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FEMA - Case Laws

Showing 1 to 20 of 1439 Records

2025 (6) TMI 602

Violation of the provisions of FEMA, 1999 - short-realization of export proceeds as against the invoiced value of the exports - penalties arose from two export transactions

HELD THAT:- First transaction, i.e., the export made through M.V. Vincentia, we are of the view that while there has undoubtedly been short-realization of export proceeds as against the invoiced value of the exports, the same was for reasons completely outside the control of the appellant company. Furthermore, the appellant company made appropriate efforts to mitigate the loss by moving the Hon’ble High Court and succeeding in obtaining relief in the matter.

As regards the unrealized amount, the Appellant company, on 17.03.2012, submitted 'REX' form with the AD Bank to obtain necessary approval from RBI. Further, since, there was no communication by the AD Bank regarding to the acceptance of REX application by RBI and closure of the transaction, M/s BEML issued letter dated 10.12.2012, once again requesting the AD Bank to follow the matter up with RBI and close the transaction at the earliest. Evidently, the said application remained pending and as late as in 2018, the AD Bank, vide its letter dated 20.03.2018, informed the Ld. AA that the RBI had requested to resubmit the whole set of documents once again for their perusal and that SBI would submit the same to the RBI shortly.

The above facts, in our view, adequately establish the bona fide of the appellants herein insofar as the first transaction is concerned. No doubt, existence of mens rea is not an essential element of penalties under FEMA, 1999 which are leviable for failure to adhere to procedural and technical compliances which do not necessarily involve contumacious conduct. However, the language of the statute, read together with the rules framed thereunder, does not indicate that there is an absolute bar on non- realisation of full export proceeds under all circumstances. Rather, in an appropriate case, the RBI has been empowered to authorise short- realization or non-realization of full export value of goods.

Under the circumstances, we are of the view that no penalty was imposable on the appellant in respect of this transaction. The respondents have not been able to point out any specific provision of the Act, rule or any guideline issued by the RBI which makes the levy of penalty mandatory in each and every case where full value of export proceeds was not realized and even where the appellant had acted bona fide and taken all necessary steps as per law.

Furthermore, we find that the impugned order does not record the reasons for the decision to impose penalty. It appears that the authority was of the view that the very fact of short realisation of export proceeds invites a mandatory penalty. For the reasons discussed hereinabove, we are unable to agree with the Ld. AA and are of the view that no penalty was imposable on the appellants in respect of the first transaction.

Coming to Transaction No. 2, i.e., export through MV Riva the submission of the appellant company is that based on the analysis report issued at the discharge port, it was only entitled to receive USD 17,59,154.09 against which it had already received advance payment of USD 33,20,464.11, which amounts to an excess receipt of USD 15,61,310.02. It is claimed that because of the business relationship between the appellant company and the Buyer, the latter could be persuaded not to claim refund of the excess paid from the appellant company. We do not wish to comment on these claims made on behalf of the appellants which have otherwise not been disputed by the respondents on facts. However, respondents have asserted that there was a huge loss of foreign exchange on account of negligence and inaction on the part of the appellants, without specifying the nature of such alleged negligence and how the appellant company could have realised value in in contravention of the terms of the contract with the Buyer and the LC.

Thus, no penalty was imposable on the company even in respect of the second transaction.

The penalties imposed on the individual appellants herein were in consequence of the finding of contravention by the company. Consequently, we find that the facts on record do not make out a case for imposition of penalty on the individual appellants either.
2025 (6) TMI 538

Interim Application filed by Bank of Baroda seeking a condonation of delay in preferring the Appeal u/s 35 of FEMA 1999 - HELD THAT:- As can be seen from Section 35 of the FEMA 1999, the limitation starts to run from the date of communication of the decision or order of the Appellate Tribunal. In the facts of the present case, it is the argument of the Appellants that the impugned order of the Appellate Tribunal was never communicated to them. Bank of Baroda became aware of this order only when they checked the website of the Appellate Tribunal wherein the impugned order dated 24th September 2024 was uploaded.

When the Appeals of Bank of Baroda and Doha Bank Q.P.S.C. had come up on 27th February 2025, the learned Special P.P appearing for the Enforcement Directorate was unable to definitively inform the Court whether the impugned order dated 24th September 2024 was communicated to the Appellants, and if so on what date. To take necessary instructions, the matter was adjourned from time to time.

Now, the Registrar of the Appellate Tribunal has filed a report before this Court on 7th April 2025. From this report, it is clear that the impugned order passed in the Appeals filed by Bank of Baroda and Doha Bank Q. P. S. C. (before the Appellate Tribunal) was never communicated to them.

Considering these facts and circumstances, we find that all these Appeals have been filed within the total period of 120 days as stipulated under Section 35 of the FEMA 1999. Accordingly, Interim Application is allowed to condone the delay on 44 days in filing the Appeal to challenge the impugned order.

