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TMI Blog2015 (1) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... osed on the appellant company, and a penalty of Rs. 7,50,000/- was imposed on the appellant-director of the appellant company for contravention of Section 8(3) and 8(4) read with Section 68 of FEMA read with para-7A, 20(i) of Exchange Control Manual, 1995 (ECM). 2. The predecessor-in-interest of the appellant company M/s Xerox Modi Corp Ltd. (now known as Xerox India Ltd.), namely, Modi Xerox Ltd. (MXL) was issued a notice dated 18.01.2002 by the ED alleging that MXL had not submitted the exchange control copies of the Bills of Entries to the authorized dealer, namely, Bank of India as proof of actual import within the stipulated period of three months in respect of 64 remittances of Foreign Exchange made by MXL. 3. The appellant responded to the said notice on 28.01.2002. It appears that the appellant submitted the relevant documents and satisfied the ED with regard to 60 out of the 64 transactions in respect whereof notices had been issued. The four remittances in respect whereof the respondent sought to continue the proceedings were as follows: 1. JY 1734784 dt. 1.12.93 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hartered Bank had forwarded the appellant's communication addressed to the Reserve Bank of India dated 12.07.1994, on 04.08.1994. In its communication dated 12.07.1994, the appellant had claimed that it had shifted its office from Hemkunt Towers to Punj Lloyd House in Nehru Place. While shifting the records, the file containing the exchange control copies of Bill of Entries had been misplaced and was not traceable immediately. The appellant enclosed with the said letter an affidavit, undertaking to submit the exchange control copy of Bill of Entries as soon as they are traced; photocopy of the relevant bill of entries, and; the original triplicate copy of the Bill of Entries for verification of Reserve Bank of India. The affidavit of the appellant enclosed with the said communication, inter alia, pertained to the remittance of JY 1734784 on 01.12.1993. According to the appellant, the said remittance was in respect of bill of entry no.262065 relating to invoice no.TIC-163. The appellant also produced a copy its communication dated 07.05.1998 sent to Bank of India, inter alia, in respect of the remittance of US$ 23587 made on 10.05.1996. 9. It appears that the appellant sent a commu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion proceedings with the Bank of India, which revealed by letter dated 03.02.2004 that the Bill of Entry for the subject remittances were still outstanding which fact was mentioned in the adjudication order. On being asked, Ld. Counsel of the appellant company stated that the company did not approach Bank of India to seek clarification about the said letter. Thus no effort was made by the company to have a certificate of the Bank of India about furnishing the Bill of Entries for the subject remittances even after said letter of 03.02.2004 was issued by the bank of India till date." 12. Learned counsel for the appellant submits that the proceedings before the adjudicating authority as well as before the Appellate Tribunal stand completely vitiated on account of breach of principles of natural justice. Neither the communication sent by the ED on 08.01.2004 to the Bank of India, nor the response of the said Bank dated 03.02.2004 have seen the light of the day. These documents were not produced or relied upon in the adjudication proceedings, and the appellant had no occasion to deal with the same. I may note that 14.07.2003 is said to be the date when the order was reserved by the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eminder through registered post acknowledgment due, requiring submission of the exchange control copies of the Bills of Entries. It is submitted that the non-issuance of reminder, or a further reminder in terms of para 7A.20(iv) shows that the said documents, namely, the exchange control copies of the Bill of Entries were duly submitted, which is why the cause for issuance of such notices did not arise. Reference is also made to clause (vi) of para 7A.20, which obliges that the exchange control copy of the Bill of Entry for home consumption/postal wrappers should be preserved by the authorized dealers for a period of one year from the date of its verification. Learned counsel submits that no such obligation is cast on the person remitting the foreign exchange for import. He submits that since the notice was issued after over five years, apparently, the authorized dealer, namely, the Bank of India had not preserved the exchange control copy of the Bills of Entries in respect of the three remittances aforesaid. 