1995 (11) TMI 491 - AT - FEMA

Appeals Succeed: Penalties Under Foreign Exchange Act Overturned Due to Lack of Evidence; Refunds Ordered Promptly.

Smt. Shakuntala Bhargava Versus Director of Enforcement

The court allowed all four appeals, overturning the adjudication orders that imposed penalties under the Foreign Exchange Regulation Act, 1973, for ... - Issues:1. Imposition of penalties under the Foreign Exchange Regulation Act, 1973.2. Allegations of contravention of section 9(1)(d) in multiple adjudication orders.3. Legal arguments challenging the adjudication orders.4. Interpretation of section 9(1)(d) regarding payments made by a person resident in India on behalf of a person residing outside India.5. Examination of the Amnesty Scheme under the Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Amenities & Exemptions Act), 1991.6. Decision on the appeals and refund of pre-deposit amounts.Analysis:The judgment involves appeals against four adjudication orders imposing penalties under the Foreign Exchange Regulation Act, 1973. Each appeal challenges a specific adjudication order that imposed penalties ranging from Rs. 37,500 to Rs. 60,000 on the appellant for contravention of section 9(1)(d) of the Act. The appellant contested the charges, arguing that the contravention was not established and that they might be covered by the Amnesty Scheme under the Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Amenities & Exemptions Act), 1991.The allegations in each case involved a person resident in India making payments to a person residing outside India on behalf of another person abroad. The appellant received pay orders from accounts abroad and made corresponding payments in India. The appellant's representative argued that the charge of contravention of section 9(1)(d) could not be sustained as the payments were not made on behalf of the person residing outside India, as required by the provision. The Adjudicating Officer's findings regarding the lack of connection between the payments and the alleged foreign resident supported this argument.The judgment focused on the interpretation of section 9(1)(d) and the essential requirement that payments must be made on behalf of a person residing outside India to establish a contravention. The court agreed with the appellant's counsel that the charge could not be upheld based on the facts presented. As a result, the court did not delve into other issues, including the applicability of the Amnesty Scheme to the appellant's situation.Ultimately, the court allowed all four appeals, setting aside the impugned orders and directing the respondents to refund any pre-deposit amounts made by the appellants within a specified timeframe. The judgment emphasized the lack of evidence supporting the contravention of section 9(1)(d) and the importance of meeting the statutory requirements for establishing violations under the Foreign Exchange Regulation Act, 1973.