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TMI Blog2025 (1) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... holding the contravention. We do not find any error in findings and otherwise the judgment cited by the appellant would not support a case of civil nature but can be handful in prosecution or criminal case. In substance, we find contravention in Section 8(1) of the Act of 1973 for arranging and transferring foreign exchange. Penalty imposed on the appellant company u/s 8(1) of the Act of 1973 for acquiring and transferring of foreign exchange with separate penalty for violation of Section 8(1) of the Act of 1973 towards the borrowing of foreign exchange of US Dollars and Sterling Pounds - The appellant company has already deposited 25% of the penalty amount to satisfy the condition of pre-deposit. It was in pursuance to the order of the Calcutta High Court. We find this case to be old by more than 20 years and looking at all the facts, we find a case to make penalty proportionate. It is looking to appeal, evidence available on record and the peculiarity of the facts and thereby we cause interference in the penalty and reduce it to 25% of the amount of penalty imposed by the authority. The amount aforesaid has already been satisfied by the appellant company. Hence the present appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y may have not filed the appeals to challenge the impugned order and thus we would be addressing the issues raised by the two appellants. 3. The Ld. Counsel for the appellants have submitted brief facts of the case which are as under: BRIEF FACTS OF THE CASE M/s Tata Iron and Steel Co. Ltd. entered into a joint venture business with M/s Korf K.G. Germany forming a new company i.e. M/s Tata Korf Engineering Services Pvt. Ltd. to promote new technologies in the field of metallurgical engineering. After the formation of the new Company and for the purpose of smooth working, it was realized that due to poor airline network in India at the relevant time, the personnel of M/s Korf K.G. Germany were facing difficulty in travelling from one destination to another. To overcome from the aforesaid problem, Dr. Willy Korf sent a letter to Mr. Aditya Kashyap, the then Director of the Tata Korf expressing his desire to place an aircraft in India. Dr. Willy Korf agreed to pay the necessary customs duty in foreign exchange, as applicable in India for import of an aircraft. The then Director of the Tata Korf, Shri Aditya Kashyap processed the case for grant of Custom Clearance Permit (CCP) for impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act of 1973. According to the Directorate of Enforcement, New Delhi, it was an import of the aircraft in the hands of the appellant Company. The matter proceeded with the issuance of show-cause notice alleging contravention of Section 8(1) of the Act of 1973. A memorandum was issued to Tata Korf, Shri Russi H. Mody and many others, who are not appellants, other than Shri Ishaat Hussain. The said memorandum was duly replied to with a prayer that if the respondent proceeds to initiate adjudication proceedings, an opportunity of personal hearing be given. The respondent then passed the impugned order in ignorance of the facts and the provisions of law. Grounds of appeal 4. The Ld. Counsel for the appellant submitted that without there being an element of acquisition and transfer of the foreign exchange of US$ 28,26,433.26 coupled with the allegations of borrowing of foreign exchange amounting to US$ 3,33,025 and 7,068.38, the allegations of contravention of Section 8(1) of the Act of 1973 were made. It is after ignoring the material on record and true facts given by the appellant. To substantiate the charges, the department relied on the submission of one Mr. James Patrick Ker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation in favour of the appellant company for payment of custom duty, which demonstrates that the payment was made by Korf Shipping GMBH and not by the appellant. The said amount was sent to Korf Organization through Mr. Kadan for payment of customs duty. The said draft, in terms of statement of Mr. Rohit Luthra dated 25.07.1994 was not issued by Swiss Bank Corporation, New York, but had been issued by one of its branch. The respondent failed to produce any document or evidence that the remitter of the draft was Tata, Inc., New York. As regards the two bank drafts amounting to Rs. 2,46,194/- are concerned, it was submitted that the amount was received from Tata Ltd. London. The said amount was received by them from Korf Organization. Accordingly, the bank draft of US$ 3,33,025 and 7068.38 represented the amount for payment of customs duty. It was, in fact, the receipt of Korf Organization and as such there was no borrowing, as alleged. The Ld. Counsel for the appellant also submitted that those bank drafts were received through authorized channels but ignored by the respondent. In fact, there was no element of investment by the appellant for acquisition of the aircraft. In that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scanned the records carefully. The brief facts of the case have been given which show that the appellant company was incorporated as Joint Venture of M/s Tata Iron and Steel Co. Ltd. with M/s Korf K.G. Germany. After formation of the new Company i.e. M/s Tata Korf Engineering Services Pvt. Ltd., it was realized that due to poor airline network in India at the relevant point of time, personnel of M/s Korf K.G. Germany were facing difficulty in travelling from one destination to another. This culminated in import of aircraft. The investigation emanated from a letter dated 26.05.1988 written by Dr. Willy Korf of M/s Korf K.G. Germany addressed to Mr. Aditya Kashyap, Director of M/s Tata Korf expressing his intention to place an aircraft at the disposal of the company for use of its officials. On receipt of the said letter, the appellant M/s Tata Korf vide their letter dated 26.07.1988 / 02.08.1988 sent an application to Chief Controller of Imports and Exports for Custom Clearance Permit (CCP). The said application was signed by Mr. Adiya Kashyap to intimate that M/s Korf K.G. Germany would bear the cost of the aircraft as well as the payment of customs duty. The Company also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant, aircraft was purchased by Mr. Willy Korf to place it in India to facilitate their personnel for travelling while according to the respondent no evidence was produced to show the payment of aircraft by Mr. Willy Korf. Rather, according to the respondent, all the evidence collected by them indicate purchase of an aircraft at the instance of the appellant company and it was not by Mr. Willy Korf. The aforesaid issue is to be answered in these appeals and for that we would first refer to the evidence produced by the respondent. 