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M.L. Gupta Versus Special Director of Enforcement

2016 (2) TMI 480 - APPELLATE TRIBUNAL FOR FOREIGN EXCHANGE, NEW DELHI

Levy of penalty for Non realization of export proceeds (foreign exchange) within six months of the date of shipment or within the extended period - Held that:- Considering the submission that almost entire sale proceeds have been realized and loss to the exchequer has subsequently been made good therefore, taking a holistic view, we are of the opinion that it will be just and fair in the circumstances that the penalties imposed which are almost half of the amount of alleged amount appear to be e .....

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for the Appellant. Shri Rahul Meena, Legal Consultant, for the Respondent. ORDER We have heard Ms. Pooja Saigal, Advocate, for the appellants and Mr. Rahul Meena, Legal Consultant for the respondents and have also perused the record. 1. Brief facts relevant for the disposal of the instant appeals are that Appeal No. 519/1993 has been filed by appellant M.L. Gupta, Karta of M/s. Kanta International. It is alleged that during the year 1976-1985 M/s. Kanta International, New Delhi, effected sh .....

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nt Notification dated 1-1-1974 has been made. Show cause notice was issued to M/s. Kanta International and M.L. Gupta, Karta of the firm. However, no reply was received for quite some time. Therefore, adjudication proceedings were initiated. Several, dates for personal hearing were also fixed. Ultimately Shri J.S. Arora, Advocate, appeared for M/s. Kanta International in response and submitted reply dated 23-11-1992. It was pleaded on behalf of the firm that several letters were sent to M/s. S.V .....

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d Attorneys abroad in an effort to realize outstanding export proceeds. He recorded his dissatisfaction that the exporter had not made any efforts worth the name to pressurize the buyer to remit the export proceeds and held appellant M.L. Gupta, Karta of M/s. Kanta International liable for contravention of Section 18(2) r/w Section 18(3) of FERA, 1973 and imposed a penalty of ₹ 25,00,000/- against him. The Adjudication Order No. SDE(R)III/57/93, dated 30-6-1993 has been assailed by the app .....

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ion 18(2), 18(3) r/w Central Government Notification No. F.I.67/EC/73-1 & 3 both, dated 1-1-1974 have been alleged. Sh. M.L. Gupta, Smt. Rajkarni and Smt. Sarla Agarwal were partners in the firm during the relevant period and were allegedly incharge and responsible for the conduct of the business. Show cause notice was issued. However, no reply thereby was filed for a period of almost five years. Thereafter, it was decided to hold adjudication proceedings, opportunity for personal hearing wa .....

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pta, partner, vide the impugned order. The impugned order has been challenged through the instant appeal by M/s. Sandeep Traders while Appeal No. 521/1993 has been filed by the appellant M.L. Gupta, partner of M/s. Sandeep Traders against the same impugned order. In the instant appeal, the appellant has challenged imposition of penalty of ₹ 5,00,000/- against him for having contravened provisions of Sections 18(2), 18(3) of FERA, 1973 r/w relevant modification of Section 68(1) of FERA, 197 .....

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the firm effected Shipment of goods valued at ₹ 28,88,662/- and US $ 738.50 and failed to realize & repatriate the sale proceeds within the prescribed period. The Adjudicating Authority found the efforts made for realization to be inadequate. 4. Appeal No. 523/1993 has been filed by the appellant M.L. Gupta, Director M/s. M.L. Gupta & Sons (P) Ltd., against the Adjudication Order dated 30-6-1993 against which connected Appeal No. 522/93 has been filed by the appellant M.L. Gu .....

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/6/93, dated 30-6-1993. It is alleged that in July, 1984 appellant instructed P. Gangaram and C. Gangaram persons resident of outside India to arrange Foreign Exchange of Pound 20,000/- in Dubai for M/s. Kanta International in lieu of payment of ₹ 3,20,000/-. The amount of Pound 20,000/- was subsequently remitted to SBI Overseas Branch, New Delhi. Appellant has been held guilty of contravention under Section 8(1) and 8(1)(a) of FERA, 1973 and a penalty of ₹ 50,000/- has been imposed .....

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cted shipment of goods worth ₹ 26,01,005.00 and US $ 991.05 under GRI forms but had failed to realize the export proceeds within the prescribed period. 7. Since all the appeals have been filed against adjudication orders which relate to firms in which the appellant M.L. Gupta or Mrs. Manjari Gupta were partners and contraventions of similar nature have been alleged against them, and the defence taken is common, therefore, for convenience sake, all the appeals are being disposed of by .....

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the order. In this view, there was no valid adjudication in the instant appeals which were subsequently placed before this Bench on 19-8-2014 on which date in view of the fact that the draft judgment dated 13-1-2011 could not be pronounced by the Bench, appeals were ordered to be reheard. 9. Ms. Pooja Saigal, ld. Counsel for the appellants has submitted that various adjudication orders were passed in the instant appeals. An affidavit each has been filed in all the appeals separately by the .....

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orized dealers (Banks) affirming that the export proceeds have been realized and GR forms released in respect of all the shipments except in respect of certain shipments of small amounts. Further submission is that the State Bank has been unable to trace the records to release GR forms and in such cases the appellants have placed the original FIRs. Submission is that the very basis upon which the show cause notices were issued by the respondents and subsequently the impugned orders were passed n .....

