TMI Blog2015 (1) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Bank or not. The appellants should have then approached the Bank of India and enquired about the same. This argument has only to be stated, to be rejected. Pertinently, when the appellant company demanded copies of the said communications vide their letter dated 29.03.2004, the same were not provided. Without having copies of the said communication, this Court fails to appreciate as to how the appellants could be expected to gather any information from the said Bank, or get them verified. In fact, the appellants were not even obliged to do so, and it was the primary obligation of the adjudicating authority to place all incriminating material - which was intended to be relied upon to condemn the appellants and penalize them in a quasi-criminal proceedings, before the appellants to elicit their response. The order imposing penalty is undoubtedly a prejudicial order as it entails quasi criminal and penal consequences. No such order could have been passed behind the back of the appellants, without confronting them with all the material which was sought to be relied upon and granting adequate opportunity to them to deal with the same. It was obligatory for the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vishal Gohri and Mr. Jitender, Advocates JUDGEMENT VIPIN SANGHI, J. (OPEN COURT) 1. The present appeals under Section 35 of the Foreign Exchange Management Act, 1999 (FEMA) have been preferred to assail the common final order dated 24.10.2008 passed by the Appellate Tribunal for Foreign Exchange (The Appellate Tribunal) in Appeal Nos.401/2004 and 430/2004. The Appellate Tribunal by the impugned order dismissed the two appeals, preferred by the appellant company and its director Dr. Bhupendra Kumar Modi against the common order passed by the adjudicating authority, namely, Special Director, Enforcement Directorate, New Delhi (ED) dated 13.02.2004 bearing SDE/SKP/III/47/2003, by which penalty of ₹ 22,75,000/- was imposed on the appellant company, and a penalty of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice, copy of TR-6 challan and copy of exchange control copy of bill of entries against both the cases. 7. The appellant further submits that in relation to the remittance of GBP 8367.17, the appellant had submitted the exchange control copy of Bill of Entry to the Bank of India on 14.12.1996 along with several other Bills of Entries in respect of other remittances. A copy of the said document was produced before the adjudicating authority. 8. The appellant also claims that its banker, namely, Standard Chartered 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 Entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing, was also never provided to or communicated to the appellant by the adjudicating authority before passing the impugned order in original, even though the same had been passed - primarily on the basis thereof. The Appellate Tribunal dealt with the said aspect in para 19 of the impugned order, which reads as follows: 19. Further enquiries were made by the Adjudicating Officer during adjudication 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not recite that the authorized dealer had ever sent a reminder to the appellant company asking it to produce the exchange control copies of the Bill of Entries on the basis that the same had not been produced within three months from the date of remittance. The authorized dealer, i.e. the Bank of India had also not claimed that it had sent a further reminder 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 y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve Bank of India, whereby the Standard Chartered Bank, in turn, forwarded the communication dated 12.07.1994 claimed to have been addressed to Reserve Bank of India by the appellant company. 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 appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prescribed therein permit it, it is inconceivable that 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 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.02.2004. Pertinently, it appears that the Appellate Tribunal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices have been issued belatedly - even though there is no period of 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 by the respondents. In these circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR457(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 not apposite. We are not concerned with the pre-guilt finding of mens rea in this case. What is important is whether the appellant had any mala fide intention of violating the law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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