As far as IDBI is concerned, in light of what is stated hereinabove, there is in fact no delay in filing the above Appeal. Hence, the Applicant has not filed any application seeking the condonation of delay.
2025 (6) TMI 537

Unaccounted amount recovered from premises - contravention of Section 10(4) of FEMA r/w with RBI Master Circular No. 10/2013-14 - HELD THAT:- In view of the incriminating material on record, we agree with the contention of Ld. Counsel for the respondent ED that appellant failed to justify the unaccounted amount of Rs. 7,21,800/- recovered from his premises. The defence taken by the appellant is apparently an afterthought strategy to show that the said amount Rs. 3,00,000/- pertains to his employee Mr. Leenas and the remaining amount of Rs. 4,21,800/- was kept by him on account of withdrawal in the previous week. Except self-serving statement, there is no corroborative documentary evidence in this regard. Hence, the same is certainly a lame defence. Accordingly, the order qua the finding of contravention is hereby upheld.

Quantum of penalty, the penalty of Rs. 4,00,000/-, seems to be unjustified, seeing the fact that the sum of Rs. 7,21,800/- was seized from the premises of appellant is already confiscated by ED. Moreover, there is nothing on record that appellant is a habitual offender in committing the contraventions.

Hence by taking a lenient view, we hereby reduce the penalty from Rs. 4,00,000/- to Rs. 1,00,000/-. The pre-deposit, if any, be adjusted against the said penalty of Rs. 1,00,000/-. The remainder/ excess, if any, be adjusted within period of three months from the date of expiry the period of limitation for filing the appeal.
2025 (6) TMI 536

Violation of the provisions of FEMA - information was received that Shri Ullattil Jossy Joseph, an NRI based in Switzerland, purchased agricultural land and constructed a hotel - HELD THAT:- The noticee no. 5 had purchased four plots of land in Vaikom Taluk between 1995-2000 for total amount of Rs. 5,25,000 and constructed a residential house subsequently, which was later on converted into a Hotel with Bar. The said construction was completed in 2010 and during the construction he had brought 2,59,93,218 in 13 transactions in NRE account. His wife noticee no. 4 also bought two plots. All the properties were sold for Rs. 15.25 crores.

Out of the said amount sum of Rs. 2.5 crore was directly remitted to noticee no. 5 in their joint account. Noticee no. 4 & 5 contended that the said amount of Rs. 2.5 crore was towards the share of noticee no. 5 only and not for noticee no. 4 was not accepted by the Adjudicating Authority, being the joint account, coupled with the fact that noticee no. 5 was available in India for accepting the sale consideration. Seeing the fact that noticee no. 4 & 5 have not contested the impugned order along with documentary evidence in support of their defence, the reasoning given by the Adjudicating Authority for not accepting their defence appears to be just & reasonable.

However, seeing the fact that the present appellant Shri K.P Varghese has already surrendered the equal amount of FCNR receipt to his NRE account and thereby, there is no foreign exchange loss to the country and thus, the appellants are entitled for leniency in payment of penalty.

Accordingly, the order of imposition of the penalty is hereby maintained, but taking the lenient view, the penalty of Rs. 25 lakhs imposed on the appellant company is hereby reduced to 5 lakh and penalty of Rs. 1 lakh each imposed on appellants no. 2 & 3 is hereby reduced to Rs. 50,000 each.
2025 (6) TMI 535

Noticee Company (present appellant) had entered into a land deal in Goa violating the provisions of FEMA, 1999 - foreign remittances received by the appellant Company - orders for confiscation of the land and also imposed penalties of Rs. 17 lakhs on the appellant

HELD THAT:- In the State of Goa, permission is required for every kind of development whether for residential, commercial, public utilities and services award for recreational purposes. Just because a person applied for Sanad/permission does not amount that the purchased land was not located in a settlement zone. In the absence of any contravention on the above aspect, the penalty of Rs. 10 Lakh imposed on the appellant company is hereby, set-aside and be refunded.

In continuation of this issue, the Adjudicating Authority ordered for the confiscation of land on the presumption that the same is an agriculture land. As this issue is reversed, the order for the confiscation of land situated in plot no. 313/1, Village Siolim measuring 8075 sq. mtr. is hereby also set aside.

Contravention of Section 6(3)(b) of FEMA, 1999 r.w. Para 8 of Schedule 1 of Regulation 5(1) of Foreign Exchange Management (Transfer or Issue of Security by a person Resident Outside India) Regulations, 2000 - Admittedly, the appellant company received sum of Rs. 1,27,32,113/- from M/s Avitar Holding Group and M/s Oceania Transit Corp., but not in the name of Mr. Vladimir Koveshnikov and Mr. Andrey Kiriyanon. The contention of appellant the said two companies in fact belongs to the aforesaid, previous Directors is without any merit as the companies and the said two Directors are different persons in the eyes of law. Therefore, fine imposed on the appellant company qua the second contravention is hereby maintained.

Contravention for not submitting the statement within 30 days to RBI is an admitted fact, though the shares were already stated to be allotted in favour of the previous Directors, namely, Mr. Vladimir Koveshnikov and Mr. Andrey Kiriyanon, on 19.04.2006 (500 shares each) and M/s Avitar Holding Group and M/s Oceania Transit Corp., on 30.05.2011 (1, 27, 119 and 202 shares). Thereby, the share capital of the company increased to 128321. Later on, the shares of the appellant company were purchased by Pankaj Madan on 15.06.2012, and 27.03.2017 and by Rashmi Bakshi on 12.01.2017. However, the contravention of the provision being an admitted fact, the quantum of penalty under this head is also hereby maintained.

In sequel to discussion in the para no. 5 above, pertaining to contravention no. 1 being decided in favour of appellant company, the present appeal is hereby, partly allowed.

