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TMI Blog2015 (10) TMI 2684X X X X Extracts X X X X X X X X Extracts X X X X ..... ed export outstanding in respect of 8 GR forms, out of which 5 GR forms were negotiated through Indus Ind. Bank Ltd., Begumpet, Hyderabad, while 1 GR form related to State Bank of India, IFB and 2 GRI forms related to State Bank of Mauritius Ltd., Hyderabad. The total amount of export outstanding was US $ 8,67,275.00. The company also disclosed that the appellant G. Rama Raju was the Managing Director and G. Subha Raju was the Executive Director. Letters were issued to all three banks requesting them to furnish the details of export outstanding pending against M/s. Siris Ltd., Hyderabad. In response Indus Ind. Bank reported that there were 6 outstanding export bills against the appellant M/s. Siris Ltd. However, documents relating to only 5 export bills could be made available by the bank and as the sixth bill related to the year 1999 for US $ 18,000, the same was not available. The total amount of export outstanding was reported by the bank was US $ 6,70,766. The State Bank of Mauritius Ltd. reported that out of 3 export bills pending the proceeds of two bills were received by the State Bank of India and Indus Ind. Bank Ltd. and both banks had furnished the FIRCs to them. Based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o GRI forms to the extent of US $ 1,27,384.20 as in his view the company had failed to take all reasonable steps to realise and repatriate the value of the said GRI forms within the prescribed period and had contravened the provisions of FEMA, 1999 and Regulation of 2000 and a penalty of Rs. 40,00,000/- was imposed on M/s. Siris Ltd. (the company) under Section 13 and a penalty of Rs. 5,00,000/- each has been imposed against appellants G. Rama Raju, Managing Director and G. Subha Raju, Executive Director respectively. 5. Aggrieved from the Impugned Order of the Special Director Appeal No. 284/2009 has been filed by G. Rama Raju, Managing Director, while Appeal No. 285/2009 has been preferred by M/s. Siris Ltd. and Appeal No. 286/2009 has been preferred by G. Subha Raju, Executive Director. Since all the appeals arise out of the common adjudication order, therefore, the appeals are being disposed of by a common order. 6. Ld. Counsel for the appellants has submitted that due to the fact the drugs and their formulations were not approved by the buyers and the goods were rejected arbitrarily, unqualified write off of outstanding export proceeds in respect of all the GRI for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forts to realise the export proceeds and upon its satisfaction had permitted the write off. The Special Director had no authority to overturn the decision of the RBI and decline the write off. The transactions took place around 1999 and the proceedings were initiated in the year 2007, thus the proceeds could not have been initiated as they were clearly barred by Section 49(3) of FEMA, 1999. Further submission is that the penalty for non-realisation of export proceeds is assessed on the presumption that the exporter had failed to take necessary steps for realisation and repatriation of the export proceeds. But this presumption is rebuttable. Mere non-realisation of export proceeds per se is not punishable. The fact remains that the drugs and drug formulations exported by the appellant had not been approved and considering the facts and circumstances RBI had allowed the write off in respect of all GRI terms except two GRI forms for which only a formality of obtaining a no objection certificate was set forth. Further the Adjudicating Officer misunderstood the legal position. It has also been argued that the hearing had concluded on 30-10-2008 and the impugned order was passed on 18-8- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RBI on different dates and in view of the write off no contravention under FEMA in respect of the said GRI forms is made out. It has been contended on behalf of the appellants that the drugs exported by the appellant company were rejected by the buyers on the ground that the drugs and their formulations were not according to the required standards. Though it has been claimed that efforts for realisation and repatriation of the export proceeds were made by the appellant company which were adequate and bona fide, however, the attempts did not succeeds. It has been further, contended that in respect of two GRI forms which are the subject matter of dispute in the instant appeals, the RBI considering the efforts made by the appellant company had advised the authorized dealer i.e. State Bank of Mauritius, that unrealised export bills under GRI form No. AT 0127134 for US $ 66384.20 and GRI form No. AT 128198 for US $ 61,000 may be written off subject to obtaining no objection from ED as has been conveyed by the authorized dealer (State Bank of India) vide communication