2018 (5) TMI 730 - AT - FEMA

Appeal allowed due to procedural irregularities and lack of original documents.

M/s. Ingram Micro India (P) Ltd. Versus The Special Director Directorate of Enforcement, Mumbai

M/s. Ingram Micro India (P) Ltd. Versus The Special Director Directorate of Enforcement, Mumbai - TMI Issues Involved:1. Timeliness of proceedings initiation.2. Requirement to produce original Bills of Entry.3. Burden of proof regarding the use of foreign exchange.4. Acceptance of secondary evidence.5. Applicability of penalties for procedural irregularities.Detailed Analysis:1. Timeliness of Proceedings Initiation:The proceedings under Section 13 of FEMA, 1999 were initiated on 28th March 2013, more than 12 years after the alleged contravention in the year 2000. The appellant argued that such a delay prejudiced their ability to produce the required documents. The respondent contended that no limitation act applies in the absence of any provision in the Act, and there was correspondence between the parties from 2002 onwards.2. Requirement to Produce Original Bills of Entry:The appellant was asked to provide Bills of Entry for certain remittances dating back to 2000. The appellant managed to provide documents for some remittances but could not produce original documents for others due to the lapse of time. The Adjudicating Authority accepted some documents but refused others, insisting on the original Bills of Entry.3. Burden of Proof Regarding the Use of Foreign Exchange:Section 10(6) of FEMA is applicable only if the foreign exchange was used for a purpose other than declared. The complainant failed to demonstrate any misuse of foreign exchange by the appellant. It was highlighted that non-furnishing of the original Bill of Entry is not an offense under Section 10(6) of FEMA, especially when the fact of import is undisputed.4. Acceptance of Secondary Evidence:The appellant argued that secondary evidence, such as photocopies of the Bills of Entry, should be accepted when the originals are lost or destroyed. Section 65(c) of the Indian Evidence Act, 1872 allows for secondary evidence in such cases. The Adjudicating Authority erred in rejecting the photocopy of the Bill of Entry for US$ 299,533, which was endorsed by customs, despite the appellant demonstrating that the original was lost without negligence.5. Applicability of Penalties for Procedural Irregularities:It was argued that non-filing of the original Bill of Entry is a procedural irregularity and does not amount to a contravention of Section 10(6) of FEMA. The Supreme Court in Hindustan Steel Ltd v State of Orissa held that penalties should not be imposed for mere technical breaches unless there is deliberate defiance of the law or dishonest conduct, which were not present in this case. The appellant acted in a bona fide manner and was not guilty of any contravention or dishonest conduct.Conclusion:The order passed by the Adjudicating Authority was found to be unsustainable in law due to the clear infirmities in the impugned order. The appeal was allowed, and the impugned order was set aside. No costs were imposed.