Appeal Partly Allowed.
2025 (6) TMI 123

Deposit of the amount towards the condition of pre-deposit in parts - appellant submitted that the appellant is not in a position to deposit a sum of Rs. 25 lakhs to satisfy the condition of pre-deposit but partial amount of 5 lakhs can be deposited if a period of 8 weeks is given for it.

HELD THAT:- As in order where it was made clear that if the amount of Rs. 25 lakhs is not deposited within 30 days, the appeal would stand dismissed, the consequence to follow.

The appeal stood dismissed with expiry of one month from the order dated 04.04.2024 due default in making good of the order though effectively an order was passed on 31st July 2024 after giving two opportunities to appellant because on 23rd July 2024, none had appeared on behalf of the appellant and the same story was repeated on 31st July, 2024 in the oldest matter before the Tribunal. Even today, an application for restoration has not been filed in reference to the dismissal of the appeal for non compliance of the condition enumerated under section 52 of the Act of 1973, rather prayer in the restoration application is to allow partial deposit of the amount pursuant to the order dated 04.04.2024 which cannot be accepted.

Appellant then insisted for hearing the appeal on merit. It was made clear that unless the condition of pre-deposit under section 52 is satisfied, the appeal cannot be heard on merit. At this stage, the learned counsel for the appellant submitted that in fact the appeal was restored by this tribunal on 24th March 2025.

In view of the facts given above and when order dated 04.04.2024 has not been complied, the appeal is not maintainable and thus rightly dismissed by the Tribunal.
2025 (5) TMI 1143

Penalties and confiscation u/s 3(c) and 3(d) - appellant had received a sum in India on the instructions of person resident outside India - HELD THAT:- Tribunal would not be justified to cause interference in the order for the sake of it unless an error or the illegality in the order is shown. It is, otherwise, not a case to place the reliance on the statements of Shri Ratan Das M and Shri Srinivas alone but the statements were corroborated by the documents and hence we find a case for contravention of Section 3(c) and Section 3(d) of the Act of 1999 where the appellant had received a sum in India on the instructions of person resident outside India in an unauthorized manner and further he entered into a financial transaction in India for creation of right to equivalent foreign exchange of persons outside India.

Forfeiture of the amount seized by the respondent at the time of search and seizure - Elaborate argument in reference to it has been given. The cash-book and other documents have been produced to indicate no justification for forfeiture of the cash recovered at the time of search. The cash-book shows Rs. 40,99,431.49 in the hands of the Firm while recovery was only of Rs. 30 lakhs from the business premises and at the same time out of the recovery of Rs. 80,95,000/-, the appellant submitted that a sum of Rs. 69,95,000/- was belonging to appellant’s father in the Almirah maintained by him leaving a sum of Rs. 11 lakhs. It is apart from the fact that total sum in the books of accounts was showing cash in hand to be more than Rs. 1 crore. It is not properly considered by the Adjudicating Authority. We find admission of the appellant about the cash recovered from him to be part of transaction through Shri Ratan Das M. The Adjudicating Authority has recorded finding taking aforesaid into consideration and the documents produced and relied upon.

Penalty amount - Tasking overall facts into consideration and also that the matter is now old by 14 years the penalty imposed for contravention of Section 3(c) of the Act is substituted to Rs. 2,75,00,000/- against the penalty of Rs. 9,00,00,000/- and for contravention of Section 3(d) of the Act of 1999, the penalty of Rs. 1,00,00,000/- is substituted to Rs. 25,00,000/- . The appellant has already deposited Rs. 90 lakhs towards the satisfaction of the condition of High Court of Delhi and otherwise Bank Guarantee of Rs. 1,10,00,000/- was given which can be encashed by the respondent and apart from that we direct the respondent to adjust the amount of Rs. 1,00,00,000/- out of Rs. 1,10,95,000/- confiscated by them with direction to the respondent to return the excess amount after adjusting an amount to make good of the penalty and remaining amount would be refunded to the appellant. The adjustment of the confiscated amount has been allowed looking to availability of cash in hand in cash-books of the Firm and in the hands of the appellant’s father.
2025 (5) TMI 1142

Contravention of Section 10(5) of FEMA for remittance of Rs. 47.3 Crores towards the interest @ 17% - HELD THAT:- The transactions to divert the funds were made after receipt of the amount in the bank account of the appellant bank who remitted the interest despite diversion of the fund and its utilization for the purpose other than for which FDI was taken. The appellant bank has pleaded no control over the affairs of M/s Amrapali and its entities after the amount came to their account ignoring the fact that diversion of the amount out of the bank account was to be in the knowledge of the appellant bank otherwise there was no purpose to seek declaration by the authorized person that the transaction is not for the purpose of contravention of the provisions of the Act of 1999 or Rules and Regulations made thereunder.

The plea has been taken that if the CCD was not converted into equities in a period of five years, it could not have been termed to be ECD so as to seek prior permission of the RBI for remittance of the interest amount. The argument raised by the appellant bank cannot be accepted in their hands and otherwise when appellant bank was under obligation to take declaration that transaction would not involve contravention of the provision of the Act of 1999 and Rules and Regulations, it was required to give significance to it thus contravention of Section 10(5) of the Act of 1999 is found in the light of the finding recorded by us.

