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TMI Blog2025 (1) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... e against the exports were received in advance without any actual export of goods, that all the export documents bear the signatures of the appellant and the exports proceeds were also realized by the appellant. There was no written arrangement between the appellant and the Mundra Brothers with reference to the export of goods. These findings have, therefore, become conclusive in light of the Ld. Settlement Commission s order. Whether significant delay was caused as Respondent took almost six years from the date of receiving information from the Excise Department to lodge a Complaint against the Appellant? - The present case, as already noted, is one of FEMA,1999. The penalties prescribed for contravention under FEMA, 1999 are in the nature of technical and procedural lapses. The liability for contravention under FEMA is of a civil nature unlike the erstwhile FERA which it replaced, and also unlike the PMLA, 2002. As such, the ratio of the cases cited by the appellant would not apply to the present case. It is evident from the order of settlement before the Settlement Commission that the remittance against the said exports were received in advance without any actual export of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Director, whereby a penalty of Rs.25 Lacs was imposed on the Appellant. FACTS IN BRIEF 2. The brief facts of the case are that information was received from Central Excise Customs, Surat that M/s Siddha Exports had applied for rebate of Central Excise Duty by producing 15 fake shipping bills, related applications for removal of excisable goods for export (ARE-1s)and other related shipping documents, and fraudulently availed rebate of Central Excise Duty amounting to Rs. 28,61,529/-. It was reported that though the goods were not exported at all against the 15 fake Shipping Bills, M/s. Siddha Exports claimed availed the rebate of Rs 28,61,529/- fraudulently; that M/s. Siddha Exports received total foreign exchange of US$ 10,54,310.36(FOB Value) against the aforesaid fake export as evident from the Bank Realization Certificates (BRCs) issued by UTI Bank Ltd., Ghod Dod Road, Surat, which was deposited in the Current Account of M/s. Siddha Exports bearing No. 047010200008280 by producing forged shipping documents to the Bank Authorities for negotiation. 3. M/s. Siddha Exports, was found to be a proprietary concern of Shri Kamal, Singh Sancheti. Statement of Shri Kamal Singh San ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Mr. Rajesh D. Mundra Mr. Kamal D. Mundra both resident of A-1/401, Vasant Vihar, Udhana, Magdalla Road, Surat; that Mr. Rajesh D. Mundra Mr. Kamal D. Mundra had told him that they had confirmed export order from foreign buyers, they know where from the goods are to be purchased and through which shipping lines goods are finally exported to the desired destination of foreign buyer, that payment shall be through bank to bank and export documents, i.e., B/L shipping bill, invoices packing list ARE-1 shall be prepared by them and export formalities shall be completed at their level; that he has only to sign such documents relating to export made to the foreign buyer and after the receipt and credit of foreign inward remittances, he has to issue cheques in favour of the suppliers from whom the goods were procured; that Mr. Rajesh D. Mundra Mr. Kamal D. Mundra will be entitled to DEPB licenses and he will be entitled for Central Excise Rebate, which used to range up to 10% of the assessed value of the goods; that all the export documents bear his signature and he claimed the rebate under DEPB Scheme; that export proceeds were realized by him; that he had known Mr. Rajesh D. Mundra M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission, in its order, observed that the appellant had voluntarily come before them and that the appellant had been deceived. It held that the amount of rebate had to be returned but did not hold the appellant liable for payment of any penalty. 10. It is further submitted by the learned counsel for the appellant that the appellant has not been unjustly enriched in the transaction but was the victim of a fraud. He placed reliance on the judgement of the Central Excise Service Tax Appellate Tribunal (CESTAT) to contend that going to the Settlement Commission does not show mala fide intentions. 11. It was once again emphasized by the learned counsel for the appellant that the export was duly made to the best of the belief of the appellant and the proceeds were also realised. 12. During the course of proceedings, an application for submission of additional grounds of appeal was also filed by the appellant which was strongly opposed by the respondent Directorate. The respondents submitted that thesaid additional grounds were purely factual in natureand were proposed to be raised after a substantial period of almost 13 years from the filing of the appeal. The said applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate delay in itself may not be ground for quashing of a criminal complaint, in such cases, unexplained inordinate delay of such length must be taken into consideration as a very crucial factor as grounds for quashing a criminal complaint. 