2015 (2) TMI 415 - AT - FEMA

Tribunal upholds order, dismisses appeal, directs penalty payment within four weeks. Failure to comply may lead to recovery.

The tribunal upheld the impugned order and dismissed the appellant's appeal, directing the appellant to deposit penalty amounts within four weeks. Failure ... Contravention of the provisions of Section 9(1)(b), 9(1)(d) and Section 64(2) r/w Section 9(1)(d) of Foreign Exchange Regulation Act, 1973 - Imposition of personal penalty - violation under Section 51 of FERA, 1973 - whether the adjudicating authority has given the appellant an opportunity of cross-examining the mahazar witnesses and the person who recorded the voluntary statement of the appellant - Held that:- Sh. Kiran S. Javali, Counsel for the appellant chose not to pursue the cross-examination but preferred the case to be decided on the written submission he proposed to make and requested the Adjudicating Authority to conduct the proceedings on the basis of facts and evidence on record. Sh. Kiran S. Javali, Counsel for the appellant filed his written submission on 19-10-2010 which is taken into record. Therefore, I am of the view that appellant by choosing not to proceed with cross-examination of witnesses has himself given a go by to the direction of the Hon’ble High Court. Even his written submission is bereft of the demand of cross-examination and, it appears, he had no dispute at all about the issue of cross-examination of witnesses. For the reasons stated herein, the question of cross-examination does not arise and the adjudication order now is not vitiated for want of opportunity to cross-examine the witnesses. Whether the Adjudicating Authority is justified in re-adjudicating the case to the extent that was already decided by this Tribunal by Order dated 19-7-2002. - Held that:- remitting back the case to the Adjudicating Authority by the Hon’ble High Court of Karnataka was for conducting a fresh enquiry into the allegation as made in the SCN and adjudicating the case according to law. The word “fresh enquiry” in this case means conducting the adjudicating proceedings over again setting aside the earlier Adjudication Order. When the fresh enquiry led to passing of the present Adjudication Order which replaced the earlier Adjudication Order, this Tribunal’s Order dated 19-7-2002 passed in Appeal No. 779/1993 against earlier Adjudication Order is non-existent in the eyes of law. Therefore, exoneration of the appellant of charges under Section 9(1)(b) & (d) of FERA, 1973 under this Tribunal’s earlier Order dated 19-7-2002 stands disallowed at the threshold and that Order no more subsists. Appellant’s dispute was only with the drawal of Panchnama in the office of the DRI consequent to the search of the appellant and his scooter. The appellant was apprehended at about 2115 hours of 6-1-1989 near Sawarkar Baba Pai Petrol Pump, Mangalore. It is evident from a bare perusal of the Panchnama and cross-examination of Sh. Gangadharan, Assistant Enforcement Officer that there was a prior intelligence on the movement of the appellant on or about 2100 hrs. at the spot where he was apprehended and he would be having at his person certain amounts which was meant for distribution in violation of the provisions of the Act. Since it was very late in the night, considering the safety and security of the appellant he was taken to the office of DRI for the search of his person and the scooter for which witnesses were called to the office and a thorough search resulted in seizure of ₹ 8.50 lacs wrapped in newspaper sheets kept in gunny bag in the leg space of his scooter and of documents in 2 sheets recovery of which has not been disputed by the appellant. Therefore, I also concur with the finding of the ld. Adjudicating Authority that the conduct of the search at the office of DRI at Mangalore by the officers of Enforcement Directorate and DRI does not impair the adjudication proceedings. Appellant miserably failed to prove the source of ₹ 8.50 lacs when he claims that the amount of ₹ 8.5 lacs alleged to have been seized from him actually belongs to him. He has not produced any document to prove the source of income. I find that the statement is only an explanation to the seizure of ₹ 8.5 lacs and documents. Sheet No. 1 lists date wise receipts of the amount of ₹ 57,00,000/- in 14 occasions whereas Sheet No. 2 shows payments of ₹ 48.50 lacs made to Sh. Abdul Basith Kadli in 13 occasions. The entire case against the appellant is made out from the explanation contained in the statement to the seizure. The fact of receiving and making payments as evident from the recovery and seizure has not been disputed by the appellant. As regards the criminal complaint initiated by the respondent