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TMI Blog2018 (12) TMI 1765X X X X Extracts X X X X X X X X Extracts X X X X ..... a Show Cause Notice was issued against the Appellant Company and its Managing Director for alleged violation of Section 10 (5) and 10 (6) of FEMA, 1999, r/w Regulation 6 (1) of the Foreign Exchange Management (Realisation, Repatriation, and Surrender of Foreign Exchange) Regulations, 2000 alleging that the Appellant Company has failed to submit (Bill of entry) documentary evidence for import of goods in respect of the advance remittance of US $433661.76 through HSBC Bank. In terms of Section 42 of FEMA, 1999, the Managing Director of the Company was arraigned as a noticee. 4. The RBI gave information to Enforcement Directorate, by communication dated 08/08/2002 that certain Bill of Entries have not been submitted in respect of remittances made through Citi Bank and State Bank of India for period prior to 08.02.2002, however, it was contented by the Company that it had produced documents for such remittances, as would be evident from Para 2.3 and 2.4 and 2.5 of the Show Cause Notice. 5. It was submitted that in respect to the remittance of US $ 433661.76 clarification was sought from the M/s. L.G. Electronics Pvt. Ltd. and they have replied that they have made a request to the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovember 2008, however, due to financial crisis, the vendor could not fulfil its commitment and also did not refund the advance amount. Also the vendor was declared bankrupt and as such the advance amount could not be recovered from the vendor. It is also found that the Appellants failed to respond to the query regarding filing of any claim before the competent court during the course of bankruptcy proceedings, thereby leading to formation of a belief that no such claim was filed by the Appellants." 10. Lastly, it is stated on behalf of respondent that since the Appellants failed to respond to the query regarding filing of any claim before the competent court during the course of bankruptcy proceedings, thereby leading to formation of a belief that no such claim was filed by the Appellants. It is alleged that the Civil Judgment dated 29/03/2012 of the competent court in China ordering bankruptcy of the Chinese vendor shows that the vendor had suffered huge losses in a row from 2006 to 2008 and stopped production entirely in October 2008 i.e. the same month when the advance amount was paid by the Appellants to the vendor. It has been further mentioned in the said judgment that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and impose penalty. Needless to submit that the contravention under FEMA are subject to permission of Reserve Bank of India. 16. The counsel for the appellant argued that once the said permission and exemption by Reserve Bank of India is granted, later on it cannot be prohibited and there shall not be a contravention. 17. The counsel argued that ex-post facto permission granted by Reserve Bank of India wipes out the contravention and the purpose of writing "without prejudice to the action that may be taken by the Enforcement Authorities under FEMA 1999" is only to refrain from entering the jurisdiction of Enforcement Directorate and would be directing and indicating authority which is not the domain of RBI. 18. This Tribunal, the judgment of the Division Bench of Foreign Exchange Regulations Appellate Board in appeal no. 98 to 110 of 1998, wherein this issue has been squarely dealt with and is completely covering the case of the Appellant Company. 19. Similar view is taken in the judgment of the Hon‟ble Delhi High Court in the case of Continental Construction Co. Ltd versus Special Director reported in 2016 (1) JCC 690. 20. Section 10 (5) of FEMA relates to obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation 6 of the Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 is without any substance as the same applies to Resident Person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration to the Authorised Dealer in terms of Section 10 (5) of the Act and does not use it for the said purpose and is enjoined to surrender such foreign exchange or unused portion thereof back to the Authorised Dealer within 60 days. In the Show Cause Notice, the provisions of the law have also been engrafted . 25. The Respondents has relied upon the judgment of Hon‟ble Supreme Court in the case of the Chairman, SEBI versus Shriram Mutual Fund reported in 2006 (5) SCC 361. This judgment has no application, inasmuch as, it relates to imposition of penalty, if there is a contravention of the statute. The existence of a contravention is a precondition for imposition of penalty. In the instant case it is humbly submitted that since there is no scope of even alleging a contravention, the judgment has no application and in any case the judgment does not answer the rationale of the two judgments and the exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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