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TMI Blog2024 (6) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... is an excess of jurisdiction or where challenge to the vires of the statute or delegated legislation. No materials gathered behind one's back can be relied on without giving opportunity to the said person to challenge the correctness and accuracy of the said information. That not having been done in the present case and as such, it is clear violation of principles of natural justice. Further, there is huge delay for imposing of penalty for contravention of Section 7(1)(a) of FEMA, 1999 r/w Regulations 9(1) and 13 of Regulations, 2000. Therefore, the writ petition is very much maintainable without exhausting the alternative remedy as provided u/s 17 of FEMA, 1999. Failure to realize export proceeds from Brazil during 2004-2005 - The first petitioner is the indigenous manufacturer of various telecommunication and networking product. On complaint, the respondent alleged that the petitioners had realised export proceeds made by it to Brazil during the period between the years 2004 to 2005 valued at 10 million US dollars. Therefore, investigation was initiated against the first petitioner. During the investigation, letters were sent to the petitioners' bankers i.e. Axis Bank, My ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners : Mr.V.Prakash, Senior Counsel for Mr. K. Krishnamoorthy For the Respondents : Mr.N.Ramesh, Senior Panel Counsel ORDER This writ petition has been filed challenging the order passed by the respondent dated 17.06.2021 thereby found that the petitioner contravened the provisions of Section 7(1)(a) of Foreign Exchange Management Act, 1999 r/w Regulations 9(1) and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 and imposed penalty and also challenging the demand notice dated 14.06.2022. 2. The second petitioner formed the first petitioner and he is one of the Directors. Now the first petitioner has no operations, no revenues and no staff or employees. It is facing liquidation proceedings and the second petitioner is now an employee in some other company. It is facing liquidation after cancelled an order midway by the Bharat Sanchar Nigam Limited. It was challenged in the writ appeal in W.A.(MD).650 of 2010. The Hon'ble Division Bench of this Court found that the cancellation of order is illegal. The petitioner had exported goods to Brazil in the year 2004-2005 and the value of the order was about 10 million US dollars. This supply was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers for writing off a portion of the bills which were non commodity engineering technical exports in the interest of further export business. Such concessions are given in the course of business especially non commodity engineering export business and the write off was pending with the authorised dealers who because of the investigation relating to other company by the respondent were not willing to take a decision and sought for no objection certificate from the respondent. Whereas the stand of the Directorate was that it fell within the domain of the decision making of the dealers. 3.1 He further submitted that the petitioners' request to write off was neither rejected nor acceded to and after more than 12 years, the notice was issued for such transactions. Therefore the delay of more than 10 years with regard to the subject transaction is unfair and deprived the petitioners reasonable opportunity to defend themselves in respect of the alleged contraventions. The copy of the letter dated 01.07.2013 was not furnished to the petitioners and the entire information received from the dealers / banks had been behind back of the petitioners and without giving any opportunity for pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en granted for realisation of those outstanding 13 bills. The petitioners failed to submit any documentary evidence before the adjudicating authority with regards to taking steps to realise the outstanding export proceeds. In respect of 16 outstanding export bills, negotiated through Axis Bank Mylapore, Chennai, neither had those 16 bills been realised nor had the bills been written off nor had any extension been granted for realisation of those outstanding 16 bills. The authorised person is duty bound to act in accordance with the directions of the Reserve Bank of India and it is the duty of the bank to disclose the action taken on the representation for write off to the exporter in time. As per the Master Circular on Export of Goods and Services issued by the Reserve Bank of India, exporters are allowed to write off outstanding export dues only if the aggregate value of such export bills written off and bills extended for realisation does not exceed 10% of the export proceeds due during the calender year and such export bills are not a subject of investigation by the respondent. 4.2 He further submitted that the petitioner had come to the adverse notice of the respondent for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified manner. Insofar as the petitioner is concerned, the payment of goods exported under 37 invoices were not realised and it is in violation of the aforesaid Regulations. Export bills remained outstanding during the adjudication proceedings and the regulations framed under Section 7 of FEMA puts the entire onus on the exporter to realise export value of the goods exported. 4.4 He further submitted that in respect of delay is concerned, the employee of the first petitioner Mr.Krishnamurthy died on 28.01.2016. The second petitioner was the Director who was in full charge of the company. The petitioners never made any submission before the respondent about the demise of the said Krishnamurthy and his demise had adversely affected them to make proper submissions. Therefore, the disputed questions of facts cannot be gone into by way of writ petition under Article 226 of the Constitution of India. 5. Heard, the learned counsel appearing on either side and perused the materials available on record. 6. From the above submissions, in this writ petition, the points for consideration are as follows: (i) Whether the writ petition is maintainable or not when the statutory alternative re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,277.44/- and failed to realise the export proceeds and thereby contravened Section 7(1)(a) of FEMA r/w Regulations 9(1) and 13 of Regulation, 2000. After filing of complaint, the petitioners were issued show cause notice dated 14.10.2015, and on receipt of the same, the petitioners had sent their reply dated 16.12.2015. Thereafter, the impugned order was passed on 17.06.2021 thereby imposed penalty. It is relevant to extract provisions under Section 7(1)(a) of FEMA, 1999 hereunder: 7. Export of goods and services - (1) Every exporter of goods shall- (a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, containing true and correct material particulars, including the amount representing the full export value or, if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in a market outside India 10. It is also relevant to extract the provisions under Regulations 9(1) and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 hereunder: 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected nor acceded to and after more than 12 years, the petitioners were served notices for such transactions. Therefore, the long delay of more than 10 years with regard to the transactions is unfair and deprived of the petitioners a reasonable opportunity to defend themselves in respect of the alleged contraventions. Further, the entire information received from the dealers / banks had been behind the petitioners' back and without an opportunity to the petitioners, it was adjudicated. Therefore the petitioners are not guilty of any non declaration in terms of Section 7(1)(a) of FEMA r/w Regulation 9(1) and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000. 12. Further, it is not the case of the respondent that the petitioners did not declare the value of the export or not declared correctly. Further the first petitioner is no longer in operation for more than a decade. The second petitioner is employed in other company. The first petitioner has no operation, no revenues and no staff or employees and it is facing liquidation proceedings. There is absolutely no explanation for the delay in issuance of notice, that too after period of 10 years. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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