Penalty imposed on the appellant bank which is said to be disproportionate to the contravention and thus the counsel for the appellant bank has prayed for appropriate order - Though at the first instance, the counsel pleaded no contravention of Section 10(5) of the Act of 1999 in the hands of the appellant bank but alternative plea was to make the penalty proportionate to the allegation. We find that the penalty of Rs. 5 Crores has been imposed on the appellant bank while separate penalties have been imposed on the other noticee. Looking to the overall case, we find penalty of Rs. 5 Crores to be disproportionate to the allegation against the appellant bank and accordingly to make it proportionate, we reduce it from Rs. 5 Crores to Rs. 50 lakhs. An amount of Rs. 5 Crores has already been deposited by the appellant bank. Thus, after keeping Rs. 50 lakhs towards the penalty imposed and substituted by us, remaining amount of Rs. 4.50 Crores would be returned to the appellant bank. The appeal is disposed of with the aforesaid.
2025 (5) TMI 1141

Waiver of condition of pre deposit u/s 19 of FEMA - contravention of section 6(3)(f) of FEMA - HELD THAT:- Proceeding for imposition of penalty under different legislation is not affected by section 14 of the Act. Thus, prima facie we are of the view that the plea raised by the appellant in reference to section 14 is not tenable. It is more so when the order passed by NCLT, Kolkata has been stayed by the NCLAT. In any case, we have expressed our view on the effect of section 14 to these proceeding where the impugned order was passed even much prior to the moratorium under section 14 of the IBC.

So far as alleged discrepancies with reference to the Regulation are concerned, we do not find prima facie much substance in the argument of the appellant because show cause notice was issued referring to the Regulation applied by the respondent i.e. Foreign Exchange (Deposits) Regulation, 2000. Thus, we do not find any discrepancy in referring the provision applicable to the case. The reference of a wrong provision does not affect the order if facts available on record make out a case for valuation of the Regulations applicable to the case.

The appellants have otherwise not shown any financial crunches to deposit the amount of penalty for maintaining the appeal.

However taking overall view, we are of the opinion that it would be appropriate to direct the appellants to deposit only 25% of the penalty amount to satisfy the condition of pre-deposit so that there remains no hardship on the appellants to pursue the appeal and with the aforesaid, the application is disposed of.

The order would be satisfied by the appellants within three weeks of its pronouncement and subject to satisfaction of the condition of pre-deposit, appeal may be heard.
2025 (5) TMI 1140

Penalty on the appellant’s bank for contraventions of Section 6(3)(b), Section 10(5) and Section 47(3) of FEMA for allowing outward remittance without the approval of RBI - DCF method was applied to determine repurchase price of the share at Rs. 2290 Rs. 2577.25 Rs. 2910 per share having face value of Rs. 10 per share and otherwise purchased at a price of Rs. 1071.81 per share and thereby huge amount was siphoned off at the cost of the home buyers and thus cognizance was taken by the Apex Court

HELD THAT:- As found that in the head of “valuation” in the brief summary that no person from Mauritius travelled to India and no person from India travelled to Mauritius. Indian people signed the contract in India and Mauritius people signed the contract in Mauritius. Buyer did not carry out any due diligence nor it appointed any valuer. The appellant was under obligation to call for the information in the case, as mandated u/s 10(5) of the Act when C.A. was not given proper access to the record.

The company was not having any profit for taking value of the share at Rs. 2290 Rs. 2577.25 and Rs. 2910 per share at time of exist. The outcome of it remained onward remittance of Rs. 140 crores without proper report or certificate. The authorised dealer was bound to follow the direction issued by the RBI from time to time and Regulation 11(2)(b) of the Regulation of 2000 which was required to be read harmonization with liberalization scheme.

RBI’s approval was not required for the sale of security and onward remittance but it could not have been without adherence of other provisions and by simply in ignorance and the responsibility under Section 10(5) of the Act of 1999 and relying on the valuation certificate issued by the CA when DCF method was based on incorrect data and thereby without following the genuineness of the transaction.

Accordingly, we are unable to agree with the appellant that it has not contravened the provisions of Section 6(3)(b), Section 10(5) and Section 47(3) of the Act of 1999 read with Regulation 11(2)(b) of the Regulation of 2000 rather we endorse the analysis of the Special Director, Directorate of Enforcement on the aforesaid.

Imposition of penalty of Rs. 14 crores on the appellant’s bank while the penalty has been imposed on other noticees varying from Rs. 85 crores to Rs. 4 crores on different noticees who were taken to be involved in the contravention and otherwise penalty of Rs. 140 crores imposed on JP Morgan apart from the penalty of Rs. 85 crores - As we find that Rs. 14 crores penalty imposed on the appellant bank is disproportionate. The main allegation for contravention of provisions of Act of 1999 and Regulation of 2000 was against other notices and even the appellant but definitely the appellant bank had remitted the amount said to be in terms of the agreement but finding case of contravention of Section 6(3)(b), Section 10(5) and Section 47(3) of the Act of 1999 read with Regulation 11(2)(b) of the Regulation of 2000, the penalty of Rs. 14 crore has been imposed. We find it to disproportionate, thus, reduce it from Rs. 14 crores to Rs. 1.4 crores on the appellant bank. The amount aforesaid has been deposited towards satisfaction of the pre-deposit as per the order of this Tribunal. Accordingly, we cause interference in the impugned order qua the appellant bank only in reference of penalty which is reduced to Rs. 1.4 crores and with the aforesaid appeal is disposed of.
2025 (5) TMI 1139

