102, Sion-Matunga Estate, Scheme No. 6, Road No. 29, Sion (E), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived, which, might have resulted into inclusion of the name of the appellants in the list of defaulters. The Adjudicating Authority committed error in arriving at its conclusion without any documentary evidence or cogent evidence available in support at all. Therefore, it has been prayed that the Adjudication Orders dated 27-1-2004 be set aside and quashed. 11. Shri Rahul Ray, advocate representing all the appellants has submitted that the appellants have been unduly harassed and prosecuted in the instant matters for no fault of theirs. The fact of the matter is that the appellants had timely filed the bills of entries as a proof of imports in respect of all the remittances sent by them in all the appeals to the authorized dealers. Thus no contravention of any of the provisions of FERA or FEMA is made out. Submission is that the office of the company had been shifted from Mittal Tower, Nariman Point to Thirumalai House, Plot No. 101/102, Sion-Matunga Estate, Scheme No. 6, Road No. 29, Sion (E), Mumbai in September, 1999. It appears that the alleged communications including the SCN and alleged notices for personal hearing and reminders thereof might have been sent at the Nariman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 12. Ms. Natasha Sarkar, legal consultant has defended the impugned order and has contended that show cause notices were dispatched to the appellants but they failed to appear or file any response to them. She has argued that the rules do not talk about the requirement of ensuring service upon the noticees. The plea that the company s office had shifted to other place and the communication sent could not be delivered to the appellants is wrong as no report to that effect was received in the office of Enforcement Directorate. Further submission is that the Adjudicating Authority sent notices of personal hearing to all the appellants and also sent reminders thereof. The appellants chose not to contest and place their case before the Adjudicating Authority. Further submission is that the Enforcement Directorate acted on the communication of the RBI which was based on the information submitted by the authorized dealers (banks) to the RBI wherein it was informed that the appellants had not filed evidence in the form of bills of entry of import against the foreign exchange acquired by them and remitted by them to various countries. Ld. legal consultant has further submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in our view unless the communication is served upon the addressee he cannot be expected to appear and defend or contest his case. Thus in our opinion the principles of natural justice have not been adhered by the Adjudicating Authority in proceeding ex parte particularly when the offices of the company were shifted from Nariman Point to Matunga, Mumbai in 1999 prior to the alleged dispatch of notices to the appellants. Thus, service of SCNs or notices etc. for personal hearing could not have been deemed sufficient upon the appellants. 14. The impugned orders are ex parte orders. The Adjudicating Authority has without due application of mind relied upon the contentions of the Enforcement Directorate and has imposed penalties equal to the amount which was reportedly released to the appellants without evaluating the facts and discussing even relied upon evidence of the enforcement. The penalties imposed appear to have been imposed arbitrarily and no reason to fix the quantum on the logic or formula has been disclosed. 16. It has been contended on behalf of the appellants that in Appeal No. 787/2004 the appellants have filed copies of communications by RBI dated 21-12-2004 addr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso proof of filing the bills of entry towards the import of orthoxylene in respect of 6 bills of entry were filed with the Standard Chartered Bank and were duly received, by the Bank on 9-12-1996 and copies of bill of entries ex-bond clearance home consumption have also been filed and the communication by the Standard Chartered Bank to the RBI and documentary evidence dated 12-5-2004 and the communication by RBI of May, 2004 confirming that the ICICI bank had confirmed that they had received EC copies of bills of entry in respect of the transactions have also been filed. 20. From the above it is clear that the appellants had timely submitted the exchange control copies of bills of entries in respect of the transactions involved in all the 4 appeals however, the RBI was apparently not informed by the Banks that the appellants had filed the exchange control copies of bills of entries within the time. It appears that the banks, subsequently realized their mistake/negligence and RBI also realized that the proceedings ought not to have been taken against the appellants. Therefore, it advised Deputy Director, Enforcement Directorate to revise the decision and inform the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e compliances to the RBI and instead furnished wrong information. The basic fault appears to us on the part of the banks but since they are neither parties in these appeals nor they have been afforded any opportunity to place their version before the Tribunal, therefore, we are not making any observations against them. 24. As regards the role of respondents, Enforcement Directorate, we find that despite the communication by the Reserve Bank of India to the Deputy Director dated 21-12-2004 whereby it was informed that no lapse/FERA violations on the part of the company had been found and the transactions were wrongly reported in BFE due to oversight of the bankers and a request in view of the above was made to review the decision regarding the levy of penalty with further directions to apprise the Appellate Tribunal suitably for withdrawal of the relevant orders passed against the company, copy of which has been filed in the record of Appeal No. 787/2004. The Enforcement Directorate perused the matter and did not inform the Tribunal that no lapse/FERA violation on the part of the company has been found by the RBI and RBI has asked the Enforcement Directorate to withdraw the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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