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TMI Blog2008 (2) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... .4.1998 against appellant-company and Rs. 20,000 each against other appellants in Appeal Nos. 522, 523, 524, 525, 526, 527 528/2003 for contravention of Section 9(1)(c) Foreign Exchange Regulation Act, 1973. (c) a penalty of Rs. 40,000 on the allegations contained in Show Cause Notice No. 37-45/98/SCN/DD dated 17.4.1998 against appellant-company and Rs. 4000 each against appellants in Appeal Nos. 522, 523, 525, 526, 527 528/2003 for contravention of Section 16(1)(a) Foreign Exchange Regulation Act, 1973. Read with Section 68 Foreign Exchange Regulation Act, 1973, on the reasons that the appellants failed to take reasonable steps for repatriation of the export proceeds of UK Pound 422071.10 of the goods exported through 18 GRIs and for acknowledging a debt of UK Pound 22000 in favour of non-resident person and further not doing or refraining from doing any thing which had the effect of not receiving foreign currency of UK Pound 7500. While disposing of application for dispensation of pre-deposit, this Tribunal allowed by order dated 11.5.2004 appellant in Appeal No. 521/2003 to make pre-deposit of Rs. 5 lakhs which the appellant in Appeal No. 521/2003 has complied. Further, in Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. Another argument is that the appellants when claimed before Commercial Court, London, an amount of U.K. Pound 173763.90, the foreign buyer offered settlement on the condition of allowing a discount of U.K. Pound 22000 which was allowed. This discount was rightfully claimed by the foreign buyer because of delay in the shipment or quality of the exported goods. Therefore, this discounted amount is not an acknowledgement of debt in violation of Section 9(1)(c) Foreign Exchange Regulation Act, 1973. Lastly, the arguments are that the appellants remitted US dollars 7500 to M/s Wellbred Assets Management (Bahamos) Ltd. for placement of preferential shares of US dollars 30 millions so that the appellants can start their copper project. Though the placement of preferential shares could not materialize but M/s Wellbred Assets Management (Bahamos) Ltd. refuted the reimbursement of US dollars 7500. The appellants could not have initiated a legal proceedings for recovery of US dollars 7500 because the same would have resulted in huge expenses, totally incomparable to the amount recoverable. Per contra, Shri A.C. Singh, DLA, supported the impugned order and made vehement arguments for dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prudent man dealing in export business. 7. The gravamen of charge under the provisions of Section 18(2) consists of not taking reasonable steps in the particular circumstances of the case which are required to be taken by a prudent exporter. Here the contravention relates to taking or not taking of effective steps. It is not the non-realization of export proceeds which amounts to contravention of Section 18(2). The legislature has not made non-receipt of export proceeds an offence under FER Act, 1973 but the gravamen of charge is of not taking reasonable steps for repatriation of export proceeds. Though sub-Section (3) of Section 18 further creates a legal presumption against the exporter but the same is rebuttable and can be displaced, if taking of effective steps are proved by the exporter. 8. As soon as Enforcement Directorate is able to lead proof that export price is not repatriated within six months or the period extended by RBI, an adverse legal presumption against the exporter is automatically raised under Section 18(3) Foreign Exchange Regulation Act, 1973. This is an admitted position that export price is not repatriated till now whereafter adverse legal presumption, thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he limit of the reasonable time must be determined by the facts of the case and nature of the order which was sought to be varied. This aspect does not appear to have been specifically kept in view by the Division Bench . Additionally, the points relating to applicability of the Andhra Pradesh Assigned Lands ( Prohibition of Transfers) Act, 1977, and even if it is held that the Act was applicable, the reasonableness of the time during which action should have been initiated were also not considered. It would be hard to give an exact definition of the word reasonable Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and circumstances in which he thinks. The reasoning which built up the old scholastic logic stands now like the jingling of a child's joy. But mankind must be satisfied with the reasonableness within reach; and in cases not covered by authority, the decision of the Judge usually determines what is reasonable in each particular case; but frequently reasonableness belongs to the knowledge of the law, and therefore to be decided by the courts . It was illuminatingly stated by a learned author that an attempt to give a specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed in para 2(c) above, has alleged non-receipt of US dollars 7500 due to act or omission of the appellants and has placed reliance on two letters from the appellants weitten to M/s Wellbred Asset Management (Bahamos) Ltd., requesting refund of US dollars 7500 given for placement of preferential shares which later were not issued by the appellants. 