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TMI ID= 270391
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  • Cases Cited

2016 (1) TMI 183 - APPELLATE TRIBUNAL FOR FOREIGN EXCHANGE, NEW DELHI

Sun Star Future Wood Ltd. Versus Special Director of Enforcement

Importers who had acquired foreign exchange from their authorized dealers for the purpose of imports of specified goods but had failed to submit the Exchange Control copy of Bill of Entry in respect of the relevant imports to their authorized dealers - It has been contended on behalf of the appellant that an amount of ₹ 410,550 US $ was remitted by IDBI by opening L/C (Letter of Credit). The goods were shipped by the foreign seller and arrived in India passed through the Customs authorities. Copy of the Bill of Entry for Warehousing filed is a proof of the arrival of the goods in India and is a conclusive proof and proceedings ought to have been dropped in this perspective.

Held that:- it is not in dispute that the entire foreign exchange acquired by the appellant has been remitted to the foreign seller and it is also undisputed that the imported goods were stored in a warehouse and as the customs duty and warehousing charges could not be paid by the appellant, the goods were sold. In our considered view, there is no contravention of Section 8(3) or 8(4) of FERA, 1973 as only proof of import of goods has to be filed and Bill of Entry of WH is a valid and convincing proof of the arrival of goods in India. As we have stated earlier, there is no allegation that the foreign exchange was used otherwise for the purpose for which it was issued or the appellant has failed to comply with any of the conditions required by him to be fulfilled, therefore, in our views contravention of the Section 8(3) and 8(4) are not made out. - Appeals allowed - Decided in favor of appellants.

No.- 110/2006

Dated.- July 28, 2015

Citations:

  1. Themis Agencies Versus Union of India - 2007 (1) TMI 255 - HIGH COURT OF BOMBAY

Vinay Kumar Mathur, Chairperson and Ms. Sharda Jain, Member

Shri P. Ojha, Advocate, for the Appellant.

Ms. Natasha Sarkar, Legal Consultant, for the  Respondent.

ORDER

We have heard Mr. P. Ojha, Advocate, for the appellant and Ms. Natasha Sarkar, Legal Consultant for the respondent and’ have also perused the record.

1. Relevant facts bereft of details, for the disposal of the instant appeal are that the Reserve Bank of India Mumbai had forwarded a list of importers who had acquired foreign exchange from their authorized dealers for the purpose of imports of specified goods but had failed to submit the Exchange Control copy of Bill of Entry in respect of the relevant imports to their authorized dealers as evidence of actual import of the goods, which is a requirement to be complied with by the importers as specified in Para 7A-20 (Chaper-7) of the Exchange Control Manual. It is contended that the appellant was one of such importers who had failed to submit the Exchange Control copy of the Bill of Entry. The details furnished by the RBI disclosed that the appellant company had acquired and remitted foreign exchange worth ₹ 1,57,61,577/- through Industrial Development Bank of India, Forex Service Department, Mumbai on 16-6-1997. Show cause notice was issued to the appellant alleging contravention of Section 8(3) r/w Section 8(4) of the Foreign Exchange Regulation Act, 1973 r/w Section 49(3) and 49(4) of Foreign Exchange Management Act, 1999. It was alleged that non submission of documentary evidence would lead to the conclusion that no import covering the subject remittance was made by the noticee/appellant. Reply dated 10-6-2002 and 15-9-2009 by the appellant were filed forwarding copies of proforma invoice dated 12-10-1996 from M/s Brimco Industrial Co. Ltd., Taiwan for US $ 410,550 and photo copy of the Bill of Entry for the same, claimed to be against the remittance in question. However, it was found from the copy of the application for L/C filed with the Industrial Development Bank of India that they had applied for L/C for import of Brand New Extrusion Line from High Wood Consultants, Park Road, Ryde, for a total value of 6,20,290/- Sterling Pound. In this view of the matter, adjudication proceedings were initiated, appellant was represented through Counsel and photo copy of Bill of Entry for US $ 410,550 was filed. The Adjudicating Officer held the appellant company guilty of contravention of provisions and imposed a penalty of ₹ 1,50,00,000/- on M/s. Sun Star Future Wood Ltd., the company/appellant herein. Against the impugned Adjudication Order No. ADJ/524/B/SDE/SKP/2003/7941, dated 19-12-2003, the instant appeal has been filed by the appellant.

2. It has been contended on behalf of the appellant that an amount of ₹ 410,550 US $ was remitted by IDBI by opening L/C (Letter of Credit). The goods were shipped by the foreign seller and arrived in India passed through the Customs authorities. Copy of the Bill of Entry for Warehousing filed is a proof of the arrival of the goods in India and is a conclusive proof and proceedings ought to have been dropped in this perspective. Further submission is that the Mumbai Port Trust levied charges when the goods were unloaded at the Port. Copy of the Port charges has also been annexed with Memorandum of appeal. Submission is that after arrival in India the goods were kept under the Bond of Customs in a Warehouse run by the Central Warehousing Corporation. Copy of the dues of Warehousing charges has also been annexed as Annexure A-4 to the Memo of Appeal. Since after expiry of the Bond period, the goods could be cleared, therefore, the Customs Department issued a notice, copy of which is Annexure A-5 and as the goods were lying in the Warehouse for a long period, therefore, the Central Warehousing Corporation issued notice dated 15-12-1999 for the payment of Warehousing charges, copy of which is as Annexure A-6. Copy of Bill of Entry was submitted at the time of personal hearing as evidence of the arrival of the goods. However, the Adjudicating authority illegally did not accept the Bill of Entry on the basis of rupee valuation. The adjudicating authority also took no notice about the US Dollar mentioned and demanded documents such as Bill of Lading, invoice, copy of L/C, etc., as time was short for retrieving, the said documents as the company was out of business, however, without waiting for the documents to be filed, the impugned order was passed arbitrarily.

