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TMI Blog2014 (9) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... MMTC with other exporters who may be operating on a larger scale and who may have wherewithal to take more effective steps for realisation of export proceeds. The key issue here is about the sincerity of the efforts made by COPL to realise the proceeds. What Section 18(2) FERA expects is that there should be no deliberate attempt to refrain from realising the export proceeds. The AO of DD itself notices that the Appellants made sincere efforts to realise at least part of the outstanding amount. In the circumstances, it is not possible to concur with the conclusion reached by the DD in the AO that there has been a contravention by the Appellants of Section 18(2) and Section 18(3) FERA. The AT also does not appear to have examined the docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, it was stated that between the years 1991 and 1993, there were six transactions of export undertaken by COPL in association with M.M.T.C. Ltd. ('MMTC') to the total extent of US Dollar ('USD') 1,95,519.61, the proceeds of which had not been realised. It was noted that despite the COPL applying to the Reserve Bank of India ('RBI') to seek time for realisation of the export proceeds, time was not extended by RBI. It was accordingly stated that failure by COPL to realise the export proceeds was in contravention of Section 18(2) FERA. The COPL and its directors, i.e., the other Appellants were asked to show cause why the proceedings under Section 51 FERA should not be initiated against them. 2. COPL, in response t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignated agency for the supply of gold and had no other role in the actual exports of jewellery which was done by COPL. Reference was made to an agreement dated 25th April 1991 executed between COPL and MMTC which only envisaged the method by which the export had to be done. The said agreement made it clear that in the event the EOU fails to realise export proceeds from the foreign buyer, resulting in a consequent inability by MMTC to realise its financial assistance, the responsibility essentially would be that of the EOU. It was pointed out that COPL had signed the GR form as an exporter and was, therefore, fully liable for the export proceeds and the consequences of the failure to realise it in terms of Section 18 FERA. MMTC explained tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plete, given the circumstances of the case and the amounts involved. 6. In the above circumstances, it was held in the AO that in respect of the export proceeds to the extent of USD 1,80,519.61, there had been a contravention of Section 18(2) read with Section 18(3) FERA. The AO also negatived the plea of the Appellants that it was Mrs. Meena Wadhwa, the manager of COPL, who was in fact in charge of the day-to-day affairs of the company and, therefore, the liability cannot be fastened on to the other directors. Apart from the signature of Mrs. Wadhwa on a few documents, there was nothing to show that she was personally responsible for the non-realisation of the amounts in question. 7. Accordingly, the DD, ED through the AO proceeded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Mr. Vijay Pal Singh, DGM, MMTC made under Section 40. FERA before the ED. It does appear that under the Scheme, MMTC was to provide gold which was then to be used for making the jewellery for export. It was COPL which was the actual exporter. The liability to real is the export proceeds was indeed that of COPL. 11. The Court is also not able to find any error having been committed either by the AT or the DD regarding the liability of the individual directors of COPL. However, the central question in these appeals is regarding the liability of COPL and its directors for failure to realise the export proceeds. 12. It was pointed out by Ms. Behura by referring to Rule 8 of the Foreign Exchange Regulation Rules, 1974 ('FERA Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limit. Copies of the letters written by COPL to the RBI on 5th November 1993 and 14th December 1993 have been placed on record. There is a letter dated 6th July 1993, written by one of the buyers, Anglia Jewellers Goldsmiths Ltd. to COPL stating that they had suffered a theft during February of that year which had created a cash flow problem. They were making an interim payment of USD 20,000 and would be making the balance payment without delay. There was a fax message sent on 17th May 1993 sent by COPL to the said buyer, reminding it of the overdue amount and requesting for remission of the balance sum. As far as the other buyers are concerned, copies of the letters have been; written by COPL in January, July, October, December 1994, Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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