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Issues: (i) Whether contraventions relating to 25 export consignments exported during the FERA regime could be proceeded against after the sunset period under Section 49(3) of FEMA. (ii) Whether the Foreign Inward Remittance Certificate and allied material established realization of export proceeds for the two remaining consignments. (iii) Whether the penalty required reduction in the light of the findings on the above issues.
Issue (i): Whether contraventions relating to 25 export consignments exported during the FERA regime could be proceeded against after the sunset period under Section 49(3) of FEMA.
Analysis: The consignments in question were exported between 1994 and 1998, while FEMA came into force on 01.06.2000. Section 49(3) of FEMA permits notice of a contravention under the repealed Act only within two years from commencement of FEMA. The show-cause notice was issued in 2008, well beyond 31.05.2002. The saving provision in Section 49(4) preserves proceedings under the repealed Act only subject to Section 49(3). The continuing-offence theory could not override the statutory bar on taking notice after the sunset period.
Conclusion: The proceedings for the 25 pre-FEMA consignments were barred, and the penalty imposed on that count could not stand.
Issue (ii): Whether the Foreign Inward Remittance Certificate and allied material established realization of export proceeds for the two remaining consignments.
Analysis: The remittance documents showed advance-receipt terminology and did not conclusively establish that the sums were received as realization of the two impugned export bills. The entries in the certificate were not intrinsically clear, the handwritten invoice references were not part of the printed document, and the supporting message was treated as insufficient to prove realization. The Appellants also failed to show effective follow-up or convincing acceptance by the authorized dealer of the alleged realization.
Conclusion: The finding of contravention in relation to the two remaining consignments was sustained.
Issue (iii): Whether the penalty required reduction in the light of the findings on the above issues.
Analysis: Since the penalty order could not survive for the 25 consignments covered by the statutory bar, but survived for the two remaining consignments, the quantum had to be confined to the proved contraventions only. The individual appellant's liability was also maintained to the extent found sustainable against the company.
Conclusion: The penalties were reduced to Rs. 11,00,000/- for the company and Rs. 2,00,000/- for the individual appellant.
Final Conclusion: The appeal succeeded only to the extent of excluding the time-barred pre-FEMA consignments, while the remaining contraventions were upheld and the penalties were proportionately reduced.
Ratio Decidendi: Under FEMA, Section 49(3) creates a strict sunset bar on taking notice of contraventions under the repealed Act after the prescribed period, and the saving clause in Section 49(4) operates only subject to that bar; documentary proof must be clear and intrinsic to establish realization of export proceeds.
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