15. It is conceded that exports were made totaling to U.K. Pound 422071.10 through 18 GRIs from November, 1995, till March, 1996. These exports were made to M/s Burce Clothing Ltd., Great Britain. As per Section 18(1)(a), the exporter is required to disclose all material particulars, including full export value of the goods as well as the total period during which export value is likely to be repatriated. This is an admitted tact that appellants filed an undertaking to repatriate export proceeds within six months. This period of six months is also prescribed by Rule 8 of the Foreign Exchange Regulation Rules, 1974, promulgated under Section 79 Foreign Exchange Regulation Act, 1973, by Central Government. These being statutory rules, are binding on every exporter, including the appellants. The last payment of U.K. Pound 37350 from M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y absolved till wound up on 18.11.1999 as stated in the Chronology of Events filed by the Ld. Counsel on behalf of the appellants. 18. From above narration of factual position, it is difficult to agree with the arguments advanced by Shri R.C. Gill, Advocate, that the appellants have taken all reasonable steps for recovery of the export proceeds. The factual description given above does not justify this conclusion, especially when the efforts are required to be made for recovery of the amount within six months failing which an adverse presumption is raised against the appellant. The question of taking reasonable steps is a question of facts. The efforts made by the appellants when looked into the prism of amount involved, do not depict appropriate steps in the particular circumstances of these appeals. The letter to the Indian High Commission, London, or its reply dated January, 2000, hardly depicts reasonable steps. The impossibility of recovery as argued by the appellants in their reply to SCN is of their own creation who by not pursuing the matter urgently and promptly have lost the precious time during which the recovery would have been possible. There is nothing on record where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otiate any bill of exchange or promissory note so that a right to receive payment is created or transferred in favour of any person resident outside India. Further, an acknowledgment of a debt in favour of a non-resident person is prohibited in absence of any permission from RBI. 21. The Act neither defines the term 'debt' or 'acknowledgement'. The term 'acknowledgment' has been dealt with in two other Acts, i.e. under Section 18 of the Limitation Act, 1963, and under Section 25(3) of Indian Contract Act, 1872. The requirements and purports of the said term in the said Acts are different, therefore, further discussions of the terms 'acknowledgment' in relation to the above stated Acts may not be necessary. In Limitation Act, an acknowledgment has to be in writing but that requirement of in writing is not incorporated in FER Act. 22. According to the Black's Law Dictionary 5th Edition, 'debt' means 'a sum of money due by certain express agreement; a specified sum of money owing to one person from another, including not only obligation of debtor to pay but right of creditor to receive and enforce payment. However, from the plain reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrival of a settlement. If that is so, the appellants have no reason to say that acknowledgement has not been made in favour of non-resident person in violation of Section 9(1)(c) Foreign Exchange Regulation Act, 1973, without permission of RBI. This is an admitted position that RBI was neither approached nor granted any permission to acknowledgement of debt claimed in the nature of reduction of the price of exported goods due to late shipment or quality of the goods. The actionable claim not only is acknowledged so that amount can be recovered in future but the incidence has come to the light after the payment had already been made. Therefore, the impugned order cannot be faulted with this arrival of guilt and there is no error found in the adjudication order. 24. Lastly, we come to the third Show Cause Notice discussed in Para 2(c) above. According to this Show Cause Notice, US dollars 7500 was paid to M/s Wellbred Asset Management (Bahamas) Ltd. for processing the listing of preferential shares. This listing of preferential shares never occurred but the amount was neither refunded. The appellants have sent letter also to claim this amount but thereafter failed to do anything. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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