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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 ..... rted 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 Sancheti, Proprietor of M/s. Siddha Exports, Surat was recorded before the Officers of Central Excise Department under Section 14 of Central Excise Act, 1944 on 20.09.2004, 21.09.2004 wherein Shri Sancheti, inter alia, stated that he had seen two letters dated 11.08.2004 &. 30.08.2004 of Customs CFS, Mulund shown to him and admitted that all the 15 Shipping Bills, the details of which are mentioned in those two letters, were forged and that the goods were not exported under those Shipping Bills. 4. Shri Ramasubramaniam V., Manager (Forex, L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 & Mr. Kamal D. Mundra for last 20 years. 7. From the foregoing facts, it appeared that the funds amounting to US.S. 10,54,310.36 were remitted by order of M/s. Yakoob N. Sons Holdings (S) PTE Ltd., Singapore, at the request of M/s. Pee Jay Trading Co., Dubai through United Overseas Bank Ltd., Singapore, as advance payment for the said 15 bogus shipping bills; that all the export documents bear the signature of Shri Kamal Singh Sancheti as the proprietor of M/s. Siddha Exports; that the remittance had been received in the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT) 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 application was not pressed in the course of subsequent proceedings in view of the clarification given by the Bench in the hearing held on 22.05.2024 that it would be permissible for the appellant to raise additional legal grounds even if the same are not specifically pleaded in the grounds of appeal. Accordingly, the appellant raised an argument about undue delay in the conduct of proceeding. It is contended that the RespondentDepartment took almost six years from the date of receiving information from the Customs & Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mence 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 collusion with each other, maliciously withheld from the Appellant the information forwarded by the Additional Commissioner, Central Excise and Customs, Surat- 1 vide letter dated 17.09.2004 in order to restrain the Appellant from impleading the FEMA authorities during the settlement proceedings before the Hon'ble Settlement Commission, Customs Act, 1962 & Central Excise Act, 1944 causing grave prejudice to the Appellant and only because the FEMA authorities were not impleaded by the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 is applicable to the present case as the facts & circumstances therein are similar to the present case. It is again reiterated that in the present case also, though both the departments, i.e., the Excise Department and the Respondent, had information of the alleged offence as far back as in 2004 but the Respondent deliberately delayed the proceedings and filed a Complaint after a delay of almost six years and lodged the same in 2010. 19. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant 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 and argue to the contrary." "...A person committing a contravention may apply for compounding the contravention. Compounding procedure provides an opportunity to the person who contravenes to apply for compounding so that the other consequences emanating from a violation are obviated. Having applied for compounding on the basis that there was a contravention, the petitioner is precluded from now denying that there was a contravention. An order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 physical export. This is for the reason that the Appellant would be bound by the principle of issue estoppel.The principle of res-judicata bars a Court from exercising its jurisdiction to determine a lis, if it has attained finality between the parties. On the other hand, the doctrine of issue estoppel is invoked against a party from raising an issue in a subsequent proceeding, if the same has been decided in an earlier lis by a compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 were not and could not be charged with it before the Collector of Customs. It is an offence separate from the crime which it may have for its object and is complete even before the crime is attempted or completed, and even when attempted or completed; it forms no ingredients of such crime. They are, therefore, quite separate offences. The Court relied on the view expressed by the United States, Supreme Court in United State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 of its provisions is not regarded as a criminal offence, yet it is an illegal activity jeopardising the very economic fabric of the country. For violation of foreign exchange regulations, penalty can be levied and its non- compliance results in civil imprisonment of the defaulter. The whole intent and idea behind COFEPOSA is to prevent violation of foreign exchange regulations or smuggling activities whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 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 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted 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 Tribunal's order in the case of K.J. Paul Vs. Joint Director 2018 SCC ONLINE ATFEMA (5)(order dated 24.05.2018). In that case, the matter was decided under the PMLA, 2002 and not under FEMA, 1999. As such, it was observed by this Appellate Tribunal that being a quasi-criminal proceeding, penalty for contravention of statutory obligation ought not ordinarily be imposed. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 time, I do find several mitigating factors in the case. It is contention of the appellant that he trusted the promises made by the Mundra Brothers and was unaware of the contraventions committed by them. It is also not in dispute that to all appearances, all the documentation had been completed as if the export had genuinely been made and the proceeds there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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