Violations of provisions of Sec. 3(a) of FEMA, 1999 - illegal unaccounted foreign currency possed without dealing through an authorized person or reporting to the Reserve Bank of India (RBI) - as contented person to whom the payment was made in India had made purchases in India itself

As contented that appellant has not made contravention of Section 3(a) of FEMA - HELD THAT:- As appellant could not give proper explanation for taking the foreign currency allegedly from the hundies of the church to the place of recovery, and thus, these facts points towards his mala fide intention and taking a false & afterthought defence. Hence, the seized foreign currency equivalent to INR 3,30,82,775.28 is unaccounted foreign exchange dealt by the appellant, other than through an Authorised Dealer, and thus, contravention of Section 3(a) of FEMA,1999, is made in the present case. Thus, the above said foreign currency equivalent to Rs3,30,82,775.28 is rightly confiscated by the Adjudicating Authority, under Section 13(2) of FEMA, along with imposition of penalty of Rs. One lakh.

Payment of Rs 13,09,000/- (equivalent to USD 22,000) to Mr Cody an NRI who had come to India for attending meetings held by the Trust was for the purpose of purchase of watches. The payment was made to him in Indian currency and utilised by him for the purchase of a watch in India itself and thus, the same was not taken outside India - Mr. Cody is a person resident outside India and the records show that the Income Tax Department had seized a receipt for payment of USD 22000 issued by M/s Television Broadcasting Legacy, USA. The execution & recovery of receipt is an admitted fact, and hence, its contents for payment in USD cannot be denied. The payment made by the appellant to Mr, Cody is without the permission of the RBI. Also, there is no authority letter issued by M/s Television Broadcasting Legacy USA, authorising Mr. Cody to receive the payment in cash. Hence, there exists clear violation of Section 3(b) in the case at hand and the penalty of Rs. 10,000/- imposed upon the appellant for violation of Section 3(b) for the amount of USD 22000 is justified.

The present appeal is dismissed hereby being devoid of any merits and thereby the order passed by the Adjudicating Authority is hereby upheld.
2025 (5) TMI 799

Offence under FEMA - Adequacy of penalty imposed - Contravention of Section 8 of FEMA read with Regulation 3 of the Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations 2000 by failing to realize export proceeds within the stipulated period without prior permission from the Reserve Bank of India (RBI) - penalty imposed u/s 42(1) of FEMA - HELD THAT:- On reading of Section 13 (1) FEMA it is obvious that the maximum amount of penalty which can be imposed under the Section is three times the amount of contravention involved. From the language of the Section 13(1) FEMA, it is clear that the Section has not prescribed either a fixed amount of penalty or minimum amount of penalty. It therefore, follows that the amount of the penalty which is to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before him. The appellant has stressed that in the present case the Adjudicating Authority has imposed the penalty to the extent of one percent to the contravened amount not realized by the respondents.

The question as to when a penalty is to be regarded as either low or high is at best answered subjectively. In the present case it is seen that the Adjudicating Authority has not only taken notice of the facts of the case but also has evaluated the evidence on record to infer for imposing penalty on the lower side. The perusal of order passed by the Adjudicating Authority reflects that he considered the mitigating circumstances for taking the lenient view for imposing the penalty on the lower side. The reading of the Adjudication Order, therefore, reflects objectivity and judiciousness on the part of the Adjudicating Authority.

We are not inclined to enhance the quantum of penalty, as there is nothing on record to show that the Adjudicating Authority has not properly and judiciously exercised his discretion. Therefore, the order of the Adjudicating Authority needs no interference. In view of the aforementioned discussions and observations, the appeal for enhancement of penalty fails and is hereby dismissed.
2025 (4) TMI 1603

Hawala transaction - note book was recovered during the course of search containing the details of the business of hawala on day-to-day basis - scope of retracted statement - HELD THAT:- A note book was recovered during the course of search. It was containing the details of the business of hawala on day-to-day basis. It was then explained for the short figure mentioned therein. That was not the loose sheet but note book which otherwise said to be containing business account of the appellant, therefore the respondent rightly relied on the note-book containing the details of the accounts showing hawala transaction. The details mentioned therein was not pertaining to Automobile business otherwise showcased by the appellant. Apart from the aforesaid, in the statement of Shri Mahendra Jain, he referred to the business of Shri Ramesh B. Doshi which was not only of automobile but even of hawala transactions.

The said statement was not retracted, thus, even if the appellant retracted from his statement and sent a telegram, as reproduced above, does not show complete retraction but acceptance of certain material by the appellant. The note-book said to be containing the accounts of the appellant, as stated by the Counsel for the appellant and otherwise the statement of Shri Mahendra Jain has corroborated the note-book recovered from the appellant, Shri Ramesh B. Doshi. Thus, it is not that there was no material other than the retracted statement to find the case of contravention under section 3(a), (b) and (c) of the Act of 1999.

Appellant has referred several judgments where it has been held that retracted statement may not be relied and we agree with the proposition therefor. It is not required to refer or cite those judgments but would be referring the judgment in the case of Vinod Solanki [2008 (12) TMI 31 - SUPREME COURT] where it was held that retracted statement can also be relied, if it is supported or corroborated by other evidence.

No illegality or error in the impugned order passed by the Special Director to rely on the material to draw his conclusion.