16. It is submitted that the documents relied upon and referred to herein above sufficiently establish that the appellant company had submitted the exchange control copies of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. Mr. Malhotra submits that since Standard Chartered Bank was not the authorized dealer, there was no occasion for the said Bank to forward the appellants communication of 12.07.1994 to the Reserve Bank of India. He submits that the Appellate Tribunal correctly rejected reliance placed on the said document by the appellants in para 18 of the impugned order, which reads as follows: "18. Now coming to the factual situation, from perusal of record it is clear that the said three remittances of foreign exchange were effected during the year 1993 & 1996. The appellants submitted the copy of the letter of Standard Chartered Bank regarding submission of documents of imports of goods dated 04.08.1994, Pg.171 on record. However, there is no mention of the subject remittances in this letter of Standard Chartered Bank and the appellants have not been able to prove the import of goods particularly when the Bank of India and not Standard Chartered Bank was the authorized dealer of the appellant company. As regards the third remittance, the appellants submitted photocopy of the letter to Bank of India but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Tribunal can act on what is not evidence such as hearsay, nor can it justify the Tribunal in basing its award on copies of documents when the originals which are in existence are not produced and proved by one of the methods either by affidavit or by witness who have executed them, if they are alive and can be produced. Again if a party wants an inspection, it is incumbent on the Tribunal to give inspection in so far as that is relevant to the enquiry. The applicability of these principles are well recognised and admit of no doubt". 21. In the present case, the order in original, as noticed above, is primarily founded upon the response dated 03.02.2004 received from Bank of India by the ED to its communication of 08.01.2004. It is not clear as to what is the nature and content of the information elicited by the ED from the Bank of India in its communication of 08.01.2004. It also remains in suspense as to what was the nature and content of the response sent by Bank of India in its communication dated 03.02.2004. It is not clear as to who sent the said alleged communication - i.e. whether it was sent by an authorized officer of the Bank or not. 22. The submission of Mr. Malh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal also did not even consider it necessary to go through the said correspondences dated 08.01.2004 and 03.02.2004 between the ED and the Bank of India. The Appellate Tribunal did not consider it necessary to satisfy itself as to the nature of information sought from, and provided by the Bank of India. On this short ground, the order in original and the impugned order of the Appellate Tribunal are liable to be quashed and set aside. 24. Even on merits, this Court is satisfied that the appellants had raised substantial defence to raise sufficient doubt with regard to the allegations that the appellant had not made imports in respect of the three remittances aforesaid. The utilization of the first remittance of JY 1734784 made on 01.12.1993 was sought to be explained by reference to the communication of Standard Chartered Bank dated 04.08.1994 to the Reserve Bank of India, which forwarded the appellants communication dated 12.07.1994 to the Reserve Bank of India. In the said communication, the appellant company had claimed that during the shifting of office from one building to another in Nehru Place, the file containing exchange control copy of Bill of Entry had been misplaced. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f limitation prescribed therefor. For such delays, the noticee cannot be made to suffer and the circumstance pleaded by the noticee that the documents have not been preserved or are not available would have to be given due weightage. 27. In Sunil Engineering Corporation (supra), the petitioner raised a similar plea that the authorized dealer was not shown to have issued a reminder in terms of the ECM. The Court observed as follows: "6. Petitioners submit that original Bills of Entry had also been tendered but they were not having the receipt for the same as the same had been misplaced and was not traceable. However, petitioners had duly furnished the copies of Bills of Lading, Invoices. The photocopy of Exchange Control copy of the Bill of Entry duly carried endorsement by the Customs Authorities of the clearance of the goods. Mr. Sharma also submitted that the Bank itself had failed to comply with the procedure. 7. In this view of the matter, there was hardly any doubt left regarding genuineness of the transactions which fact is not even disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the decisions in Hindustan Steel Ltd. v. State of Orissa, [1972]83ITR26(SC), Anantharam Veerasinghaiah and Co. v. CIT, [1980]123ITR457(SC) , and in Cement Marketing Co. of India Ltd. v. Asst. CST AIR 1960 SC 346. There was no such consideration in this case at all. 19. That the proceedings for imposition of penalty under the Act are of quasi-criminal nature follows from the nature of the proceedings itself. It is also settled law that where proceedings are penal in nature, they are quasi-criminal proceedings. (See the decisions in CIT v. Anwar Ali, [1970]76ITR696(SC) , and Shanti Prasad Jain v. Director of Enforcement, [1963]2SCR297). The consequence of this is two fold, first is the question of mens rea before finding of guilt and second is the question of mens rea once guilt has been established. The decision in State of Maharashtra v. Mayor Hans George, [1965]1SCR123 , is an authority for the proposition that mens rea is not required to be established in respect of an offence under Section 8(1) of the Foreign Exchange Regulation Act, 1973, and that it was an offence which creates absolute liability. The decision is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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