3. Submission is that no contravention of any of the provisions of FERA or FEMA are made out against the appellant. The agricultural land belonging to the family of the Director of the company has also been attached by the Enforcement Directorate and an entry in the revenue papers in this regard has been made, certified copy of which and its English translation have been filed in the instant appeal. It has also been contended that contraventions of Section 8(3) and 8(4) of FERA are not made out as is apparent from the bare reading of the provisions. Further in Para 7A-20 of E.C.M., it has been clearly mentioned that authorized dealer should insist on production of documentary evidence of import i.e. Exchange Control copy of Bill of Entry for home consumption/postal/wrappers at the time of effecting remittances, it has been provided that if no response within the prescribed period of three months from the date of remittance is received by the authorized dealer, a reminder by registered post with acknowledgement due should be issued not later than one month from the date of the first reminder. No such reminder was issued by the authorized dealer IDBI and it is not provided anywhere that only Bill of Exchange should be considered as the conclusive proof of import of goods. Further submission is that the Bill of Entry is a Customs document and Customs authorities did not held the appellant guilty of any violation. Since the appellant was not able to pay duty or warehousing charges, the goods were auctioned and duty and charges were realized. The foreign exchange was not used for any other purpose than for which it was issued. There is no allegation against the appellant that foreign exchange was not utilized for the purpose for which it was issued. Thus, no case against the appellant is made out. Reliance has been placed on M/s. Themis Agencies, Appellant v. Union of India, Respondent (2007) (XC1)-GJX-0003-BOM in Fera No. 63 of 2006 decided on 12-1-2007 by Hon’ble Bombay High Court. It has been submitted that the instant matter is squarely covered by the said judgment.

4. Ms. Natasha Sarkar, Legal Consultant, has very ably defended the impugned order and has submitted that only photo copy of Bill of Entry of WH was filed before the adjudicating authority and papers such as Bill of Lading, Invoice etc. were not filed. There were discrepancies in the papers regarding entries in Indian currency and foreign currencies, therefore, the adjudicating authority rightly held the appellant guilty of breach of the provisions under FERA and FEMA and imposed penalty.

5. Submission is that the appeal is devoid of merits and papers filed at the appellate stage should not be considered. Matter may be relegated to the adjudicating authority in case the papers filed by the appellant are to be considered.

6. We have considered the submissions of Ld. Counsel for the appellant as well as Ld. Legal Consultant and are of the view that the instant appeal is of the year 2006 and already a period of almost nine years has passed since the appeal was filed before this Tribunal and since the proceedings in appeal are continuation of the original proceedings before the Subordinate authority, the Appellate Court is competent to consider the papers filed in the appeal. It may be pointed out that all the papers filed on behalf of the appellant were filed as annexures to the appeal at the time of filing of the appeal and were not filed subsequently. This fact is also to be borne in mind that it has been specifically averred that though Bill of Lading, copy of invoice etc. were demanded by the adjudicating authority and time was sought by the appellant for filing the same still without waiting for the papers to be filed, the adjudication order was passed and it appears that adequate opportunity was not afforded to the appellant to file additional proof of the import of goods to India. Therefore, we are not convinced with the arguments of the ld. Legal Consultant and proceed to consider the additional evidence in support of import filed with the Memo of Appeal at the appellate stage.

7. We are in agreement with the arguments of Ld. Counsel for the appellant that the judgment of Hon’ble Bombay High Court in M/s. Themis Agencies v. Union of India (supra) is squarely applicable to the instant appeal and the controversy before the Hon’ble High Court was identical to that which is involved in the instant appeal. It has been observed by the Hon’ble High Court that foreign exchange was obtained by the appellant from an authorized dealer under the provisions of Foreign Exchange Regulation Act, 1973 and on receipt of the foreign exchange consignments were sent to India and on arrival of the goods, the appellant therein filed three Bills of Entry for WH (Warehousing) the said goods, the Customs authorities permitted the goods to be warehoused and thereupon the said goods were cleared and stored in the godown belonging to the Central Warehousing Corporation. Due to financial difficulties, two consignments out of three could not be cleared in the case before Hon’ble Bombay High Court during the permitted bond period as a result the Customs authorities/Central Warehousing Corporation auctioned the said goods. In the Bombay case also at the time of hearing of the appeal, the appellant therein produced the certificate from Central Warehousing Corporation to establish that the goods imported by the appellant were warehoused in their godown.

8. In the instant appeal, it is not in dispute that the entire foreign exchange acquired by the appellant has been remitted to the foreign seller and it is also undisputed that the imported goods were stored in a warehouse and as the customs duty and warehousing charges could not be paid by the appellant, the goods were sold. In our considered view, there is no contravention of Section 8(3) or 8(4) of FERA, 1973 as only proof of import of goods has to be filed and Bill of Entry of WH is a valid and convincing proof of the arrival of goods in India. As we have stated earlier, there is no allegation that the foreign exchange was used otherwise for the purpose for which it was issued or the appellant has failed to comply with any of the conditions required by him to be fulfilled, therefore, in our views contravention of the Section 8(3) and 8(4) are not made out.

9. In view of the above discussion, the appeal deserves to be allowed. Consequently, the appeal is allowed and the impugned order passed by the Adjudicating Authority dated 19-12-2003 is set aside. The attachment/lien upon the agricultural land of the appellant shall end with immediate effect. Copy of the order/judgment be dispatched by the Registry to both the parties.

 
 
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