Reliance on the loose sheets - In the instant case we have recorded finding that apart from loose-sheets, note-book was recovered said to be an account book of the appellant containing the business transaction but the figures mentioned therein and explained by the appellant was showing hawala transactions and accordingly ignoring the loose-sheet even the note-book was corroborating the evidence to indicate that appellant Shri Ramesh B. Doshi was involved in hawala transactions.

We are accordingly not required to cite other judgments in reference to loose-sheets and as to whether reliance on it can be placed because we have not placed reliance on the loose-sheets but on the note-book which is admitted by the appellant though showing it to be accounts book. Therefore, we are not citing the judgments for that reason.

Denial of cross-examination - Cross-examination is permitted when the statement of witness arerecorded before the Court or the Authority. It may be in the shape of affidavit but not recorded during the course of the inquiry or investigation. This is as per the provisions of the Evidence Act and in the instant case, no statement was recorded before the Adjudicating Authority so as to permit cross-examination. It is apart from the fact that in the quasi-judicial proceedings, the cross-examination cannot be claimed as a course. It may further be added that in our order, we have not relied on the statement of Shri Abhilash Vasa and Shri AftabAlam, though, if the reliance is placed in reference to their version, a case is further made out against the appellant. Thus, denial of cross-examination in the facts of this case cannot be held to be illegal and accordingly we do not find any error in the impugned order to hold contravention of Section 3(a), (b) and (c) of the Act of 1999.

Penalty imposed - appellant Shri Ramesh B. Doshi was getting commission to facilitate transaction and it was not that his own business other than to receive the commission and appellant was receiving commission of 10 to 15 paise per dollar - HELD THAT:- We are of the opinion that the total penalty imposed upon the appellant, Sh. Ramesh B. Doshi needs to be reduced and accordingly we cause interference in the penalty amount which is substituted by the penalty of Rs.40,00,000/- for contravention of section 3(c) and for Section (a) it is imposed for Rs.60,00,000/- and for section 3(b) it is made to Rs.40,00,000/- on the appellant- Shri Ramesh B. Doshi.

For Shri Mahendra Jain is concerned, he was the employee of Shri Ramesh B. Doshi and was getting salary of Rs.15000/-. The respondent has not placed on record any document to show it to be his business and directly involved in hawala transactions but was working as an employee of Shri Ramesh B. Doshi and thereby their remain no justification to impose heavy penalty on him and accordingly it is substituted it to Rs. 90,000/- for Section 3(c); Rs.1,00,000/- for Section 3(a); and Rs. 90,000/- for Section 3(b) of the Act of 1999.
2025 (4) TMI 1544

Tribunal exercising its discretion by reducing the pre-deposit of penalty only to 20% - Tribunal has exercised its discretion in the context of second proviso to Section 19(1) of the Act or not? - HELD THAT:- Once the legislature fixes the discretion to any authority, it is to the satisfaction of that authority it should exercise such discretion. Moreover, the words used in the second proviso to Section 19(1) also states that 'the appellate Tribunal is of the opinion'. It means, if the Tribunal forms an opinion that some discretion has to be exercised in a particular case, then only such a discretion has to be used.

Therefore, with regard the question of forming an opinion, it is fully left to the discretion of the Tribunal. Whether such opinion that the Tribunal had formed was based on the merits of case, cannot be gone into by sitting over on appeal by this Court and therefore, ultimately such kind of discretion if it is exercised by the original authority to whom such power of discretion is vested, it normally would not be touched upon by the appellate forums.

Here in the case in hand, in fact the Tribunal has exercised its discretion by reducing the pre-deposit of penalty only to 20%. Therefore, it is a case where the Tribunal, after having formed an opinion based on the facts and circumstances of the case, has reduced the pre-deposit of penalty to only 20%. Hence, it cannot be stated that the Tribunal has not exercised its discretion under Second proviso to Section 19(1) of the Act.

The imposition of penalty is also for the purpose of safeguarding the realization of penalty as, that also has to be taken into account. Therefore, by striking a balance between 'undue hardship' and 'safeguarding the realization of penalty', in between the two, the discretion of the Tribunal has to be exercised. Such a discretion cannot be exercised in the manner expected by the litigant in any lis. Since the discretionary power vested under the second proviso to Section 19(1) of the Act to the Tribunal has been exercised properly in this case, we do not find any reason to interfere with the same.
2025 (4) TMI 1543

Applicability of provisions of FERA to the appellant, who is not a citizen of India u/s 1(3) of the Act - HELD THAT:- The bare reading of sub clause (III) covers the person other than citizen of India who come and stay in India for taking employment or carrying a business or vocation in India. It can be when he is staying with his or her spouse and spouse being a resident of India, etc.

The definition of “person resident of India” thus covers a person not citizen of India but would fall in the definition in a given circumstances narrated under clause (III).

We are unable to accept the first argument raised by the appellant because under section 1 (3), word “also” has been used to indicate that the act of 1973 would apply to the citizen of India outside India also and branches outside India etc. Section 1(3) does not indicate that it would apply to citizen of India only. The word „only‟ does not exist under the provisions referred to above.

Thus first argument raised by the appellant is summarily rejected.