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realization were duly considered by this Tribunal and an order was dictated by then Hon ble Chairperson for remand of all the appeals for fresh consideration by the Adjudicating Authority. However, the Hon ble Member did not put his signature on the draft judgment nor passed any independent order of dissent or recorded his disagreement formally. However, technically the draft judgment could not have been treated a valid judgment of the Tribunal in the eyes of law, however, the recording of the v .....

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ona fide efforts for realization of the entire export proceeds. Genuine and bona fide efforts were made by the appellants as a result of which they have succeeded in realization of the export proceeds. Consequently all the impugned orders in which efforts made by the appellants were not duly taken note of, and prima facie appear to have been passed with a prejudice are liable to be set aside. No enclosures or relied upon documents were supplied to appellants, the transactions were old, therefore .....

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The impugned orders are ex parte and against principles of natural justice and were not fair. No financial loss has been caused to exchequer of the country and the appeals deserve to be allowed. 11. Ld. Legal Consultant has defended the impugned orders and has submitted that the appellants have failed to realize the sale proceeds of goods exported within the stipulated period in contravention of the provisions of Section 18 of FERA, 1973 and the Central Government Notifications. The appell .....

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dicating Authority rightly held that the correspondence was ex parte and had not been made with all the buyers. No effort to contact Indian Embassy, Chamber of Commerce or legal proceedings were initiated against the buyers. The authorized dealers also informed the appellants that their request for extension of time limit relating to GR forms have been rejected. Thus, the Adjudicating Authority rightly concluded that the efforts made by the appellants were not bonafidely made and were inadequate .....

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ERA. Realization after such a long gap cannot be treated to be valid compliance of the provision. The fact remains that at the time of the adjudication the appellants had not realized any amount and thus the adjudication order is perfectly legal and valid and cannot be altered or set aside at this belated stage. Time is the essence and since the appeals have no merits therefore, they are liable to be dismissed. 12. Sale proceeds have to be recovered within a period of six months or extended .....

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nd has realized the complete export proceeds qua the exports that have taken place during the year 1984 & 1985. Through Annexure A-I, the appellant has filed the particulars of GR numbers, names of the foreign buyers, invoice value, amount received and also certificate of realization of GRI forms by the concerned branch of State Bank of India. A certificate confirming the realization of export proceeds has also been issued by the Bank. Canara Bank has also issued a certificate in 2004 statin .....

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ant appeals is whether the post adjudication realization of export proceeds of transactions which had taken place way back in 1984-84 will have any bearing upon the findings recorded by the Adjudicating Authority of non-compliance and alleged contravention by the appellants. 14. At this stage, we wish to clarify that in our considered view no fruitful purpose will be served by remanding the instant appeals back to Adjudicating Authority for re-determination in view of subsequent realization .....

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emitting the matter to the Adjudicating Authority for fresh determination in the light of additional evidence filed in appeal. We are inclined to opt for the first option and proceed to evaluate the consequences of realization of the export proceeds during the pendency of the appeal. 15. The appellants have contended that they have realized almost all the outstanding dues in each of the appeals and thus no financial loss has been caused to the exchequer in respect of foreign exchange. The r .....

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e against them. The Adjudicating Officer in view of the fact that RBI had declined the request for extension of time and the appellants had failed to realize any amount whatsoever within the time allowed to them was justified in holding that the appellants have contravened the provisions of Section 18 of FERA, 1973. The efforts made by them were duly considered by the Adjudicating Officer who found that filing of mere correspondence with foreign buyers will not amount to due compliance of Sectio .....

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re afforded and ultimately Sh. J.S. Arora, Advocate, appeared on behalf of the appellants and filed written submissions out of which only one i.e. relating to show cause notice II were final submissions and in rest of the replies further time for filing detailed reply was sought. It has come that several reminders were sent to the said counsel by the Adjudicating Authority in between December, 1992 and middle of June, 1993 and thereafter, the impugned orders were passed on 30-6-1993. Thus, suffi .....

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to whether adequate efforts for repatriation were undertaken by the appellants or not, it has been pleaded on behalf of the appellants that due to simultaneous proceedings by the Directorate of Revenue, Intelligence, CBI, ED, CCI, Customs and detention under COFEPOSA of the appellant M.L. Gupta, detailed replies could not be filed and immediate steps for repatriation could not be taken. We are of the view that the scheme of FERA, 1973 was stringent in nature as compared to FEMA, 1999 which repla .....

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at extension was sought by the appellants from the RBI. It has also come that the prayer for extension was declined by the RBI. 18. In the instant appeals, it has also been pleaded that due to persistent and sustained efforts of the appellants, almost entire export proceeds have been recovered after the year 2000. Therefore, there is no loss of foreign exchange to the exchequer. It has also been argued that the business of the appellant M.L. Gupta who was running almost all the firms has cl .....

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State of Orissa, AIR 1970 SC 253 = 1978 (2) E.L.T. (J159) (S.C.), the Hon ble Supreme Court has held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceeding, and a penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. It has further been held that imposition of penalty is a .....

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