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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 ..... cheques to the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less: Cash available on physical verification 3,67,380.15 ----------- Shortage of cash 17,498.00 ----------- When the State Bank of India sent a letter dated 16.10.1990 to the appellant that there was a shortage of ₹ 17,498/-, the appellant sent a reply to the bank that with the amount of ₹ 17,498/-, all the bank money had been utilised in the normal course of banking transactions in purchasing foreign currencies from the incoming passengers and that if the foreign currencies seized by the Enforcement Directorate are returned, he can tally the same with the accounts. Accepting his reply, the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with restrictions on dealing in foreign exchange; but the S.B.I.Extension Counter at Anna International Airport, where the appellant was working as Assistant Manager, is licensed by the Reserve Bank of India to act as its authorised dealers. Therefore, as an employee of the said bank, the appellant has the duty to purchase and sell foreign currencies and he has also duly acted only as an authorised dealer. Within the office hours, while he was on duty at the Extension Counter of S.B.I.at International Airport, Chennai, the appellant had purchased foreign currency from the passengers who arrived from abroad with the money belonging to State Bank of India and when the foreign exchange so purchased was in the State Bank of India, Extension counter inside the bank, they were seized by the Enforcement Directorate, whereas section 8(1) prohibits 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances when these foreign currencies and the possession of Indian currencies clearly tally with the account. Further, the learned senior counsel submitted that had the versions of the respondent been true that the appellant had brought a sum of ₹ 20,000/- personally for the purchase of foreign currencies, there should not have been any shortage of amount. Further, the respondent has not accepted the explanation given by the appellant by referring to the accounts on a reasoning that for the official conversion of the foreign currencies, it is necessary that the incoming passengers should give the prescribed format duly filled up with their personal details, passport particulars along with the details of currencies to be exchanged; but no such forms were collected by the appellant from them and hence, the explanation given by 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. In support of his contention, the learned senior counsel has relied on the decisions reported in STATE OF MAHARASHTRA ..vs.. NARBHERAM M.PAREKH (1990 (Vol.48) TAXMAN-MAGAZINE 278), VALLIAMMAL ACHI ..vs.. DIRECTOR OF ENFORCEMENT (AIR 1983 MADRAS 92), L.I.C.OF INDIA ..vs.. ESCORTS LTD., (AIR 1986 SC 1370), GAJANAN VISHESHWAR BIRJUR ..vs.. UNKION OF INDIA (1994 (72) E.L.T.788 (S.C.), and COMMISSIONER OF CENTRAL EXCISE, BHUBANESHWAR-I ..vs.. CHAMPDANY INDUSTRIES LTD., ((2009) 9 SCC 466). Under such circumstances, the impugned order passed by the respondent is liable to be set aside. 6. Per contra, the learned Senior Special Counsel appearing for the respondent submitted that though the appellant was the employee of S.B.I.Extension Counter at Anna International Airport, he along with some others indulged in purchasing the foreign exchange for 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, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice issued under the provisions of Sections 8(1) and (2), which are meant for other than the authorised officer, is not legally sustainable. In this regard, I find that the allegation against the appellant is that he had purchased the foreign currencies by using his own money with an intention to sell the same for a higher price. Moreover, as the employee of the authorised dealer, namely, State Bank of India, Extension Counter, Anna International Airport, he is dealing with the foreign currencies. When once he contravenes or violates the provisions of the FERA Act, his action is totally independent in nature and not connected with the activities of the authorised dealer, namely, the State Bank of India. Therefore, in my considered opinion, the notice issued by the respondent under sections 8(1) and 8(2) of the FERA Act as against the appellant cannot be said to be ex-facie illegal. Therefore, in my considered 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.1 would answer the imperative. The Board was justified in not remanding the matter back for such formality. The only question, therefore, was whether it would be open for the Adjudicating Officer to convict the respondent straightaway on the basis of contravention of section 14 without giving any effective hearing to the respondent on that point. It was not open for him to do so because if the original notice had related to an offence under section 14, the respondent would have come prepared with different defence. This was a matter of substance, not of form. Failure to bear in mind this aspect had no doubt vitiated the entire proceedings. The Board was, thus, justified in holding that the Adjudicating Officer should not be given a second inning for bringing the respondent to book . 11. Further, the learned senior counsel for the appellant relied on the decision reported in (2009) 9 SCC 466 (cited 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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