2018 (5) TMI 729 - AT - FEMA

Tribunal overturns penalty in export deal appeal, clarifies FERA Section 9(1)(d) on foreign payments

Deep Swaroop Aggarwal Versus The Special Director Directorate of Enforcement, Delhi

Deep Swaroop Aggarwal Versus The Special Director Directorate of Enforcement, Delhi - TMI Issues:Appeal against penalty imposition based on Show Cause Notice alleging involvement in export transactions; Appellant's role as intermediary in CD roms deal; Contradictory findings in impugned order; Lack of evidence of Appellant's utilization of export benefits; Allegations under FERA Section 9(1)(d) against Appellant; Role of other individuals in the export transactions; Lack of evidence of Appellant's involvement in foreign exchange distribution; Interpretation of FERA Section 9(1)(d) regarding foreign payments; Allegations against Appellant's role in CD roms procurement; Comparison with adjudicated cases involving other individuals; Lack of evidence of Appellant's direct involvement in foreign exchange transactions.Analysis:The appeal was filed against a penalty imposed on the Appellant based on a Show Cause Notice initiated by a statement from an individual involved in the export transactions. The Notice detailed allegations against the Appellant's role as an intermediary in a CD roms deal, where he acted as a broker between two entities. However, the Appellant contested these allegations, arguing that he had no direct involvement in the export of CD roms and merely facilitated the deal. The impugned order found the Appellant to be a crucial link in the transaction, benefiting from export incentives, despite contradictions in the allegations and findings.The Adjudicating Order highlighted the Appellant's role as a broker in the CD roms deal, emphasizing that the export benefits were meant for the main entity involved in the transaction. It was noted that there was no concrete evidence proving the Appellant's utilization of export benefits. Additionally, there were no allegations or evidence suggesting the Appellant's knowledge or participation in foreign exchange distribution, limiting the scope of the accusations against him.The judgment delved into the interpretation of FERA Section 9(1)(d) regarding foreign payments, emphasizing that an offense is only established when a resident in India makes payments on behalf of a non-resident. The allegations against the Appellant centered on his actions as an agent in CD roms procurement, with no substantial evidence linking him to any illegal foreign payments. The comparison with adjudicated cases involving other individuals highlighted the lack of direct involvement or knowledge attributed to the Appellant in foreign exchange transactions.Ultimately, the Tribunal set aside the impugned Adjudicating Order against the Appellant, citing the lack of concrete evidence connecting him to any unlawful activities related to foreign payments or export transactions. The decision underscored the importance of aligning allegations with evidence and ensuring a fair adjudication process based on the specifics outlined in the Show Cause Notice.