2005 (8) TMI 751 - AT - FEMA

Appeal Partially Successful: Penalty on One Director Under FERA 1973 Removed, Others Must Pay Within Set Timeline.

The Appellate Tribunal partially allowed the appeal, setting aside the penalty imposed on one director under FERA, 1973, for contravening section 18(2). ... - Issues:1. Imposition of penalties under FERA, 1973 for contravention of section 18(2).2. Realization of export proceeds and steps taken by the appellants.3. Violation of principles of natural justice in issuance of show cause notice.4. Export to defaulting buyer and relationships between parties.Analysis:1. The judgment involves the imposition of penalties under FERA, 1973 for contravention of section 18(2) against the appellants. The penalties were imposed by the Special Director, Enforcement Directorate following adjudication proceedings initiated by issuance of show cause notices to the appellants. The penalties were challenged through appeals filed by the appellants before the Appellate Tribunal.2. The appellants contended that they had taken reasonable steps for the realization of export proceeds, including correspondence and visits to foreign buyers. However, the adjudicating authority found the evidence provided by the appellants to be insufficient and not convincing. The appellants also failed to produce records supporting their claims of realization, leading to the rejection of their contentions.3. Another issue raised was the alleged violation of principles of natural justice in the issuance of show cause notices. The appellants argued that the non-issuance of notices to certain individuals amounted to a violation of natural justice. However, the Tribunal found that show cause notices were appropriately issued to the relevant parties, and the contention regarding the violation of natural justice was deemed unsustainable and rejected.4. The judgment also addressed the export of goods to defaulting buyers and the relationships between the parties involved. It was highlighted that despite outstanding export proceeds from the past, the appellants continued to export goods to the same foreign buyers. The connections between the directors of the foreign buyers and the appellants were also brought to light, raising concerns about the prudence of exporting goods to defaulting buyers without efforts for recovery or necessary permissions for write-off.In conclusion, the Appellate Tribunal allowed the appeal in part, setting aside the penalty imposed on one of the directors while dismissing the appeals of the other appellants. The appellants were directed to deposit the penalty amount within a specified timeframe, failing which the respondent could recover the same in accordance with the law.