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TMI Blog2014 (5) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Additional Director General ("ADG"), Enforcement Directorate ("ED") exonerating the Appellants of violation of Section 8 (1) of the Foreign Exchange Regulation Act, 1973 ("FERA"). 2. Appellant No.1, Negolice India Limited ("NIL"), received an export order from M/s Ace Plast Limited ("APL"), Sharjah, United Arab of Emirates ("UAE") for 1,54,000 pieces of C-90 pre-recorded audio cassettes of the value of Rs. 35,92,512 (equivalent to US Dollar ["USD"] 83,160). The said consignment was dispatched by NIL to APL under shipping bill dated 23rd December 1999. Admittedly, NIL received the full remittance for the consignment. For some reason, however, APL did not lift the consignment which had reached the Dubai Port. The abandoned consignment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the above letters, a Memorandum/Show Cause Notice ("SCN") dated 16th May 2002 was issued to Appellant No.1 and to Appellants 2 to 5, being the Directors of Appellant No.1, asking them to show cause why they should not be proceeded against for violation of Section 8 (1) FERA. The principle allegation in the SCN was that NIL had exported the goods "only for availing export benefits" and the alleged problems expressed by APL with regard to the copyright of the cassettes "were only excuses" made by NIL "to escape from the clutches of law." The other major allegation was that NIL had "otherwise transferred an amount of Rs. 35,92,512", equivalent to USD 83,160 to APL "through means other than the banking channels and then cleared the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor General, who was the Adjudicating Officer, observed as under: "It is not in dispute that the payment for the exported goods has been received through banking channels. As stated by the noticees in the reply, the payment was to be made on receipt of the export documents by M/s. Ace Plast Sharjah and this has been duly done. No evidence has been given in the SCN as to when and how the amount was transferred to M/s. ACE Plast other than through banking channels. The two transactions appear to be independent and no evidence has been provided in the SCN to show that they are not genuine. The SCN itself is not clear on this point. Apparently the relied upon documents are relevant but the SCN does not explain how the documents are relevant an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty of Rs. 15,00,000 on Appellant No.1 and Rs. 5,00,000 each on Appellants 2 to 5 under Section 8(1) FERA. 12. This Court has heard the submissions of Mr. Sanjeev Sindhwani, learned Senior counsel for the Appellants and of Mr. Jatan Singh, Central Government Standing Counsel. 13. It is significant, as pointed out by the CGI Dubai in its letter dated 24th June 2001 to the DRI, that "there is no evidence to prove the allegations" that the transaction of export of pre-recorded cassettes by NIL to APL was not genuine. Yet, the entire case appears to have been built on suspicion arising from the fact that APL failed to collect the consignment delivered at the Dubai Port. 14. APL was not shown to be a fictitious entity. From the inquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusive knowledge" of the Appellants. APL was a different legal entity based in Sharjah, UAE. Inquiries could have easily been made with APL itself as to why it did not lift the consignment. 17. The major premise of the entire proceedings was that through non-banking channels NIL paid a sum of Rs. 35,92,512 to APL. There was absolutely no evidence of any kind to back this allegation. In the absence of proof of the above alleged transaction, it could not have been concluded by the AT that NIL had improperly received USD 83,160 and thereby contravened Section 8 (1) FERA. Suspicion in this case was allowed to replace proof and this resulted in an erroneous order being passed by the AT. 18. The Court is satisfied that there is no legal infi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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