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2019 (6) TMI 636

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..... raventions under FERA. The export of goods had been made on 29h May, 2000 under GR No. 366158. The subject export was governed by the Foreign Exchange Regulation Act, 1973 and no proceedings under section 8 of the FEMA 1999 which came into force on 1st June 2000 could be applicable for the GR No. 366158 dated 29.05.2000. In BHUPENDRA V. SHAH VERSUS UNION OF INDIA & ORS. [2010 (3) TMI 20 - DELHI HIGH COURT] held show cause notice (SCN) issued after the sunset clause period of 31-05-2002 for alleged contravention of Section 7 & 8 of FEMA by an exporter in not realizing proceeds of export made in 1997- 98(pertaining to the FERA period. In order to invoke section 7 of FEMA, the ED will have to show that the party reached the time limits specified in FEM EGS Regulations. At the relevant point of time, FEMA was not a force and hence there could be no question of contravening the provisions of FEMA and if at all there was any contravention, it would only under FERA and the same had to be shown to have continued beyond the two year sunset period - the legislative intent was very clear in having a limited continuation of two years for contraventions under FERA - on reading of Sectio .....

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..... llant came to light on 23.06.2010 when XOS statement for non-realization/short of foreign exchange received and accordingly show cause was received. The plea taken u/s 49(3) by appellant in additional grounds and submission is not applicable as violation came was found in 2010 only. NO sufficient reasons were advanced by the appellant for non-relisation of US$6558.64 as export proceeds. I agree with the findings of the Adjudicating Officer and confirm the penalty of ₹ 3,87,368/- on each of its Directors, Alok Prakash and Pankaj Poddar for contravention of provisions of section 7 & 8 of FEMA, 1999 read with regulation Nos. 8,9 & 13 of Foreign Exchange Management (Export o Goods and Services) Regulations, 2002. Hence, Penalty imposed on the company is confirmed. 3. The facts are already recorded by the Adjudicating Authority, the same are read as under: i. The XOS forwarded by the Assistant Commissioner of Customs (Tech), CC(P), West Bengal, Kolkata revealed that certain export proceeds are pending realization by M/s. Jiwanram Sheoduttrai Industries Pvt. Ltd., for the period from 2000-08. ii. During the course of investigation, enquiries were made with Dena Bank, 3, Par .....

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..... ompany M/s. Jiwanram Sheoduttrai Industries Pvt. Ltd. were responsible for the realization of the export proceeds. They have failed to take reasonable steps to realize the export proceeds. vii. Based on the above complaint dated 10.7.12 and documents relied therein, Show Cause Notice No. T- 4/01/Kol/SCN/FEMA/2012/AD/Adj/4866-4868 dated 11.7.12 was issued to the said M/s. Jiwanram Sheoduttrai Industries Pvt. Ltd. and its two Directors viz. S/Shri Alok Prakash and Pankaj Poddar of the addresses at Block-D, Chowringhee Mansion, 30, Jawaharlal Nehru Road, Kolkata - 700016 and 109/8A, Hazra Road, Kolkata - 700026 and 251A/22, Netaji Subhas Ch. Bose Road, Kolkata - 700047 respectively, directing them to show cause in writing within 30 days from the date of receipt of the notice as to why adjudication proceedings as contemplated under the provisions of Section 13 of the Foreign Exchange Management Act, 1999 should not be held against them for contravention of the provisions of Section 7 and 8 of FEMA, 1999 read with Regulations 8, 9 and 13 of Foreign Exchange Management (Export of goods and services) Regulation, 2000. 4. In reply dated 12.10.12 to the show cause notice, Shri Ashok Kumar C .....

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..... for US$ 22,541.36 which is the subject matter of the present show cause notice in question their banker neither rejected out claim nor advised them any further course of action relating to the matter and as a result they had shown the relevant export bill as part outstanding in their Books of A/cs. Moreover, the noticee company s employee who was acquainted with the matter and dealt the matter with our banker had left the company and since then the matter remained pending with our banker through whom the export documents were negotiated. 4.4 The Noticee Company has submitted application dated 12.02.2003 before their negotiating Banker i.e. 8(eight) years before initiation of enquiries by the Department, requesting for acceptance of the claim of the buyer and release of the concerned GR. 4.5 RBI has delegated some of their powers to the authorized dealers dealing in foreign exchange to certain extent viz. allowing extension of tie for realization of export proceeds and writing off realized export proceeds in case of fulfillment of all terms and conditions stipulated by RBI. In the present case, the noticee company submitted letter dated 12.2.2003 to Dena Bank, Park Street Branch, K .....

