TMI Blog2019 (5) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... gn suppliers towards import advance payment of ₹ 3.44 crores through proper banking channel but have made actual import of ₹ 2.49 crores and excess payment of ₹ 95 lacs was made to square off alleged differential value arising on account of alleged under valuation of the imported goods. In this regard the Respondent held that there was no doubt that advance remittances for imports are permissible under law, however the Respondent held against the Appellants on this count only on the ground that there was no co-relation between the said advance remittances and imports although Appellants produced different details to establish the said co-relation, accordingly it was held that Appellants were guilty of contravention of section 10(6) of FEMA 1999. The Respondent did agree that advance remittance is permissible in law against imports. Appellant had produced different evidence / details to establish the co-relation between the advance remittance and imports, however the Respondent was not convinced and only on that ground held Appellants guilty of violation of Section 10(6) of FEMA, 1999. One is failed to understand why a person would make alleged hawala trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said allegations. No independent investigation was done by the department in India or abroad. No show cause notice has been issued in this regard viz. for under valuation by the Customs Authorities. The department at least should have recorded statement of Shri Pankaj and Dinesh Goud to this effect from the sellers of the Appellant or other persons in India or abroad who were allegedly paid money being alleged differential value on behalf of overseas suppliers of Appellant. The Respondent only read and interpreted the cash book entries and it was the violation of various provisions against the appellant without there being any corroborative evidence available on record. Either said witnesses would have been summoned after obtaining the address or the appellants should have been directed to produce them. There is no evidence on record to show that any exercise is done. Adjudicating Authority erred holding that the Appellants should have produced Shri Pankaj/Shri Dinesh for recording their statement rather than finding fault with the department for not interrogating that the said two persons. As stated above Shri Pankaj and Shri Dinesh had left the firm during investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Order, Appellants have filed the above appeals on various grounds. 4. It has come to record that the officers of DGCEI based on certain information searched the factory premises of the firm on 8.12.2014 and seized certain documents in relation to alleged violation of Central Excise provisions. The said seized record included two volumes of cash book, which allegedly contained details of transactions of the firm and also foreign exchange dealings along with ledger extract of cash book. The said cash books were handed over to Directorate of Enforcement and based on and without perusing other documents or without conducting any independent investigation and without recording statement of key persons, the Directorate filed complaint before the Adjudicating Authority, FEMA, 1999, Chennai. Based on the said complaint, department issued Show Cause Notice dated 4.4.2016 to the Appellants calling upon the Appellants to show cause as to why penal action be not taken against them under Section 13 of FEMA, 1999. 5. The allegations leveled against the Appellants are to the following: (a) Shri Prasanna Bhutoria had dealt in foreign exchange in USD 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. During the course of investigation by the department statements were recorded of Shri Prasanna Bhutoria on 20.7.2015 and that of Shri Rankit Bhutoria on 14.8.2015. The relevant extracts are mentioned as under:- (a) Statements of Shri Prasanna Bhutoria dated 20.7.2015. In the said statement, interalia, Shri Prasanna Bhutoria had stated that he was managing the entire affairs of the company and that his son Shri Rankit Bhutoria had recently joined. Further on subject cash book having been shown to him, Shri Prasanna denied the same and amongst others, stated that he did not know the contents of the cash book as the same was not maintained by him. The said cash book was maintained by one Shri Pankaj employee of M/s. Welcord and by Shri Dinesh Gaud who was doing metal sheet pending job work for M/s. Welcord. Further Shri Prasanna had stated that all payments for import were routed through proper banking channel. Further it was stated that besides the subject issue, M/s. Welcord had not been issued with any show cause notice by any department till date for any offence. Statements of Shri Rankit Bhutoria dated 14.8.2015. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the one responsible for registration of the subject case against the Appellants. 11. In regard to alleged contravention of Section 3(a) and Section 6(3)(g) of FEMA, 1999 by Shri Prasanna Bhutoria, the basis for the aforesaid allegations are that Shri Prasanna Bhutoria had procured the aforesaid foreign currency from grey market and had carried the same abroad in person in order to pay the overseas supplier to square off the alleged difference in value. The Respondent held (in the impugned order) that Shri Prasanna Bhutoria had acquired USD 41,000 as mentioned in the cash book from other than authorized persons and in as much as such acquisition tallied with the travel dates to overseas countries, it is evident that Shri Prasanna Bhutoria had carried the said currency in person during the said travel. 