Applicability of section 8(1) - The restriction on dealing in foreign exchange has been imposed without previous general or special permission of RBI on all the persons other than the authorized dealer in India. No “person resident in India” other than authorized dealer shall outside India purchase or otherwise acquire or borrow or sale the land with any person not being authorized dealer. In the instant case, the appellants are not falling in the definition of “person resident of India” for the reason that no evidence was led by the respondent to prove that during the relevant period involved in this case, the appellant came and stayed for the purpose given under clause (iii) of section 2(p) of the Act of 1973. Accordingly, the counsel for the respondent could not clarify as to how section 8 (1) of the Act of 1973 can apply to the appellant.

The issue aforesaid has not been dealt with by the Special Director, DOE though it has been recorded that on account of the transfer of money by the Standard Chartered Bank, there was a contravention of section 8 (1) of the Act of 1973 but in this case, it could not be proved that appellant was falling in the definition of “person resident of India”. Thus, how section 8 (1) would apply to him.
2025 (4) TMI 113

Seeking compounding of the offence adjudicated by the adjudicating authority under FEMA and the subsequent demand notice issued by the Assistant Director (PRC), Government of India - HELD THAT:- Compounding cannot be claimed as a matter of right but it is always subject to the legal provisions.

From the chronological sequence of events in this case it appears that the subject transactions took place between 31st February, 2011 and 8th February, 2013. Show cause notice was issued by the adjudicating authority being the Special Director (Enforcement Directorate) on 18th November, 2022.

Application for compounding was filed by the petitioner on 20th January, 2023 but the same was returned on 8th January, 2024 on the ground that the application lacked clarity and all facts and figures were not mentioned therein. The petitioner was given liberty to file fresh compounding application.

In the instant case the offence of the petitioner was a compoundable one. The petitioner, though applied for compounding at the initial stage, but did not proceed with the same after the application of the petitioner was returned for want of proper details.

The petitioner, without raising any objection, participated in the adjudication proceeding. The participation of the petitioner implies that the petitioner did not want to compound the offence and, accordingly, proceeded for adjudication of the same. After the adjudication order was passed and the petitioner has been found guilty of the offences, now prayer has been made to permit the petitioner to proceed with the compounding.

It appears that the petitioner simply tried to test the waters and see as to whether the adjudication order comes in his favour or not. After the adjudication order went against him and penalty amount has been quantified, the petitioner seeks to proceed with the compounding. Had the petitioner been aggrieved he would have been required to prefer an appeal, and for doing so, the petitioner had to deposit the entire amount of penalty. The petitioner is trying his level best not to pay the penalty that has been imposed and delay the proceeding for an indefinite period on the plea of compounding.

The compounding authority does not have the determination or the jurisdiction to cancel/overrule or set at naught the order passed by the adjudicating authority. It is only one order that survives and that is the order of the adjudicating authority. The petitioner took the risk and did not proceed with his application for compounding prior to conclusion of the adjudication proceeding.

The petitioner could have pressed the application for compounding any time prior to conclusion of the adjudication. The FED Master Direction number 4/2015-16 permits compounding even when the adjudication proceeding is ongoing. After the adjudication is complete and offence has been established, the contravener would be bound to comply with the direction passed by the adjudicating authority.

The Act is in place since 1999 and the relevant Rules, Regulations, Circulars are also existing for quite some time. The petitioner has not been able to show a single instance when the authority permitted compounding after conclusion of the adjudication process. The interpretation of the petitioner, if accepted, will lead to an uncertain situation and reaching finality to the proceeding will be a never-ending process.

As the said situation is not contemplated in the Act, there is no time limit prescribed within which an application of compounding can be filed after the order of adjudication has been passed. It will be an open ended process and any person found guilty in the adjudication proceeding, can seek to file an application for compounding any time he chooses. Penal provision of the Act cannot be taken so lightly leaving it in such an indecisive state.

By this way the contravener will remain scot-free and the penal provision of the Act cannot be implemented. The Act will be rendered completely toothless. The same will also give out a very wrong message to the society at large. Tendency to circumvent the law will increase. To avoid such a situation, the legislature has consciously not provided the provision to compound an offence after conclusion of the adjudication process.

The Court is of the opinion that the application made by the petitioner seeking compounding of the offence on conclusion of the adjudication proceeding cannot be allowed and the authority rightly rejected the application filed by the petitioner. The Court is not inclined to exercise jurisdiction in the matter.
2025 (4) TMI 16

Offence under FERA provisions by failing to ensure that goods exported under the "Repayment of State Rupee Credits" scheme actually reached Russia - Appellants have failed to establish that 500 MTs of Wheat Flour actually reached Russia which was required as per “Scheme of Export of Goods and Services against Repayment of State Credits granted by the erstwhile Soviet Union - Failure to fulfill the specific requirement of the Scheme of Export of goods to Russia under Repayment of State Credits granted by the erstwhile Soviet Union

HELD THAT:- The arguments made by the Appellants that since they had exported the Goods on FOB basis, they had no control over the destination where Goods would be unloaded does not cut ice in the facts of the present matter.

In view of the observation afore, it is clear that after having opted for the said Scheme they could not have agreed to adhere to only few terms of the Scheme and not to other terms. It is obvious that any exporter who did not want to take benefit of the Scheme is also required to realise the export proceeds in Foreign Currency directly from the foreign buyer. If the Exporter chose to realise the export proceeds in the Indian Currency, then he had to ensure that the export is made within the bilateral framework of trade and the exports are made to the buyer in Russia.

