2005 (11) TMI 543 - AT - FEMA

Tribunal Confirms Rs. 3,00,000 Penalty for Non-Repatriation of Export Proceeds Under Foreign Exchange Regulation Act 1973.

The appellate tribunal upheld the penalty of Rs. 3,00,000 imposed under the Foreign Exchange Regulation Act, 1973, for failing to repatriate export ... - Issues:Appeal against Adjudication Order imposing penalty for contravention of Foreign Exchange Regulation Act, 1973.Analysis:The appeal was against an Adjudication Order imposing a penalty for contravention of the Foreign Exchange Regulation Act, 1973, concerning the failure to repatriate export proceeds. The appellant had made a pre-deposit of Rs. 1,00,000 in compliance with a previous order. The Show Cause Notice highlighted the alleged failure to repatriate export proceeds, leading to the penalty. The appellant contested the allegations, but the proceedings resulted in a penalty of Rs. 3,00,000 for one specific export transaction.The appellant's counsel argued that FERA proceedings require proof beyond reasonable doubt and cited legal precedents to support the contention that penalties should be imposed only in cases of deliberate defiance of the law. The counsel also emphasized that the charge under section 18(2) should focus on the failure to repatriate export proceeds without RBI permission and that pending requests with the RBI should be considered before imposing penalties. Various legal cases were referenced to support these arguments.The judgment delved into the legal framework governing the repatriation of export proceeds under sections 18(2) and 18(3) of the FER Act, 1973. It outlined the exporter's obligation to make efforts to repatriate proceeds within a specified period and the legal presumption of failure in case of non-recovery. The provisions of section 18 were quoted to explain the requirements and consequences related to export proceeds.In assessing the appellant's efforts to repatriate the export proceeds, the judgment noted various letters sent to the foreign buyer and efforts made by the appellant's representative. However, the lack of a positive response from the foreign buyer and the absence of a close connection between the efforts and the outstanding amount led the Tribunal to uphold the statutory presumption against the appellant, resulting in a guilty verdict.Regarding the penalty amount of Rs. 3,00,000 imposed, the judgment found it proportionate to the contravened amount and not excessive. The appellant did not raise any arguments against the penalty amount. Consequently, the adjudication order was upheld, the appeal was dismissed, and the appellant was directed to pay the remaining penalty amount within a specified timeframe.In conclusion, the judgment upheld the penalty imposed for the contravention of the Foreign Exchange Regulation Act, 1973, based on the appellant's failure to adequately repatriate export proceeds despite the efforts made. The legal framework and precedents were carefully considered in rendering the decision, emphasizing the importance of compliance with regulatory requirements in foreign exchange transactions.