14. The Appellant has further placed reliance on the case of Fiserv India Private Limited v. Assistant Director and Another [2021 SCC ONLINE ALL 151], wherein the Hon'ble High Court of Allahabad has held as follows: 26. ...the reasonable period to commence the adjudicatory proceeding would be counted from the date when that information was received by the prosecuting agency... 15. The appellant submits that in view of the above legal position, the adjudicatory proceedings in the present case shall be deemed to have commenced on and from 17.09.2004, i.e., when the Respondent received the information from the Excise Department. After that, the Respondent cunningly and deliberately waited for the Settlement Order of the Hon'ble Settlement Commission and initiated proceedings against the Appellant only after the Settlement Order had been passed. It is further contended that the RespondentDepartment and the Customs Excise Department, in collusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it encompasses all stages, viz. investigation, inquiry, trial, appeal, revision and re- trial; that the burden lies on the prosecution to justify and explain the delay; that the Court must engage in a balancing test to determine whether this right had been denied in the particular case before it. 18. It is further contended that the Impugned Order is liable to be quashed if there is an inordinate delay even after having prior information. Furthermore, in the case of Alps Motor Finance Ltd. vs Securities and Exchange Board of India [Appeal No. 620/621 of 2023], the Hon'ble Securities Appellate Tribunal, Mumbai, dismissed the penalty order passed by SEBI on similar grounds as that of the Appellant's. In that case, though SEBI and BSE both had prior information about the impugned offence from 2013. However, the BSE took cognizance in 2016, and SEBI issued the SCN in 2023. The SAT held the impugned order was unsustainable because the SCN was issued belatedly with an inordinate delay despite having prior information about the alleged offences. The delay caused by the SEBI was not explained or justified in that case. It is argued that the law laid down by the Hon'ble SAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of the statements so given by him. 23. Further, the respondent submits that it must also be noted that the appellant had himself approached the Settlement Commission by making an application for settlement before the said forum. Therefore, there is no dispute regarding the fact that the 15 shipping bills against which the foreign exchange amounting to USD 10,54,30.36 (FOB Value) was received and a rebate of Rs. 28,61,529/- was claimed by the appellant were fake. It is submitted that since the appellant has already admitted his contraventions by himself applying for settlement at the Settlement Commission, he cannot now make submissions contrary to submissions made before the Settlement Commission. Reliance in this regard is placed in the case of JVL Agro Industries Ltd. vs. Union of India through Secy. And 3 Others (2014 SCC OnLine All 1246) wherein the Hon'ble Allahabad High Court has observed as under: ... When the petitioner filed the application for compounding the contravention, that was obviously on the basis that the amount involved in the contravention was quantifiable. Having filed the application for compounding, the petitioner cannot now be hard to turn around a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson who has made an application to it for settlement. The immunity is from prosecution under the Customs Act, 1962 and also either wholly or in part from the imposition of a penalty or fine under the Customs Act. Therefore, the immunity is only from penalty under the Customs Act and not in respect of any other Act including the FEMA. Further Section 127J of the Customs Act 1962 states that an order of the Settlement Commission shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any proceeding under this Act or any other law for the time being in force. Therefore the orders of the Settlement Commission are considered to be conclusive of the matters stated therein and cannot be challenged in any other proceeding under any other law including FEMA. In the light of the aforesaid provision the order of the Settlement Commission dated 7 June 2006 in respect of the findings of fact recorded therein is conclusive. 19. In any event, the Appellant herein is barred from raising the issue of his involvement in manipulating documents to enable foreign exchange procurement to the tune of Rs. 7 crores as remittances without effecting phy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces are distinct, there is no question of the rule as to double jeopardy being applicable.In Leo Roy Frey v. Superintendent District Jail, Amritsar (1958) SCR 822, petitioners therein were found guilty under Section 167(8) of the Sea Customs Act and the goods recovered from their possession were confiscated and heavy personal penalties imposed on them by the authority. Complaints thereafter were lodged by the authorities before the Additional District Magistrate under Section 120B of the Indian Penal Code read with provisions of the Foreign Exchange Regulations Act, 1947 and the Sea Customs Act. The petitioners approached the Supreme Court for quashing of the proceedings pending against them in the court of Magistrate inter alia contending that in view of the provisions of Article 20(2) of the Constitution they could not be prosecuted and punished twice over for the same offence and the proceedings pending before the Magistrate violated the protection afforded by Article 20(2) of the Constitution. This Court rejected the contention and held that criminal conspiracy is an offence under Section 120B of the Indian Penal Code but not so under the Sea Customs Act, and the petitioners we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a person can be prosecuted and punished more than once even on substantially same facts provided the ingredients of both the offences are totally different and they did not form the same offence. 