9. The respondent found that the appellant failed to produce any material or proof to show that the aircraft was purchased by Mr. Willy Korf. The appellant company is said to have disassociated themselves from the acquisition of aircraft. According to them, the aircraft was purchased by Dr. Korf of West Germany and was placed with the appellant company. According to the appellant, the payment of the aircraft was made by Mr. Willy Korf, who was none else but even the Director of the appellant company, but no document to this fact was submitted to make the things clear. According to the appellant, burden was on the respondent to prove the contravent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the premier Air Centre Alton (iii) . As agreed, you will cover the aircraft under your insurance policy from the time of completion until the aircraft s arrival in India . (3) A copy of the letter dated 26.7.90 from USASI to R. Kadan (faxed on 27.7.90) requesting to remit US$ 42,704 by wire towards modification of the aircraft. (4) A copy of the telefax message dated 31.7.90 from Sh. R. Kadan to USASI informing that he has arranged a wire transfer of US$ 42,704 to USASI s Account with the Chemical Bank, New Jersey and he needs invoices from Premier Air Center for the modification. (5) A copy of the telefax dated 17.9.1990 to USASI from R. Kadan informing that the registered owner of the aircraft would be: Tata Korf Engineering Services Ltd. 43, Chowringhee Road, Calcutta-700071. India (6) A copy of the telefax dated 26.9.90 from USASI to Mr. R. Kadan showing the revised balance for a total sum of US$.73,944.32 alongwith its break up. (7) A telefax message dated 10.10.1990 from Sh. R. Kadan to USASI confirming that the amount of US$. 73,944.26 had been wire transferred to USASI s account on 9.10.1990. (8) A copy of invoice dated August 1990 to Tata Korf for $.9785 from USASI for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, it could have been rebutted by the appellant company by producing documents to show payment for purchase of aircraft by Dr. Willy Korf, who was one of the Directors of the appellant s company. In any case, the appellant has raised objection to rely upon the evidence of Mr. James Kerrigan. It is submitted that one cannot be prosecuted based on the statement recorded behind the back of the accused. The Ld. Counsel for the appellant raised the issue as if the proceedings were in pursuance to the criminal proceeding or a case of prosecution. It was rather of civil nature and the documents relied by the respondent were otherwise made available to the appellant. The appellants have cited the judgement in the case of Union of India versus Abdul Mohamad reported in (2000) 10 SCC 169 and Shanti Prasad Jain versus Director of Enforcement, FERA reported in AIR 1962 SC 1764 which are in a criminal proceeding and not of civil nature. It is a fact that the material and evidence collected during the legally instituted proceeding before the Commissioner specifically appointed for the purpose and thereafter the documents were vetted and authenticated by the Embassy and the US Department of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablish their case. As regards the first charge of the receipt of Rs. 3,68,000.00 in nine Installments, the Department not only placed reliance on the admission of the appellant but also found corroboration from the account books as well as the letters of the non-residents. The crux of the matter is that the appellant has not been able to furnish any valid Explanation to the receipt of this amount and its disbursement to 48 persons. Admittedly he had no authority or permission from the competent quarters to accept the amounts from a non-resident Indian, and on his instructions to distribute the same to various persons. The appellant has failed to discharge the heavy onus and the courts below in my opinion, were justified in raising the presumption against the appellant. No interference in this finding is called for. The fact now remains that the appellant company has also relied on the letter of Dr. Willy Korf dated 26.05.1988 and 23.07.1992 written to Mr. Benz, Managing Director of M/s Korf Shipping Gmbh stating that Mr. Willy Korf of M/s Korf Shipping desired to place an aircraft in India for his business interest. The letter dated 25.07.1992 of Mr. Hans Jurgan Eckart to M/s Tat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l role in arranging the remittances. It is also a case that the appellant company acquired and transferred foreign exchange of US$ 28,26,433.26. The authority thus passed the impugned order holding the contravention. 12. We do not find any error in findings and otherwise the judgment cited by the appellant would not support a case of civil nature but can be handful in prosecution or criminal case. In substance, we find contravention in Section 8(1) of the Act of 1973 for arranging and transferring foreign exchange of US$ 28,26,433.26 as well as borrowing of US$ 333025 and thereupon 7068.38. The penalty of Rs. 2,00,00,000/- has been imposed on the appellant company under section 8(1) of the Act of 1973 for acquiring and transferring of foreign exchange with separate penalty of Rs. 25,00,000/- for violation of Section 8(1) of the Act of 1973 towards the borrowing of foreign exchange of US Dollars and Sterling Pounds. The appellant company has already deposited 25% of the penalty amount to satisfy the condition of pre-deposit. It was in pursuance to the order of the Calcutta High Court. We find this case to be old by more than 20 years and looking at all the facts, we find a case to m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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