2016 (1) TMI 183 - AT - FEMA

Tribunal allows appeal, ending attachment on agricultural land due to lack of evidence

Sun Star Future Wood Ltd. Versus Special Director of Enforcement

The Tribunal allowed the appeal, setting aside the Adjudicating Authority's order and ending the attachment on the appellant's agricultural land. The ... Importers who had acquired foreign exchange from their authorized dealers for the purpose of imports of specified goods but had failed to submit the Exchange Control copy of Bill of Entry in respect of the relevant imports to their authorized dealers - It has been contended on behalf of the appellant that an amount of ₹ 410,550 US $ was remitted by IDBI by opening L/C (Letter of Credit). The goods were shipped by the foreign seller and arrived in India passed through the Customs authorities. Copy of the Bill of Entry for Warehousing filed is a proof of the arrival of the goods in India and is a conclusive proof and proceedings ought to have been dropped in this perspective. Held that:- it is not in dispute that the entire foreign exchange acquired by the appellant has been remitted to the foreign seller and it is also undisputed that the imported goods were stored in a warehouse and as the customs duty and warehousing charges could not be paid by the appellant, the goods were sold. In our considered view, there is no contravention of Section 8(3) or 8(4) of FERA, 1973 as only proof of import of goods has to be filed and Bill of Entry of WH is a valid and convincing proof of the arrival of goods in India. As we have stated earlier, there is no allegation that the foreign exchange was used otherwise for the purpose for which it was issued or the appellant has failed to comply with any of the conditions required by him to be fulfilled, therefore, in our views contravention of the Section 8(3) and 8(4) are not made out. - Appeals allowed - Decided in favor of appellants. Issues:1. Alleged contravention of provisions under Foreign Exchange Regulation Act and Foreign Exchange Management Act.2. Discrepancies in documents submitted as proof of import.3. Failure to comply with documentary evidence requirements for import.4. Justification of penalty imposed by Adjudicating Officer.5. Consideration of additional evidence at the appellate stage.6. Applicability of previous judgments to the current case.Issue 1:The case involved an alleged contravention of Section 8(3) and 8(4) of the Foreign Exchange Regulation Act, 1973, and Section 49(3) and 49(4) of the Foreign Exchange Management Act, 1999. The appellant was accused of failing to submit the Exchange Control copy of the Bill of Entry as evidence of actual import, as required by the Exchange Control Manual.Issue 2:The appellant argued that documents such as the Bill of Entry for Warehousing, Port charges, and Customs notices proved the arrival of goods in India, justifying the remittance made through a Letter of Credit. However, discrepancies in the documents submitted led to the Adjudicating Officer concluding a breach of FERA and FEMA provisions.Issue 3:The appellant contended that no contravention of FERA or FEMA was evident, emphasizing that the Bill of Entry was a valid Customs document. The appellant also highlighted the absence of allegations regarding misuse of foreign exchange, asserting compliance with the purpose of the remittance.Issue 4:The Adjudicating Officer imposed a substantial penalty on the appellant, justifying it based on the failure to submit complete documentation and discrepancies in currency entries. The Legal Consultant defended this decision, arguing that incomplete paperwork led to the breach of regulations.Issue 5:The Tribunal considered the relevance of additional evidence submitted by the appellant at the appellate stage, noting the procedural fairness in allowing the submission of documents to support the import of goods.Issue 6:Drawing on a previous judgment by the Bombay High Court, the Tribunal found similarities in cases where goods were warehoused due to financial difficulties, leading to auctioning by Customs authorities. Applying the principles from the precedent, the Tribunal concluded that no contravention of FERA provisions was established in the current appeal.In the final judgment, the Tribunal allowed the appeal, setting aside the Adjudicating Authority's order and ending the attachment on the appellant's agricultural land. The decision was based on the lack of evidence supporting a breach of FERA or FEMA provisions and the satisfactory proof of import provided through the Bill of Entry for Warehousing.