under Section 56 of FERA, 1973, the appellant submitted that the complaint was supported with the same set of evidence that have been relied upon in the adjudication proceedings. Since the complaint was discharged exonerating the appellant of criminal prosecution and the respondent had not challenged the Order of exoneration, the impugned order passed in pursuance of the SCN supported by the same set of evidence is liable to be quashed and set aside. As regards the penalty, the Adjudicating authority is vested with power to impose penalties under Section 50 not exceeding five times the amount or value involved in any contravention. I am, therefore, of the view that the penalties imposed on the appellant are commensurate with the quantum of amounts involved in the contravention. - Reason to interfere in the impugned order in so far as it relates to the levy of penalties of ₹ 5,70,000/-, ₹ 4,80,000/- & ₹ 8,50,000/- on the appellant respectively for contravention of Section 9(1)(b), 9(1)(d) & 9(1)(d) r/w Section 64(2) of FERA, 1973 and also to the confiscation of ₹ 8.50 lacs under Section 63 of the Act. - Decided against assessee. Issues Involved:1. Opportunity for cross-examination of witnesses.2. Justification of re-adjudicating the case.3. Validity of the Panchnama.4. Voluntariness and corroboration of the appellant's statement.5. Impact of criminal complaint exoneration on adjudication proceedings.6. Appropriateness of penalties imposed.Issue-wise Detailed Analysis:1. Opportunity for Cross-Examination of Witnesses:The appellant argued that the adjudicating authority did not provide an opportunity to cross-examine the mahazar witnesses and the person who recorded the voluntary statement. Summons were issued to the witnesses, but they did not appear, and the appellant's counsel chose not to pursue cross-examination and requested the case be decided on written submissions. The tribunal concluded that the appellant waived his right to cross-examination, and thus, the adjudication order was not vitiated for want of cross-examination.2. Justification of Re-Adjudicating the Case:The appellant contended that the tribunal's earlier order exonerating him of violations under Sections 9(1)(b) & 9(1)(d) should stand. However, the High Court of Karnataka remitted the matter for a fresh enquiry, setting aside the earlier adjudication order. The tribunal held that the fresh enquiry replaced the earlier order, making the previous exoneration non-existent in the eyes of the law.3. Validity of the Panchnama:The appellant claimed the panchas were not present at the time of seizure and were called later to sign the Panchnama. The tribunal noted that the appellant was apprehended based on prior intelligence, and the search was conducted at the DRI office for safety reasons. The tribunal concurred with the adjudicating authority that the search's conduct did not impair the adjudication proceedings.4. Voluntariness and Corroboration of the Appellant's Statement:The appellant argued that his statement was not voluntary and was recorded under duress. The tribunal found that the appellant failed to prove the source of Rs. 8.50 lacs and did not provide any documents to support his claim. The tribunal noted that the appellant's explanation in the statement was consistent with the seizure and that he could not satisfactorily explain the ownership of the currency. The burden of proof was on the appellant, which he failed to discharge.5. Impact of Criminal Complaint Exoneration on Adjudication Proceedings:The appellant submitted that since he was exonerated in the criminal prosecution, the adjudication proceedings should also be quashed. The tribunal referred to the Supreme Court's observation in Radheyshyam Kejriwal v. State of West Bengal, stating that adjudication and prosecution are distinct and separate proceedings. Therefore, the exoneration in the criminal complaint did not affect the adjudication proceedings.6. Appropriateness of Penalties Imposed:The tribunal noted that the adjudicating authority is empowered to impose penalties up to five times the amount involved in the contravention. The penalties imposed were found to be commensurate with the quantum of amounts involved. The tribunal upheld the penalties of Rs. 5,70,000/-, Rs. 4,80,000/-, and Rs. 8,50,000/- for contraventions of Section 9(1)(b), 9(1)(d), and Section 64(2) r/w Section 9(1)(d) of FERA, 1973, respectively, and the confiscation of Rs. 8.50 lacs under Section 63 of the Act.Conclusion:The tribunal upheld the impugned order and dismissed the appellant's appeal. The appellant was directed to deposit the penalty amounts within four weeks, failing which the respondents were permitted to recover the amounts in accordance with the law.