FERA penalty reduced from Rs. 50 lakhs to Rs. 14 lakhs for export dues violation under sections 18(2) and 18(3)

The Appellate Tribunal for SAFEMA at New Delhi partly allowed an appeal in a FERA contravention case. The appellant was found guilty of violating sections 18(2) and 18(3) read with section 64(2) of FERA, 1973 for failing to recover export dues without RBI permission. While confirming the contravention, the Tribunal reduced the penalty from Rs. 50 lakhs to Rs. 14 lakhs, finding the original penalty disproportionate compared to the main defaulter's penalty of Rs. 45 lakhs, considering the appellant's limited involvement in document preparation for one shipment and receipt of Rs. 14 lakhs as work compensation.

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Issues:
Challenge to adjudication order under FERA, 1973 - Contravention of section 18(2) and 18(3) - Imposition of penalty - Application for waiver of pre-deposit - Allegations against appellant and noticee - Denial of cross-examination.

Detailed Analysis:

1. Challenge to Adjudication Order under FERA, 1973:
The appeal challenges the adjudication order dated 26.06.2008 concerning the contravention of section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 (FERA). A penalty of Rs. 50 lacs has been imposed on the appellant, leading to the filing of an appeal seeking relief from the said order.

2. Application for Waiver of Pre-Deposit:
The appellant filed an application for the waiver of the pre-deposit condition. After a series of orders by the Tribunal and the High Court, the appellant deposited a sum of Rs. 6 lacs to meet the pre-deposit requirement, allowing the appeal to proceed for final arguments.

3. Allegations and Defense:
The appellant contests the penalty imposition, arguing that the violation of FERA sections was not justified. The appellant was allegedly involved in handling only one out of three export consignments, acting as a Customs House Agent (CHA) for a specific consignment. The appellant disputes the heavy penalty of Rs. 50 lacs, emphasizing the lack of involvement in all three consignments.

4. Denial of Cross-Examination:
An issue of denial of cross-examination is raised in the written arguments, indicating a procedural challenge in the adjudication process, which could impact the fairness of the proceedings.

5. Contravention of FERA Provisions:
The investigation revealed that the appellant, along with others, contravened section 18(2) and 18(3) of FERA by failing to recover export dues without the necessary permissions. The appellant's role as a CHA in one of the consignments was acknowledged, leading to the imposition of the penalty.

6. Reduction of Penalty:
The Tribunal found the penalty of Rs. 50 lacs to be disproportionate and reduced it to Rs. 14 lacs, considering the appellant's limited involvement and the penalty imposed on the main defaulter. The appellant had already deposited Rs. 6 lacs, satisfying the pre-deposit condition, resulting in a final penalty of Rs. 14 lacs.

7. Final Decision:
The appeal was partly allowed, acknowledging the contravention of FERA provisions but reducing the penalty to Rs. 14 lacs. With the appellant's deposit covering the required amount, the Tribunal disposed of the appeal, providing relief from the initial penalty amount.

This detailed analysis encapsulates the legal judgment's core issues, arguments presented, findings, and the ultimate decision regarding the challenge to the adjudication order under FERA, 1973.

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