9911796707
TMI Blog2000 (3) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to US $13,01,477.52 in respect of 31 GRIs mentioned in Annexure A to the Memorandum of Show Cause No. T-4/33-M/86 (SCN) dated 3-7-1986 in pursuance of which adjudication proceedings were held against the appellants. The appellants sent a reply dated 6-9-1989 to the SCN wherein they denied the charge. Written submissions in defence were also submitted on behalf of appellant during personal hearing on 16-4-1990. It appears that in their reply to the SCN the appellants, apart from making several contentions in the defence, filed tabular statements in respect of the position of each GRI mentioned in the Annexure to the SCN. In the Annexures the correct aggregate value of the invoices pertaining to the said GRIs is US $12,03,005.14 instead of US $13,01,447.52. It appears from the consolidated tabular statement that invoice value in respect of GRIs at Serial Nos. 1, 5, 7, 9, 10, 16, 21, 25 and 26 were not correctly mentioned in the Annexure. It is also shown that goods of the total value of US $98,472.38 were short-shipped (i.e., were not shipped) and that a total of amount US $2,85,035.82 had since been realised. This leaves a balance amount of US $9,17,969.32. 3. Out of the balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made a reference through the Consulate General of India at Dubai to confirm whether the documents of destruction of goods as relied on by the appellants were the certificates issued by the health department of Dubai municipality. It is observed by the learned Adjudicating Officer that the health department at Dubai confirmed that the certificate produced by the respondent are not official destruction certificates issued by the Dubai municipality. He, therefore, concluded that the certificates submitted by the appellants did not prove destruction. 7. We have perused the copies of what the appellants have described as the destruction certificate issued by the Dubai municipality. These certificates were sent by Baraka apparently to support the debits against the appellants. It is seen from the so-called certificates that they are memos addressed to the Head of its Public Health Department by Dubai municipality on the subject of destruction of goods belonging to Baraka Food Stuff and Meat Est., Dubai. All memos are on the same proforma. In this memo it is stated that the goods indicated therein were destroyed in presence of the Members of the Destruction Committee as the same were un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that the export contemplated under the regime of section 18 of the Act relate to exports in the course of sale of goods by Indian exporters to foreign importers of those goods. The obligation of realisation of proceeds of exports would arise only when such payment for the goods becomes due for payment by the foreign buyer. Where there is no sale, for example, where the goods were exported as gift the question of payment for such export would not arise. For the same reason where the goods have not been delivered to the foreign buyer or taken delivery of by him, the question of realising the payment for such goods would not arise. It would thus be seen that in order to bring home the charge of contravention of section 18(2) it is necessary for the department to prove that the goods covered by 31 GRIs mentioned in the Annexure to the SCN were cleared by the foreign buyer so as to create an obligation on the part of the Indian exporter to realise payment therefor. 10. It is now well-settled that the burden is on the department to prove, by appropriate evidence, the facts that are necessary to constitute the contravention that has been alleged by the department. In view thereof, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vention of section 18(2) on the part of the appellants. On the other hand there is evidence of the debit note supported by the memo of the destruction committee of the Dubai municipality. This evidence is contemporaneous and cannot be said to have been procured or created by the appellants subsequently in the course of the proceedings against them. There is no evidence to controvert the fact of destruction of the goods mentioned in the destruction memo. Had the goods been cleared by the foreign buyer there ought to have been the record of negotiations of the documents but there is no such evidence. The confirmation sought by the learned Adjudicating Officer is that the said memos of the destruction committee of the municipality are not the official destruction certificates issued by the Dubai municipality. This confirmation is of no avail as the evidence of the memo of the destruction committee of the Dubai municipality addressed to the Head of its Health Department, on the face of it, cannot be said to be a certificate, much less an official certificate of the municipality. It is an internal memo and copy of which had been given to Baraka in whose presence the goods were destroyed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses not only due to non-realisation but also due to destruction of goods, and short-shipments of the goods which had become unfit for consumption even before export. He pleaded that there is no scope for realisation of the outstanding amount now with the result that the entire amount of the shipments covered by the GRIs mentioned in the Annexure to the SCN except that already realised has become total loss to the appellants. He further submitted that in addition the appellants have to pay interest of the amounts borrowed from the bank for effecting the exports. In the circumstances, Shri Handoo pleaded that the appellants do not deserve any penalty as in the process of earning foreign exchange for the country by further exports in 1984-85 they have been penalised by being victim of huge losses. He brought out that the appellants could not obtain the permission of the RBI for writing off of the outstanding amount which constitute 2.90 per cent of the total exports made by the appellants from the years 1970 1985 due to the action initiated by the Enforcement Directorate. He submitted that had the Enforcement Directorate investigated the case objectively and apprised the RBI that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Adjudicating Officer are in any case not tenable because while drawing the conclusions he has ignored the crucial evidence that were there on the record. He also submitted that the learned Adjudicating Officer was pleased to record that the entire correspondence is one-sided whereas the replies of the foreign buyer to the letters of the appellants and the mutual fax messages were already on his record. Apart from this, several letters that were written by the appellants to the foreign buyer were endorsed to the appellants bank viz., Vijaya Bank and, therefore, the fact of those letters having been written could have been verified from the bank. Ignoring all these evidence the learned Adjudicating Officer draws the inference as if the appellant had created the evidence to avoid the charge. Shri Handoo submitted that a bare perusal of the findings of the learned Adjudicating Officer discloses that not only he proceeded with pre-determined mind he also prejudiced his mind by entertaining doubts about the bona fides of the appellants, without appreciating the export performance of the appellants who had already earned for the country foreign exchange worth several crores of rupee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a business is regulated by the law, backed by the sanction of monetary penalty in the event of violations, a prudent businessman has to balance his business decision (of taking risks and reconciling himself to minor losses as bad debts) with the obligation imposed on him by law. He ought to appreciate that when he operates his business in a legal regime he does not have free play and he cannot afford to take his business decisions in his absolute discretion. Promises by the foreign buyer, even if he has honoured his promises to some extent, could be a good reason for a businesman not to rush to formal coercive action and prudence may lie in giving some indulgence to the defaulting buyers. But beyond a certain period of waiting, banking on such promises may not be considered to be adequate efforts towards realisation of the outstanding amounts of the proceeds of exports. We do take notice of the circumstances and the efforts that were made by the appellants towards realisation of the outstanding amount and also the constrains they have in their efforts towards realisation of that amount, but we are not inclined to pursuade ourselves to accept that the appellants have not contraven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open to the appellant-company, in the circumstances, was to initiate formal proceedings against the foreign partners within due time but while considering that option the ground realities cannot be ignored. Apart from the costs of such litigation one cannot be assured of the success and recovery of outstanding amounts as there is no evidence that the foreign party had adequate assets to honour the decree, if obtained. In the circumstances, the contravention cannot be said to be intentional; it lacks the inherent mental element of a deliberate act or omission. In our opinion, the appellant-company does not deserve more than a token penalty. A deterrent quantum as determined by the learned Adjudicating Officer is misconceived. Considering all these circumstances, in our opinion, a penalty of Rs. 2,50,000 on the appellant-company namely, the appellant in appeal No. 849 of 1990 would meet the end of justice. 24. In the result appeal No. 848 of 1990 is allowed and the impugned order is set aside as against the appellant K.S. Abdullah. Appeal No. 849 of 1990 is partly allowed. While the finding of the contravention of section 18(2) on the part of the appellant-company is upheld but the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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