TMI Blog2011 (1) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... for the alleged contravention of the provisions of the Act and the Roles is called in question in this writ petition. 2. The show-cause notice is issued based on the complaint filed by the Assistant Director of Enforcement. Bangalore, on 01.02.2010 under Section 16(3) of the FEMA alleging that M/s.Enlel (pvt.) Limited had made export of Quartz Analog Wrist Watches along with FOP items to a Foreign Trading Establishment located at Dubai during the period between 03.07.1998 to .18.07.1998 for the value of ₹ 51.44,468/-, but had failed to realize the export proceeds within the specified period of 180 days from the date of export and as such there was contravention of Section 7(1 )(a) of the FEMA read with Regulations 8, 9 and 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion could have been initialed under Section 51 of the said An. In this regard, he brings to the notice the provisions contained under Sob-section (3) of Section 49 of FEMA and urges that even if an action was to be initialed under Section 51 of the FERA. the same could have been resorted to and cognizance could have been taken on or before 31.05.2002. Whereas, in the instant case, the show-cause notice is issued on 05.02.2010 which is impermissible as per Section 49(3) of FEMA. He has invited the attention of the Court to the fact that FEMA came into force on 01.06.2000 and therefore as per Sub-section (3) of Section 49 of FEMA cognizance of an offence under the Repealed Act. namely FERA could have been taken under Section 51 of the FERA on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the light of the respective contentions urged and in the wake of the pleadings of both the parties, the question that arises for consideration is: Whether the respondent has acted illegally and without jurisdiction in issuing the impugned show cause notice? 6. The impugned show-cause notice is issued alleging violation of the provisions contained under Sections 7 8 of the FEMA read with the relevant rules. The allegation is that the petitioner being a Director of M/s.Entel Pvt. Ltd. and having exported certain goods between the period from 03.07.1998 to 18.07.1998 failed to realize the value of the export proceeds within a period of 180 days from the date of export. Admittedly, the realization of the proceeds ought to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l take cognizance of an offence under the Repealed Act and no Adjudicating Officer shall take notice of any contravention under Section 51. of the Repealed Act. i.e. FERA after the expiry of the period of two years from the date of die commencement of FEMA. Therefore, it is clear that for a period of two years from 01.06.2000 for any offence committed under the provisions of FERA. cognizance could be taken and proceedings could be continued under the provisions of the said Act. as if the said Act had not been repealed, but after the expiry of the period of two years from 01.06.2000. cognizance of any offence or notice of any contravention under Section 53 of FERA could not be taken. 9. In the instant ease, the show-cause notice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s untenable in law as the alleged contravention look place during 1997-98 when the FERA was in force. Section 49(3) of FEMA was pressed into service to contend that after the expiry of the period of two years from 01.06.2000. no Adjudicating Officer shall take notice of the contravention under Section 51 of the Repealed Act. Examining the entire matter at length, the High Court, at paragraphs-11 to 13, has held that no notice of contravention of any of the provisions of FERA could have been taken by the Special Director beyond the 'sunset period i.e. to say beyond 31.05.2002. Consequently, it was found that unless the Enforcement Director was able to show that the failure to realize the proceeds of export for the period 1997 98 which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of M.G.Wagh v. Jay Engineering Works Ltd. - (1987) 1 SCC 542 that Section 8 of FEMA had only to do with receipt of foreign exchange other than realization of export proceeds. The realization of export proceeds is exclusively covered by Section 7 of FEMA and to invoke Section 7 of FEMA the Enforcement Director had to show that the petitioners breached the rime limits specified in the Foreign Exchange Management (Export of Goods Services) Regulations. As the export were completed and so was the contravention of the non realisation of the corresponding proceeds, prior to the FEMA came into force, the provisions of Section 7 of FEMA were also held inapplicable. 12. The facts dealt with in the judgment of the Delhi High Court r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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