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..... ed by the company. JSIPL was not aware of the unilateral action of the bank and was not aware of the fact that the bank have chosen to show that export bill as outstanding whereas in fact the matter had been settled between the buyer and the Company. Furthermore, in any business leave apart export business there are numerous occasion where there is difference of opinion about the price, quality of goods, delay in delivery of goods and other multifarious reasons where the buyer and seller amongst themselves has to settle on the price front due to their mutual commercial interest. 8. The mast Circular on export of Goods and service (RBI/2015-16/83 Master Circular No. 14/2015-16 July 01,2015 (Updated as on November 5, 2015) Para C.15 Part 3 reproduced hereunder; C.15 Reduction in Invoice Value in other cases (i) If, after a bill has been negotiated or sent for collection, its amount is to be reduced for any reason, AD Category- I banks may approved such reduction, if satisfied about genuineness of the request, provided; a. The reduction does not exceed 25 per cent of invoice value; b. it does not relate to export of commodities subject to floor price stipulations the exporter is not o .....

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..... e been through by them. The company and or its Directors had negotiated very hard as per material available with the buyer failed to convince him to release the payment. In fact it is a case of less - realisation of proceeds due to the fact of defective supply and also the information about the less realization has been passed on to the Authorised dealer to deal with. Legal issue 13. The Foreign Exchange Management Act, 1999 ( FEMA ) was brought in to keep pace with the changing dynamics of the Indian economic polity repealed the Foreign Exchange Regulation Act, 1973 ( FERA ) and came into force on 1-6-2000. Apart from removing criminal prosecution for non-compliance of foreign exchange norms, FEMA also introduced a sunset clause for taking notice of contraventions under FEMA. 14. FEMA provides that no adjudicating authority shall take notice of any contravention under FERA two years after the coming into force of FEMA. In other words, it provided a window up to 31-05-2002 for the authorities under FEMA to take notice of contraventions under FERA. 15. The Foreign Exchange Management Act, 1999 (FEMA)- Section 49 of FEMA: Repeal and saving:- i) The Foreign Exchange Regulation Act, 19 .....

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..... ted by sufficient cause from filing the appeal; vi) Save as otherwise provided in subsection(3), the mention of particular matters in subsections(2), (4) and (5) shall not e held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897), with regard to the effect of repeal. 16. The export of goods had been made on 29h May, 2000 under GR No. 366158. The subject export was governed by the Foreign Exchange Regulation Act, 1973 and no proceedings under section 8 of the FEMA 1999 which came into force on 1st June 2000 could be applicable for the GR No. 366158 dated 29.05.2000. 17. Hon ble Delhi High Court in the unreported case of Bhupendra V Shah Vs Union of India (WP 19881/2004) and the Hon ble Karnataka High Court wherein it has been held show cause notice (SCN) issued after the sunset clause period of 31-05-2002 for alleged contravention of Section 7 & 8 of FEMA by an exporter in not realizing proceeds of export made in 1997- 98(pertaining to the FERA period. 18. In order to invoke section 7 of FEMA, the ED will have to show that the party reached the time limits specified in FEM EGS Regulations. 19. The exports were completed and .....

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..... ntion for saving all those proceedings is available in aforesaid section 49. According to Section 49(3) of the FEMA therefore such proceedings would only be valid notice of which has been taken by the adjudicatory officer within two years from the date of commencement of the FERA. 22. Decision under FERA but still valid under FEMA- In LIC VS Escorts Ltd. AIR 1986 sc 1370(1986) 1 SCC264 (1986) 59 Comp Case. 548 (SC), wherein it has been held that RBI is empowered to grant ex-post permission under Section 18(2). Thus, mere non-realisation of export proceeds will not amount to contravention of Section 18(2) of FERA, unless RBI refused permission to write off the receivables or to extend the period. 23. It is rightly submitted on behalf of appellants that according to the decision of Hon ble Apex Court, as enumerated at Paragraph-17 above, initiation of enquiry against the noticee company by the Directorate of Enforcement for same and identical matter pending before their banker for last 8 years is a long delay. No doubt, there is no prescribed period stipulated but at the same time, it is settled law that if the party has a reasonable case on merit, the issue of delay cannot be consid .....

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