12. There was no seizure of foreign currency either from the premises of the Appellant firm or its partners or from the person of Shri Prasanna Bhutoria during any of his travel abroad. Thus, the findings are result of reading and analyzing the cash book entries by assumptions and presumptions to the effect that these entries were factual, without the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat these entries were factual and held against the Appellants, without any corroborative evidence available on record. 16. Pertaining to violation of Section 10(6) of FEMA, the basis of the said allegation is that the Appellant firm had made remittance to its foreign suppliers towards import advance payment of ₹ 3.44 crores through proper banking channel but have made actual import of ₹ 2.49 crores and excess payment of ₹ 95 lacs was made to square off alleged differential value arising on account of alleged under valuation of the imported goods. In this regard the Respondent held that there was no doubt that advance remittances for imports are permissible under law, however the Respondent held against the Appellants on this count only on the ground that there was no co-relation between the said advance remittances and imports although Appellants produced different details to establish the said co-relation, accordingly it was held that Appellants were guilty of contravention of section 10(6) of FEMA 1999. 17. The Respondent did agree that advance remittance is permissible in law against imports. Appellant had produced different evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations in order to square off the alleged difference in value of the imported goods / components viz. under valuing the same and paying the alleged difference in value to its overseas supplier through non-banking channels. There no evidence on record to substantiate the said allegations. There is no statement or document or admission on record to substantiate the said allegations. No independent investigation was done by the department in India or abroad. No show cause notice has been issued in this regard viz. for under valuation by the Customs Authorities. 21. The department at least should have recorded statement of Shri Pankaj and Dinesh Goud to this effect from the sellers of the Appellant or other persons in India or abroad who were allegedly paid money being alleged differential value on behalf of overseas suppliers of Appellant. The Respondent only read and interpreted the cash book entries and it was the violation of various provisions against the appellant without there being any corroborative evidence available on record. Either said witnesses would have been summoned after obtaining the address or the appellants should have been directed to produce them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India and abroad and further held that the entries made in the diary by itself were not sufficient to prove the allegations against the noticee. Accordingly the Hon‟ble Court held that the impugned order was based on improper appreciation of the probative value of evidence produced by the department in support of its allegations and accordingly the impugned order was set aside being unsustainable in law. Being aggrieved, department had filed SLP before the Hon. Apex Court against the aforesaid judgment rendered by Hon. Delhi High Court and the said petition was dismissed by Hon. Apex Court vide Order dated 23.11.2015. 25.1 Mittal Ispat vs Enforcement Directorate 2017 (349) ELT 513 (ATFE) In this case also the basic allegation which was leveled by the department was that hawala payments were made to overseas suppliers to square off the differential amount arising out of under valuation of imports made by the Appellant Company, accordingly show cause notice was issued. In this case there was admission by two employees of the company, however said statements were retracted the very next day. It was held that Custom Authorities had not issued a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic entity. It was held that unless there is intention of the legislature to treat the firm and partners as distinct entities, no separate penalty can be imposed and in this regard reference was made to Income Tax Act where there was such intent. It is submitted that as per Section 3(u) of FEMA, 1999, which defines person as appearing in Section 13 of Act, there is no intention to treat the firm and its partners as distinct entities. Hence separate penalty cannot be imposed on partners on the partnership firm. 25.5 Vinod Kumar Gupta vs CCE 2013 (287) ELT 54 (P H) In this case also, as above, it was held that partnership firm in mercantile usage is the firm in its own, strictly in the eye of law, it is not a legal entity like a natural person. Hence it was held that no separate penalty can be imposed on the partners of the firm. Copies of the aforesaid judgments were handed over at the time of hearing. 26. Learned counsel for the respondent has relied upon the following judgements:- (a) Gian Chand Brothers Vs Rattan Lal It is submitted that instant judgment has no application to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
