Penalty upheld for unauthorized foreign exchange remittance under FEMA; review allowed with proof of posting

The AT under SAFEMA dismissed the appeal against the penalty imposed for contravention of FEMA provisions related to unauthorized foreign exchange remittance for satellite transponder hire. The appellant, a Deputy General Manager at the relevant bank branch, failed to provide evidence negating his posting there during the period of alleged contravention (July to December 2012). The Tribunal found the appellant's counsel evasive and held that the penalty of Rs. 10,000/- was justified and maintained. The penalty, already deposited, was adjusted accordingly. The appellant was allowed to file a review petition with proof of posting within the limitation period if factual.

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ISSUES:

Whether the appellant was responsible for contravention of Section 10(4) and Section 10(5) of the Foreign Exchange Management Act, 1999 (FEMA) by making foreign exchange remittances without prior approval from the Ministry of Information & Broadcasting.Whether the appellant was posted at the relevant bank branch during the period when the contravening transactions were made.Whether the penalty imposed under Section 13(1) of FEMA, 1999 on the appellant is justified.

RULINGS / HOLDINGS:

The contravention of Sections 10(4) and 10(5) of FEMA, 1999 occurred due to remittances made without prior approval from the Ministry of Information & Broadcasting, in violation of the directions contained in A.P. (DIR Series) Circular No. 20 dated 25.10.2004.The appellant failed to provide positive evidence negating his posting at the Connaught Circle Branch during July and December 2012, the period when the contravening remittances were made; thus, the appellant was held responsible for the contravention.The penalty of Rs. 10,000/- imposed on the appellant under Section 13(1) of FEMA, 1999 is maintained as it is "already on the lower side seeing the quantum of contravention."

RATIONALE:

The Court applied the provisions of Sections 10(4), 10(5), 13(1), and 42 of FEMA, 1999, and the directions issued under A.P. (DIR Series) Circular No. 20 dated 25.10.2004, which require prior approval from the Ministry of Information & Broadcasting for remittances related to hiring foreign satellite transponders.The adjudicating authority's conclusion that the appellant was responsible was based on the absence of any documentary evidence disproving his posting at the relevant branch during the time of the contravention; the appellant's counsel's failure to clarify or produce posting orders for the relevant period was considered evasive and indicative of an attempt to mislead the Tribunal.The Tribunal allowed the appellant liberty to file a review petition with posting evidence within the limitation period, reflecting a procedural safeguard despite dismissal of the appeal.

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