Appellants cited the order dated 02.08.2007 of this Tribunal. We observe that the order relates to the maritime agents/shipping lines and not to the exporters. Moreover, the order has failed to take into account the responsibilities which are entailed from trading within the bilateral framework as enunciated under the Scheme of “Export of Goods & Services against Repayment of State Credits granted by erstwhile Soviet Union”.

The Judgment in Contship Container Lines Ltd. vs. D K Lall [2010 (3) TMI 992 - SUPREME COURT] is in the context of the claim of the exporter with regard to the insurance cover if in case there is mis-delivery by the carrier. It is submitted with respect that this Judgment has no bearing in so far as the issue at hand is concerned.

The decisions of the Hon’ble Supreme Court in Nestle India Ltd versus Commissioner of Central Excise, Chandigarh [2009 (2) TMI 22 - SUPREME COURT] and Commissioner of Central Excise, Mumbai versus Burroughs Wellcome (I) Ltd. [2006 (8) TMI 191 - SUPREME COURT] cited by the Appellants is not applicable in view of finding that the impugned order is neither cryptic nor without reasoning. Ld. Special Director (Appeals) has made definite finding of reiteration of the Adjudication Order dated 16.07.2010 and goes on further to state the limited disagreement which resulted in reduction of penalties which shows application of mind.

Thus, we find that the impugned order dated 06.03.2013 cannot be intervened with.
2025 (3) TMI 1141

Offence under FEMA - appellant was involved and played vital role in preparing the forged documents submitted in the bank and was assisting the exporter in supplementing the goods in the consignments of M/s Prominent Exim - HELD THAT:- The facts on record does not show any material to implicate and prove a case for contravention of the provisions quoted above by the appellant Manoj Arjun Gore. He was Custom Clearance Agent and used to process papers for export of the materials.

The commission for it was to be received by Vinod Chitalia to the extent of 40% of DEPB and was passing it to the appellant to the extent of 15%. The amount received for process of the export documents cannot make out a case for contravention of Section 3(b) and 3(d) of the Act of 1999.

Respondents could not refer to the evidence to show that appellant made contravention to Section 3(b) and 3(d) of the Act of 1999. The penalty of Rs.4,00,000/- and Rs.6,00,000/- has been imposed on the appellant but finding no material to prove contravention of Section 3(b) and 3(d) of the Act of 1999 by the appellant, we cause interference in the impugned order and is set aside qua the appellant. Appeal is allowed with aforesaid.
2025 (3) TMI 1140

Contraventions of FEMA provisions - liability for the failure to realize and repatriate export proceeds under Section 7 and 8 of FEMA - Whether the appellants can be absolved of liability for the contraventions due to their retirement and the provisions of the Family Arrangement cum Compromise Deed and Indemnity?

HELD THAT:- The Appellants therefore cannot escape the rigours of law with respect to their failure in realization of the pending export proceeds with respect to the 07 GRs totaling USD 3,93,094.63 as mentioned above. We observe that with respect to the 07 GRs for amount of USD 3,93,094.63, the statutory period of six months for realization and repatriation of the full export value of the goods exported had expired between 02.05.2000 to 13.08.2000, that is much before the date of resignation of the two Appellants w.e.f. 01.09.2000.

The pleadings made with respect to the efforts of contacting the buyers through letters, faxes and telephones etc. to be regarded as reasonable steps cannot be accepted as observed in the preceding paragraphs of this Order.

Appellants too have failed to produce material available to corroborate that they had taken effective steps to recover /repatriate the foreign exchange dues.

We therefore, find that the resignation of the two Appellants from M/s Rosecut Diamonds would not absolve them from the charge of contraventions of FEMA r/w Section 42 of FEMA with respect to the 07 GRs totaling USD 3,93,094.63.

Thus, we find that the two Appellants, have contravened Section 7 and 8 of the FEMA, 1999 read with Regulations 8, 9 and 13 of the FEMA Regulations, 2000 read with Section 42(1) of FEMA, 1999 with respect to the 07 GRs of the amount USD 3,93,094.63.]

Penalty imposed for failure to realize and repatriate US $ 10,24,967.32 with respect to 19 GRs - Adjudicating Authority has imposed penalty of Rs, 1,00,00,000/- on Shri Ketan A Shah who was the Partner of the Export Firm throughout the relevant period for the aforementioned contraventions in terms of Section 42 (1) of FEMA. In view of these circumstances and factors, we reduce the penalty imposed on the two Appellants to Rs 10,00,000/- (Rs Ten Lakhs Only) each. Since, Sh. Mehul R Shah and Sh. Ashwin H Shah in Appeals have paid Rs. 5,00,000/- as pre-deposit of the penalty amounts, the amount of pre-deposit made by the two Appellants are to be adjusted against the aforementioned reduced penalty amounts.
2025 (3) TMI 1037

Guilty of the offence u/s 6(4), 6(5) 8(1), 9(1)(a) and 9(1)(f)(i) of Foreign Exchange Regulation Act, 1973 - fine imposed - Court [2014 (9) TMI 1085 - DELHI HIGH COURT] is of the view that the AO dated 24th March, 2004, and the impugned order of the AT to the extent they hold the appellant liable for contravention of Section 8(1) of FERA, cannot be sustained in law - HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court; hence, the special leave petition is dismissed.