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1996 (9) TMI 645

..... dra, Chairman - The application for dispensing with the pre-deposit came up for disposal today. Shri Diwan, at the outset, filed three compilations of documents 'A', 'B' and 'C. He has also filed, to facilitate appreciation of his arguments, a statement showing realisable amounts of exports and their respective positions on date. The same position has been filed in a tabular form as Chart 'A' containing references of the relevant documents in respect of outstanding GRIs as also a Chart of export performance of the appellant for the years 1981-89. These documents are taken on record. Copies of these documents have been handed over to Shri Gadoo dasti 2. Shri Diwan for the appellants submitted that in support of the dispensation application he would not claim financial hardship. He submitted that it would cause undue hardship to the appellant if he is required to pre-deposit the amount of penalty as the impugned order is ex facie untenable in law. Elaborating his argument he submitted\that although the learned Adjudicating Officer might be justified in deciding the case ex parte due to non-appearance of the appellant's counsel, there was ho justificati .....

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..... or did he file a copy of the plaint of the suit filed in the Civil Court at Bangalore and the written statement thereto. Shri Gadoo, therefore, pleaded that let the appellant deposit the amount of penalty and he would give reply to the evidence now filed by the appellant after examining the same. 6. After hearing the parties we were satisfied that in view of the position brought out by Shri Diwan it would cause undue hardship to the appellant-company if it is required to pre-deposit the amount of penalty. We, therefore, waive the requirement of pre-deposit and proceed to hear the appeal on merits. This final order disposes of the appeal. 7. We have given due consideration to the submissions made by the parties. It is seen from paragraph 13 of the impugned order that the learned Adjudicating Officer did not consider the contention put forth by the appellant-company in its reply to the show-cause notice that the RBI had written off all outstanding amounts aggregating to ₹ 50,72,148.99 and US $ 287.10, on the ground that the company had not produced any documentary evidence in support of the contention. On the same ground he rejected the submission made by the company that they .....

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..... show-cause. If the relevant information is not initially furnished to the adjudicating authority or only selective information is furnished, the adjudicating authority is likely to be misled into holding oral hearing and if at that stage such relevant information or evidence is brought out before him to show that a case of alleged contravention cannot be made out, the entire adjudication proceedings would be a futile exercise. This is what has happened in the present case. There is adequate evidence to show that a lot of correspondence was exchanged between the appellants and the bank and between the appellants and the RBI through the bank in regard to the extension of time and permission to write off in respect of various GRIs. But neither the RBI and the bank furnished all that correspondence to the Enforcement Directorate nor the investigating agency collected that correspondence and placed before the Adjudicating Officer. 9. The appellant has brought this material on record of this appeal. He has also filed copies of the write off permission granted by the RBI subsequent to the passing of the adjudication order though the matter was pending with the RBI when the oral hearings .....

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..... sation of export proceeds or realisation of export proceeds after the expiry of the prescribed period, by itself, would not amount to contravention of section 18(2), unless the Reserve Bank, if approached, has refused to grant the permission contemplated under section 18(2) or has refused to extend the period as contemplated under rule 8 of the Foreign Exchange Regulation Rules, 1974. It would, therefore, follow that if an application seeking extension of time or for permission for writing off the outstanding export proceeds is pending consideration of the Reserve Bank, the question whether there has been a contravention of the provisions of section 18(2) cannot be determined unless and until the Reserve Bank has refused extension of time or the permission for writing off, as the case may be. If any adjudication proceedings are initiated during the pendency of such applications before the RBI, such proceedings would be pre-mature and without jurisdiction. 11. While on the question of contravention it is also to be noted that the burden is on the Department to substantiate, by proper evidence, the charge of contravention of the provisions of section 18(2). However, as stated earlier .....

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..... ant to seek such permission, it was pre-mature to say that the appellant has refrained from doing anything or refrained from taking any action 'without the permission of RBI' unless and until such permission is refused. Unless and until a decision is taken on the application, even the RBI cannot say that it has refused the permission. Therefore, in the legislative scheme of section 18(2) it is not possible for any authority to assume that non-realisation is without the permission of the RBI so long as the application for write off of the export proceeds remains under consideration of the RBI. This Board has taken a similar view in its order in [Appeal No. 440 of 1991 dated 17-2-1994] Gazebo Industries ( P.) Ltd. v. Directorate of Enforcement [Appeal No. 454 of 1990 dated 7-2-1994] and Cosmique Exports Ltd. v. Directorate of Enforcement [Appeal No. 440 of 1991 dated 17-2-1994]. The significance of an application pending consideration of the RBI is amply demonstrated in this case as the RBI has since granted the write off to the appellant by treating the non-realisation of outstanding export proceeds as legally in order. It would appear that the learned Additional Director ha .....

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..... Shri Diwan, therefore, pleaded that the remand be made with necessary legal guidance on the legal aspects that are involved in the case. He submitted that without such observations the remand of the case would cause harassment to the appellant as he would be dragged to another round of adjudication and appeal proceedings. We are inclined to accept Shri Diwan's submission. 13. We have seen a few write off permissions which are on record. For example, the write off permissions dated 8-2-1996,31-3-1996 and 6-4-1996 in respect of GRI No. BW1120007, the permission is subject to the appellant surrendering proportionate cash incentive/assistance availed of by the exporters, if any. Under letter dated 8/9-10-1992 the RBI has allowed write off to the appellant "subject to their surrendering proportionate cash incentives/assistance availed of by the exporters, if any, to appropriate authorities in due course". [Emphasis supplied] We also note that under each of their letter allowing write off the RBI asked the bank to realise the relative GR Forms duly certified on the strength of their letter. It would be clear therefrom that the requirement of surrendering proportionate cash .....

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..... elease the related GR Forms has direct bearing on the question whether in the circumstances of the case where write off has been sought and allowed, the outstanding should constitute contravention of the provisions of section 18(2). And on this question the RBI alone is competent to take a decision. The position in this regard is judicially settled by the following observations of the Supreme Court in the case of LIC of India v. Escorts Ltd AIR 1986 SC 1370/24 Taxman 105 (Tax-Mag.): "...The provisions of the Foreign Exchange Regulation Act are so structured and woven as to make it clear that it is for the Reserve Bank of India alone to consider whether the requirements of the provisions of the Foreign Exchange Regulation Act and the various rules, directions and orders issued from time to time have been fulfilled ... under the scheme of the Act, it is the Reserve Bank of India that is constituted and entrusted with the task of regulating and conserving foreign exchange. If one may use such an expression, it is the 'Custodian-General' of foreign exchange. The task of enforcement is left to the Directorate of Enforcement, but it is the Reserve Bank of India and the Reser .....

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