28. In light of the above case laws, the respondent contends that the case of the appellant arising out of the same set of facts although had been settled by the Settlement Commission, but the same set of facts in the present case also display the offences punishable under FEMA, 1999. Therefore, the ground of the appellant that the final order of the Settlement Commission gave him the immunity from all the penal provisions does not have legs to stand and the present appeal must be dismissed on this ground alone. 29. The Respondent has also placed reliance on the judgment Hon'ble Supreme Court in Dropti Devi Anr. vs. Union of India Ors. (2012) 7 SCC 499, wherein the Hon'ble Supreme Court had observed as follows about Foreign Exchange Violations: 67. The importance of foreign exchange in the development of a country needs no emphasis. FEMA regulates the foreign exchange. The conservation and augmentation of foreign exchange continue to its important theme. Although contravention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /02/2005, held as follows: On account of the full and true disclosure and cooperation in the proceedings before the commission, we grant immunity to the applicants and the co-applicant from prosecution under the Central Excise Act,1944,the Customs Act,1962 and the IPC,1898.No immunity sought for under the FEMA,1999 and the F.T.(D R) Act,1992 is considered, as the administering authorities in respect of these legislations have not been made party to these proceedings and heard. 33. Therefore, the said order of the Settlement Commission is categorical that no immunity was either sought or provided to the Appellant under FEMA,1999. The immunities so granted under other Acts won t have an impact on the proceedings under FEMA. This view is further substantiated by the findings of the Hon ble Bombay High Court, in the case of Vinod Chitalia vs. Union of India (supra), wherein it was stated that : 18. The Settlement Commission under Section 127H of the Customs Act, 1962 has power to grant immunity to any person who has made an application to it for settlement. The immunity is from prosecution under the Customs Act, 1962 and also either wholly or in part from the imposition of a penalty or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us The State Of Tamil Nadu 2022/INSC/1294 and Bijoy Singh Anr. Vs State of Bihar to state that if there is delay, it should be explained. Further, reliance has been placed on the case of Fiserv India Private Limited v. Assistant Director and Another [2021 SCC ONLINE ALL 151], in which it was held that the reasonable period to commence the adjudicatory proceeding would be counted from the date when that information was received by the prosecuting agency. 37. I have also perused the case laws cited by the appellant. Hasmukhlal D. Vora was a case of criminal prosecution which is not comparable on facts with the present case wherein a contravention is of civil nature. In Alps Motors Finance Ltd. (see para18above), it was noted that the preferential share issue was known to SEBI from August, 2013 but the show cause notice was issued only in 2023. In Neeldhara Weaving Factory2006 SCC OnLine P H cited by the appellant, the penalty was levied after 14 years. In Shirish Harshavardhan Shah Vs. Deputy Director, 2010 SCC OnLine Bom 2133which has also been cited by the appellant, the delay was of more than 12 years. Further, the appellant has also referred to the judgement of this Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminal offence. (B) A straitjacket formula of mens rea cannot be blindly followed in each and every case. The scheme of a particular statute may be diluted in a given case. (C) If, from the scheme, object and words used in the statute, it appears that the proceedings for imposition of the penalty are adjudicatory in nature, in contradistinction to criminal or quasi-criminal proceedings, the determination is of the breach of the civil obligation by the offender. The word 'penalty' by itself will not be determinative to conclude the nature of proceedings being criminal or quasi-criminal. The relevant considerations being the nature of the functions being discharged by the authority and the determination of the liability of the contravenor and the delinquency. (D) Mens rea is not essential element for imposing penalty for breach of civil obligations or liabilities. (E) There can be two distinct liabilities, civil and criminal, under the same Act. 40. In light of the above discussions, I am of the view that penalty was clearly imposablein the present case and the appellant cannot escape his liability by laying the blame solely at the door of the Mundra brothers. At the same tim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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