2001 (8) TMI 1459 - AT - FEMA

Appeal partially upheld: Penalty reduced from Rs. 50,000 to Rs. 10,000 citing firm's inexperience and financial distress.

Washeem & Bros. Versus Assistant Director of Enforcement

Washeem & Bros. Versus Assistant Director of Enforcement - TMI Issues:- Appeal against Adjudication Order imposing penalty for contravention of Foreign Exchange Regulation Act, 1973.Analysis:1. The appeal was filed against an Adjudication Order imposing a penalty on the Appellant firm for contravention of the provisions of the Foreign Exchange Regulation Act, 1973. The penalty was imposed due to the firm's failure to take necessary steps to realize outstanding export proceeds. The firm had shipped carpets for export to Germany, but the export proceeds remained unrealized. The firm blamed their Banker for the failure to realize the proceeds. The Adjudication Officer passed the impugned order, leading to the appeal.2. The Appellant's counsel argued that the firm, being from a rural background, lacked expertise in export business and relied on the bank for realizing export proceeds. They had taken various actions to recover the outstanding amount, including contacting the buyer and seeking help from authorities. The counsel emphasized that the firm's financial situation was dire, with no income source other than the export business. They pleaded for a lenient view considering the circumstances and requested a waiver of the penalty due to their financial distress.3. The Respondent did not contest the contravention but left the matter to the Tribunal's discretion. After considering the submissions, the Tribunal acknowledged the Appellant's lack of knowledge in export business and their efforts to recover the proceeds. The Tribunal noted that the firm had gone into liquidation and continued to pursue the buyer for payment even after that. Considering these factors, the Tribunal decided to reduce the penalty from Rs. 50,000 to Rs. 10,000, emphasizing that a token penalty would suffice to serve justice. The Appellant's counsel agreed to ensure payment of the reduced penalty amount.4. The Tribunal, therefore, partially allowed the appeal by modifying the Adjudication Order and reducing the penalty amount. The decision was based on the Appellant's circumstances, their efforts to recover the proceeds, and their financial distress, leading to a compassionate view in reducing the penalty.This detailed analysis covers the issues involved in the judgment, the arguments presented by both parties, and the Tribunal's decision based on the facts and legal considerations presented in the case.