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TMI Blog2010 (6) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... passengers going abroad or coming from abroad at the Air Port Counter. While the appellant was working at the S.B.I.Extension Branch, Anna International Airport, he had a separate cash chest or Coffer and he had separate counter and the ledgers showing the opening balance, the amount dealt with, etc., are all separate for him. On 11.10.1990 at about 4.30 Hours, the Enforcement Directorate, on information, conducted inspection of the State Bank of India, Exchange Bureau, situated at the Arrival Hall of Anna International Airport, Madras, under the provisions of Section 43 of the Foreign Exchange Regulation Act ('FERA Act'). During the inspection, the following unaccounted foreign currencies and travellers' cheques were found in the counter of the appellant. U.S.Dollars 100 Australian Dollars 250 U.S. Dollars in Travellers' Cheques 400 Since the foreign currencies and travellers cheques in the counter of the appellant were found to be in conformity with the transaction dated 10.10.1990, the above said currencies were returned to the officer in the presence of witnesses. Thereafter, in the presence of witnesses, when the appellant's hand bag was searched by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank did not take any further steps to recover the amount from the appellant. (c). While the situation stood thus, the authorities of the Enforcement Directorate issued a show cause notice dated 19.09.1991 to the appellant, wherein a reference was made to the statement that was given by the appellant on 11.10.1990 as if the appellant had brought ₹ 20,000/- with him to the office with an idea of purchasing foreign currencies from the incoming passengers for selling the same at a higher rate for profit; moreover, since the appellant has not issued any encashment certificate for the purchase of the said seized foreign currencies, the appellant was charged for violation of the provisions of sections 8(1) and 8(2) of FERA Act, 1973. The appellant was also directed to reply to the said show cause notice within 30 days from the date of receipt of the said notice; but the appellant had sent a detailed reply dated 06.11.1991 stating that the said statement recorded by the Enforcement Directorate was not true and voluntary and it was obtained under coercion by illegally keeping him in the office throughout the day i.e.11.10.1990. (d). But the respondent-the Special Director of En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dealing of foreign exchange by a person other than the authorised dealer. When the appellant being the authorised dealer, the question of violating the provisions of Sections 8(1) and 8(2) does not arise in this case. Therefore, the show cause notice issued by the respondent is ex-facie wrong. Further, by inviting the attention of this Court to the summary of the transactions of S.B.I., Extension Counter, International Airport as on 11.10.1990, the learned senior counsel contended that the total value of the foreign currencies with receipts by miscellaneous transactions on that day was ₹ 2,32,813/-. The opening balance on that day was ₹ 1,72,375.15 and the total was ₹ 4,05,188.15. The foreign currencies purchased i.e.400 US dollars and 250 Australian Dollars during the course of the day came to ₹ 20,310/-. The balance, after deducting ₹ 20,310/- must be ₹ 3,84,878.15. But, there was a shortage of ₹ 17,498/-. In this regard, the learned senior counsel submitted that the value of foreign currencies said to have been recovered from the personal bag of the appellant was ₹ 16,306.35 (823 US Dollars, 151 Singapore Dollars and 49 Malaysian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant with regard to the tallying of the accounts in respect of the foreign currencies and Indian cash recovered from him cannot be accepted". But the learned senior counsel for the appellant submitted that the said reasoning of the respondent is not legally sustainable. The penalty proceedings initiated against the appellant was for not issuing the encashment certificate to the passengers coming from abroad and not maintaining counterfoils with him and on the other hand, the penalty proceedings was initiated against the appellant for contravention of the provisions of Sections 8(1) and 8(2) of the FERA Act as an unauthorised dealer, he dealt with buying of foreign currencies. The learned senior counsel further submitted that had there been a charge in the show cause notice with regard to the non-issuance of the encashment certificates to the passengers coming from abroad, the appellant would have sent a proper reply for the same; but there was no mentioning in the show cause notice with regard to the non-issuance of encashment certificates by the appellants. Further, the learned senior counsel for the appellant submitted that the respondent cannot penalise the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r their own benefit, outside the books of account of the bank, thereby he clearly contravened the provisions of sections 8(1) and 8(2) of the FERA Act, 1973. Therefore, the appellant, who was working as Assistant Manager in the S.B.I. Extension Counter, cannot be construed as an authorised dealer. Under such circumstances, no fault could be found in the show cause notice issued by the Enforcement Directorate. Further, by inviting the attention of this Court to the show cause notice dated 19.09.1991, the learned senior counsel vehemently contended that the non-issuance of the encashment certificates by the appellant was clearly mentioned in the said show cause notice. Unless the encashment certificates are there, the explanation given by the appellant with regard to the accounts for tallying the possession of foreign currencies and the Indian cash, which was recovered from his possession, cannot be accepted by the respondent. Thus, the learned senior counsel submitted that there is no merit in the contentions of the appellant and hence the appeal has to be dismissed. 7. Heard the learned senior counsel for the parties and perused the materials available on record. 8. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered opinion, there is no need for the respondent, by treating the appellant as an authorised agent, to issue notice under different section, namely, 6(4) of the Act. 10. The other submission of the appellant is that in the impugned order, the respondent has observed, "there was a conversion of foreign currency without giving a prescribed format to the passengers coming from abroad and the appellant has not collected encashment certificate". According to the appellant, the said reasoning would amount to punish him under a different section and not under sections 8(1) and 8(2), because those sections deal about the prohibition of selling and purchasing the foreign currencies by the persons other than the authorised officer. If the allegation of the respondent is concerned about the non-procuring of the encashment certificates, then it would amount to violation of the licence conditions. Under such circumstances, the notice ought to have been issued under a different section by mentioning the non-procuring of encashment certificate. It is the further grievance of the appellant that since the show cause notice did not speak about the non-procuring of the encashment certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), wherein it has been held as follows: "38. Apart from that, the point on Rule 3 which has been argued by the learned counsel for the Revenue was not part of its case in the show-cause notice. It is well settled that unless the foundation of the case is made out in the show-cause notice, the Revenue cannot in Court argue a case not made out in its show-cause notice. (Commr. of Customs v. Toyo Engg. India Ltd.,(2006) 7 SCC 592). Similar view was expressed by this Court in CCE v. Ballarpur Industries Ltd.9 (2007) 8 SCC 89). In para 27 of the said Report, learned Judges made it clear that if there is no invocation of the Rules concerned in the show-cause notice, it would not be open to the Commissioner to invoke the said Rules. ........... 43. The Revenue also relied on another decision of this Court in Kemrock Industries & Exports Ltd. v. CCE, (2007) 9 SCC 52) for the purpose of essentiality test. As noted above, there is no whisper of the essentiality test in the show-cause notice. As no case of essentiality test has been made out in the show-cause notice, the same cannot be argued for the first time before this Court. As such the judgment in Kemrock on essentiality ..... X X X X Extracts X X X X X X X X Extracts X X X X
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