SAFEMA Tribunal upholds FERA violations for fake import remittances using forged documents without actual goods imported

The Appellate Tribunal under SAFEMA upheld contraventions of FERA Sections 8(3) r/w 8(4) and 9(1)(b) against both appellants for illegal foreign exchange remittances abroad disguised as import charges for goods that were never imported. The tribunal found that one appellant controlled multiple concerns and played a key role in the fraudulent scheme, while forged bills of entry were used to facilitate the contraventions. Customs reports confirmed no diamonds were imported against the impugned remittances. The tribunal rejected claims that missing import documents could have proven legitimate imports, finding the contraventions established and dismissing both appeals.

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Issues Involved:

1. Validity of the Adjudicating Authority.
2. Delay in proceedings.
3. Reliance on retracted statements.
4. Vagueness of the Show Cause Notice (SCN).
5. Composite penalty for contraventions.
6. Allegations against Shri R.K. Verma.
7. Allegations against Shri R.A. Soni.
8. Denial of cross-examination.
9. Missing import documents.

Issue-wise Detailed Analysis:

1. Validity of the Adjudicating Authority:
The Appellants argued that the Additional Director General (Systems) was not an Adjudicating Officer under Section 3 read with Section 50 of FERA. However, the Respondent countered that the Additional Director General (Systems), Customs and Central Excise, was duly notified as Adjudicating Authority under Notification No. 6(F.No. 3/1/2002-Ad I-C) dated 28.08.2003 by the Central Government, as empowered under Section 5 of FERA. The Tribunal upheld this notification, validating the authority of the Additional Director General (Systems) to adjudicate the SCN issued in the present case.

2. Delay in Proceedings:
The Appellants cited the judgment in Union of India v/s. Citibank [2022 SCC Online SC 1073] to argue for termination due to delay. However, the Tribunal noted that the SCN was issued within two years after the last statement was recorded, which was not considered a significant delay. The Tribunal dismissed the argument of delay, noting the complexity and extensive nature of the investigations.

3. Reliance on Retracted Statements:
The Appellants contended that the allegations were based on retracted statements. The Tribunal found that the statements of Shri R.K. Verma and Shri R.A. Soni were corroborated by other independent and cogent evidence. The Tribunal referred to judgments such as Vinod Solanki Vs Union of India [(2008) 16 SCC 537] and K.T.M.S Mohamed Vs. Union of India [(1992) 3 SCC 178], which held that retracted statements could be relied upon if corroborated by other evidence.

4. Vagueness of the Show Cause Notice (SCN):
The Appellants argued that the SCN was vague. The Tribunal found that the SCN issued on 12.01.1996 listed detailed remittances and provided sufficient information for the Appellants to understand the charges. The Tribunal rejected the contention that the SCN was vague, noting that it contained specific details of the remittances and the alleged contraventions.

5. Composite Penalty for Contraventions:
The Appellants argued that the imposition of composite penalties for various contraventions was irregular. The Tribunal did not find merit in this argument, as the penalties were imposed for distinct contraventions of Sections 8(3) read with 8(4) and 9(1)(b) of FERA for Shri R.K. Verma, and Sections 8(3) read with 8(4), 9(1)(b), and 64(2) of FERA for Shri R.A. Soni.

6. Allegations against Shri R.K. Verma:
The Appellants argued that Shri R.K. Verma was neither the proprietor of the firms involved nor the holder of the import code. The Tribunal found that Shri R.K. Verma admitted in his statements that he controlled the firms and arranged the remittances. The Tribunal concluded that Shri Verma was the main person involved in the fraudulent remittances and upheld the penalties imposed on him.

7. Allegations against Shri R.A. Soni:
The Appellants contended that Shri R.A. Soni was wrongly charged with abetment. The Tribunal found that Shri Soni's statements, corroborated by other evidence, indicated his involvement in the fraudulent remittances. The Tribunal upheld the penalties imposed on Shri Soni, finding that he abetted Shri Verma in the illegal remittances.

8. Denial of Cross-examination:
The Appellants argued that the denial of cross-examination violated natural justice. The Tribunal referred to judgments such as Telstar Travels Private Limited & Ors. V. Enforcement Directorate, (2013) 9 SCC 549, which held that denial of cross-examination does not violate natural justice if the SCN and relied-upon documents are provided. The Tribunal found no prejudice caused to the Appellants by the denial of cross-examination.

9. Missing Import Documents:
The Appellants claimed that the import documents were deposited with the bank but went missing. The Tribunal found that the remittances were made without actual imports, as confirmed by the Customs Department. The Tribunal concluded that the missing documents did not affect the determination of the contraventions.

Conclusion:
The Tribunal dismissed the Appeals No. FPA-FE-1283/MUM/2004 and FPA-FE-1284/MUM/2004, finding no merit in the arguments presented by the Appellants. The penalties imposed for the contraventions of FERA were upheld.

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