dated 27-9-2008 (paper No. 76 of the paper book). Thus, it has been claimed that write off was permitted subject to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the authorized dealer should itself have approached the ED for obtaining no objection. It was not permissible to the appellant to make a plea before the Adjudicating Officer treating him to be Enforcement Directorate and without making any specific request except that the plea for grant of no objection should have been forwarded by the Special Director to the ED. We do not find any such request having been made by the appellant company to the Adjudicating Officer. The Special Director/Adjudicating Officer might have been an officer of the ED but since he was not specifically assigned the function of deciding as to in which matters no objection is to be issued or declined therefore he had no authority to take a decision in such matter. His authority was only limited to adjudicating the matter pending before him. Therefore, he was incompetent to reject the plea for grant of no objection on behalf of the ED. 10. Though it has been argued on behalf of the appellants that efforts for realization of the export proceeds in respect of the two disputed GRI forms were made, but the Adjudicating Officer has recorded in his findings that the noticee company had failed to take all rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repatriation of the export proceeds and only correspondence that took place in 2007-08 has been filed as proof in this regard. Thus in the absence of any substantial credible evidence to show that genuine and bona fide attempts for realization and repatriation of the amount of two disputed GRI forms were undertaken by the appellant we are of the view that the finding of the Adjudicating Officer holding the appellant guilty of contravention of Section 8 of FEMA, 1999 is well founded and is legally correct and maintainable. 14. As regards the interpretation of Section 42(1) of FEMA, 1999 that in case of a company, the Section provides every person who at the time, the contravention was committed, was incharge and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly, to our mind Section 42(1) permits the presumption to be drawn regarding the involvement/credibility by the person who was incharge and responsible to the company for the conduct of the business. There is a requirement that evidence has to be led/produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant clauses of the Regulations, 2000 and find that Regulation 3 requires a declaration regarding export of goods and services in the prescribed format along with supporting evidence as may be specified to the specified authority. There is no allegation that this regulation was violated by the appellants. Regulation 8 prescribes manner of payment of export value of goods. Since undisputedly no payment was made the regulation is not applicable. Regulation 9 prescribes the period within which export value of goods is to be realised and repatriated to India. However, in the instant matter this regulation also does not apply because except for the two disputed GRI forms write off in respect of the rest was granted by the bank. In respect of the two GRI forms the subject matter of the instant appeals, the RBI has approved write off by the authorized dealer subject to obtaining no dues from the Enforcement Directorate. Thus the final call or decision for grant or refusal of write off was to be taken by the authorized dealer (State Bank of Mauritius) subject to obtaining no objection from the Enforcement Directorate and admittedly the authorized dealer did not approach the Enforcement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty against him is set aside. Appeal Nos. 284/2009 and 285/2009 are partly allowed with the modification that appellant G. Rama Raju, Managing Director in Appeal No. 284/2009 is held liable for contravention under Section 8 r/w Section 42(1) of FEMA, 1999 instead of Sections 7 and 8 of FEMA, 1999 r/w Regulations 3, 8, 9 and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 and the amount of penalty imposed is reduced to Rs. 3 lakhs instead of Rs. 5 lakhs. In Appeal No. 285/2009 of M/s. Siris Ltd. the impugned order is modified to the extent that the appellant is held liable for contravention of Section 8 of FEMA, 1999 instead of Sections 7 and 8 of FEMA, 1999 r/w Regulations 3, 8, 9 and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 and the amount of penalty imposed by the Adjudicating Officer of Rs. 40 lakhs is reduced to Rs. 30 lakhs. 18. The appellants shall be entitled for adjustment of the amount, if any, deposited as pre-deposit under Section 19(1). As far as appellant G. Subha Raju is concerned, in case any pre-deposit has been made by him, he will be entitled for the refund of the same. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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