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TMI Blog2024 (8) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... awat and his daughter Miss Roshni Rawat jointly signed the cheque no. 345852 345853 dated 13. 09. 2003 in the favour of said two authorized money changers respectively. Even if it is presumed that Shri Faiyaz Shamim was not aware of this fact that foreign exchange is being procured by his company, without obtaining prior permission of RBI, even then, he is not entitled to any benefit, as he was not carrying any permission of RBI at the time of his travelling to Sri Lanka when he was intercepted by Custom Authorities at the Airport. He may be ignorant of the factual position, but ignorance of law is no excuse, since he was not carrying any permission of RBI for carrying additional US $ 25,000. It was the duty on the part of appellant Faiyaz Shamim to verify this fact before obtaining the additional US $ of 25,000 and to request for RBI permission before carrying the same. Miss Roshni Rawat and Shri Dinesh Chandra Rawat have already admitted their fault for committing this technical violation by not obtaining the prior permission of RBI. Case of appellant Sanjay Mukherjee, who was working as Finance Manger in the said company - Being Finance Manager, it cannot be presumed that he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After going through the said complaint, the Adjudicating Authority issued Show Cause Notice No. T- 4/15/CAL/SCN/FEMA/2006/DD/ADJN/540/694/13 dated 12. 12. 2006 on the ground that there is a prima facie contravention of Section 5 of Foreign Exchange Management Act, 1999 read with Rule 5 of Foreign Exchange Management (Current Account Transaction) Rules, 2000 and Section 10(6) of FEMA, 1999 Shri Dinesh Chandra Rawat the then Managing Director of the company filed reply dated 20. 03. 2007 to the show cause notice wherein he has mentioned that Shri Faiyaz Shamim never handled the travelers cheques and collected the dollars;he was unaware of the quantum of amount;the procurement of TC s were finalized by two other employees. Information was forwarded from Chennai Zonal Office to the Kolkata Zonal Office of the Directorate of Enforcement to the effect that foreign exchange of US$ 50,000/- in Traveller Cheques and Indian Rs. 10,000/- in cash were seized on 19/09/03 by the Custom officers at Chennai Airport from one Shri Faiyaz Shamim, employee of M/s. Dinmay Exim Avenue (P) Ltd. of 607, Lake Gardens, Kolkata 700 045. On the basis of the said information, enquiry was initiated with the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business travel. Another US$of 25,000/- was allowed to be withdrawn for reimbursement of pre-incorporation expenses,which was permissible under the Act. On 19/09/03 Shri Faiyaz Shamim after checking out was to board flight to Colombo from Chennai Air Port. Shri Faiyaz Shamim was intercepted by the Custom Officers, when he informed that he was carrying Travelers Cheques for US$ 50,000/-. The said Travelers Cheques along with Indian Currency Rs. 10,000/- were seized by the Customs officers and the said Shri Faiyaz Shamim was arrested on 19/09/03. On 12/03/04, Show Cause Notice was issued by the Commissioner of Customs (AIR), Custom House, Chennai. On 19/07/04, the Commissioner of Customs (AIR), Custom House, Chennai passed an order and imposed redemption fine of Rs. 2,50,000/- and penalty of Rs. 1,00,000/-. Copy of the related documents were furnished by Shri Rawat Copies of documents in this matter forwarded through Chennai Zonal Office of this Directorate and copies of documents furnished by the said S/Shri D. C. Rawat and Faiyaz Shamim were examined. Shri Faiyaz Shamim in his statement dated 19/09/03 stated that their Managing Director Shri D. C. Rawat asked him to go to Sri L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was carrying in contravention. With regard to the date (15/09/03) of application for purchase from M/s. VKC Credit Forex Services Pvt. Ltd. , he clarified that the actual date of purchase was 13/09/2003 and the date 15/09/03 was due to typing mistake. Miss Roshni Rawat, Director of the Co. in her statement dated 20/09/03 stated that she was a student and was still studying and she used to sign the papers time to time as per the direction of her father Shri D. C. Rawat, Managing Director of the Co. and that she did not know the full details of her father's business. With regard to acquisition of T. C. for US$ 50,000/- by Shri Faiyaz Shamim, she had stated that she was asked by Shri Sanjay Mukherjee, Finance Manager to sign the papers and that she did it on good faith and did not know the details of the transactions and that she could remember signing of papers with regard to acquisition of US$ 25,000/- only. Shri Sanjay Mukherjee, Finance Manager of the Co. in his voluntary statement dated 20/09/03 stated that Shri Faiyaz Shamim, their export executive, proceeding to Colombo was carrying Traveler s Cheques for US$ 25,000/- which was purchased from M/s. VKC Credit Forex Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the deal. Shri Sanjay Mukherjee in his further statement dated 25/11/03 stated that he had negotiated with M/s. VKC Credit Forex Services (P) Ltd. for Traveler s Cheques worth US$ 25,000/- and the Forex dealers came to his office when Shri D. C. Rawat was not available and the application for release of foreign exchange was signed by Miss Roshni Rawat, another Director of the Co. Shri Faiyaz Shamim was called to his office and he affixed his signature on the Traveler s Cheques in hispresence and in the presence of the foreign exchange dealers on 13/09/03. He was not aware all that time of the other deal for Traveler s Cheques for US$ 25,000/- done by Mr. Rawat Shri Faiyaz Shamim in his voluntary statement dated 25/11/03 stated that on 13/09/03 at about 12 noon Shri Sanjay Mukherjee called him and asked to sign some Traveler s Cheques brought by the Forex dealer. He signed on the Traveler s Cheques in the presence of Shri Sanjay Mukherjee and the forex dealer. Shri Mukherjee told him that it contained Traveler s Cheques worth US$ 25,000/-. Around 4 p. m. another Forex dealer came to his office and obtained his signature on some more Traveler s Cheques and he had signed them thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r payments other than through banking channels cannot be considered as legal, and foreign exchange drawn cannot be deemed to be legally drawn for business travel. (ii) Shri Faiyaz Shamim stated that he had signed the two sets of TCs for US $ 25,000/- each in presence of Shri Sanjay Mukherjee and the forex dealers, whereas in his statement dated 19/09/03 he stated that he did not know the denomination/quantum of the foreign exchange he was carrying. (iii) The cheques issued in this regard had consecutive numbers of the same date. It is hard to believe that Shri Sanjay Mukherjee, Finance Manager had no knowledge of the fact that Shri D. C. Rawat had signed the previous cheque of the same amount. (iv) It appears from the copy of the Air ticket that the scheduled date of departure from India (Chennai)of Shri Faiyaz Shamim was 18/09/03 and the schedule date of his departure from Colombo was 20/09/03 and in his statement dated 20/09/03, he had stated that in case the job was not completed, he would have to stay there for another day or two. This means, he was a short visit passenger. As per the Air ticket the visit was for two days. But in the application letter, the duration of the visi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible under the provisions of the Act or the Rules or Regulations or directions or order made there under shall be deemed to have committed the provisions of the Act for the purpose of this section. Therefore, Adjudicating Authority concluded that through the joint efforts of Shri D. C. Rawat and Miss Roshni Rawat both Directors of M/s. Dinmay Exim Avenue (P) Ltd. along with their Finance Manager, Sanjay Mukherjee and employee Shri Faiyaz Shamim, acquired foreign exchange totaling US$ 50,000/- in TCs for the so called business travel to Sri Lanka in violation of Section 5 of Foreign Exchange Management Act, 1999 read with Rule 5 of Foreign Exchange Management (Current A/c Transaction) Rules, 2000 and also the said Shri Faiyaz Shamim in-spite of his knowledge about the quantum of foreign exchange i. e. US$ 50,000/- acquired for utilization for the purpose other than mentioned in the application for release of foreign exchange, failed to surrender the same to an authorized dealer in contravention of Section10(6) of Foreign Exchange Management Act, 1999. Accordingly, on the basis of above conclusion, Ld. Adjudicating Authority, imposed the penalty of Rs. 1,00,000/- for contravention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 20. 02. 2012. The Ld. Special Director (Appeals) failed to consider that for unauthorisedly keeping in his possession the additional foreign exchange for US $ 25,000 (in TCs), as per direction of Shri Dinesh Ch. Rawat, Managing Director of the Company and for failure to disclose the same before the Officers of Customs at Chennai Airport, the appellant Faiyaz Shamim already suffered imprisonment for two months, after seizure of the foreign exchange from his possession by the Customs Officers in addition to imposition of penalty and fine under the Customs Act, 1962. He submitted that the Ld. Special Director (Appeals) failed to consider that the statutes of both the Customs Act, 1962 and that of FEMA, 1999 have been enacted to deal with under different spheres. In the present matter, the Customs Act, 1962 deals with attempting to improperly export foreign exchange outside India, whereas the FEMA, 1999 deals with drawal of foreign exchange beyond prescribed limit without permission of RBI. He pointed out that the Ld. Special Director (Appeals) failed to consider that reimbursement of foreign exchange for US $ 25,000 (in TCs) towards pre-incorporation expenses of liaison of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the employee merely for the reason that he was in-charge of Exercise matters . He submitted that as an employee, the appellant Faiyaz Shamim had to carry out the Orders of the Managing Director of the company for his service interest in the company, without any knowledge that sum of additional amount of US $ 25,000 were not drawn with permission of RBI and thereby Shri D. C. Rawat committed contravention of the provisions of FEMA, 2002,as a result he had to suffer imprisonment at Chennai for two months and later-on dismissal from his service with the company. As the appellant Faiyaz Shamim had not signed the applications and issued cheques to the FEMCs on behalf of the company. He further pointed out that appellant Sanjay Mukherjee has no role for drawl of additional US $ 25,000 from M/s RR Sen Bros (P) Ltd. FFMC. Accordingly, their involvement in the FEMA contravention was misconceived and as such the same is required to be quashed/set aside. Prayer, is accordingly made to allow the present appeals and thereby set aside the impugned review order dated 08. 03. 2018; Order dated 13. 01. 2017 passed in Appeal by Ld. Special Director (Appeals); and Adjudication Order dated 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business promotion trip to Sri Lanka by appellant Faiyaz Shamim was planned at the instance of Dinesh C. Rawat. Mr. Faiyaz Shamim was working as Export Executive and Sanjay Mukherjee was working as Finance Manager in M/s Dinmay Exim Avenue Pvt Ltd. It is also an admitted fact that appellant Faiyaz Shamim was not instrumental in applying for foreign exchange, as the said work was managed by Miss Roshni Rawat and Shri Dinesh Chandra Rawat Directors of the company, who issued the application for US $ 25,000 each on company s pad in favour of Mr. Faiyaz Shamim to two different authorized money changers namely M/s VKC Credit Forex Pvt Ltd. and M/s RR Sen Bros. Pvt Ltd. Shri D. C. Rawat and his daughter Miss Roshni Rawat jointly signed the cheque no. 345852 345853 dated 13. 09. 2003 in the favour of said two authorized money changers respectively. Even if it is presumed that Shri Faiyaz Shamim was not aware of this fact that foreign exchange is being procured by his company, without obtaining prior permission of RBI, even then, he is not entitled to any benefit, as he was not carrying any permission of RBI at the time of his travelling to Sri Lanka when he was intercepted by Custom Auth ..... 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