2024 (10) TMI 396 - AT - FEMA

Tribunal Confirms Rs. 70 Lakh Penalty for Non-Realization of Export Proceeds; Appeal Dismissed for Lack of Evidence.

Rajiv Khanna Versus Special Director Directorate of Enforcement

The Tribunal upheld the penalty imposed under the Foreign Exchange Regulation Act, 1973, for non-realization of export proceeds, dismissing the ... Imposition of penalty finding Contravention of Section 18(2) of FERA - export only against 06 GR by M/s. Universal Traders and 05 GR by Zen Series though in both cases 10 GR were issued by the Custom Department - HELD THAT:- GRs are issued by the Customs Department when export has to commence and thereby the export material is brought in the bonded area. It results in exports other than in the case of withdrawal of the export so is GR but there is nothing on record to prove it. The Adjudicating Authority has referred to the statement of KVS Ram Mohan, Manager of the Bank recorded on 30.04.2002. As per his statement M/s. Universal Traders failed to realize export proceeds to the tune of Rs. 4,09,90,925/- while in the case of M/s. Zen Series, it was Rs. 3,15,50,668/-. He was asked to confirm physical exports against all the GR to which it was replied that he cannot confirm the same being not the relevant person. The fact remains that the Customs Department has endorsed for issuance of 10 GR each for both the firms and there is nothing on record to prove withdrawal of export from bounded area. Appellant has failed to prove the case in his favour. It is also a fact that the Appellant even failed to make recovery of the export proceeds against the export admitted by him other than 05 GR exports of M/s. Universal Traders. No material is placed on record to show his reasonable efforts to make recovery and therefore we do not find any error in the impugned order for recording the Contravention of Section 18(2) of the Act, 1973 in the hands of the Appellant. We are unable to accept the arguments raised by the Appellant. The Appeal accordingly fails and is dismissed. Issues:Challenge to order under Foreign Exchange Regulation Act, 1973 for non-realization of export proceeds and imposition of penalty.Analysis:The Appellant challenged an order passed by the Adjudicating Officer under the Foreign Exchange Regulation Act, 1973, regarding non-realization of export proceeds. The Appellant submitted 10 GR Forms each in the name of two firms but exported goods only against a portion of these forms. The penalty of Rs. 70 lakh was imposed for alleged violation of Section 18(2) of the Act for non-realization of export proceeds. The Appellant argued that no recovery could be made against GR forms for which exports did not take place. The Appellant presented a certificate from a shipping agent to prove actual exports against a subset of the GR forms issued. However, the order was passed ignoring this evidence.The Appellant contended that efforts were made to recover export proceeds against the completed exports, but discrepancies in reporting by the bank led to erroneous non-realization claims. The RBI granted an extension for recovery in one case but not in the other. The Appellant did not raise any other challenges to the order.The Respondent argued that a reasoned order was passed finding a contravention of Section 18(2) of FERA. The Customs Department issued 10 GR forms for each firm, but physical exports were made against only a subset of these forms. The Adjudicating Authority found discrepancies in the Appellant's claims and confirmed the authenticity of the GR forms issued by the Customs Department. The Appellant failed to provide evidence of withdrawal of the remaining GR forms from the bonded area, as required for non-export cases.The Tribunal found that the Appellant failed to prove the case in his favor. Despite opportunities, no evidence was presented to confirm the withdrawal of unutilized GR forms. The bank manager's statement indicated non-realization of export proceeds. The Tribunal upheld the penalty, stating that the Appellant did not make sufficient efforts to recover the export proceeds. The Appeal was dismissed, and the impugned order was upheld.