2025 (8) TMI 14 - AT - FEMA

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

Shri Laxmi Narayan Rath Versus The Additional Director Directorate of Enforcement, Chennai

The AT under SAFEMA dismissed the appeal against the penalty imposed for contravention of FEMA provisions related to unauthorized foreign exchange ... Contravention u/s 10(4) & Section 10(5) of FEMA, 1999 - Appellant responsible to alleged contravention - certain companies had hired transponders of foreign satellite, but had not sought permission to remit foreign exchange from the Ministry of Information & Broadcasting - penalty imposed on Deputy General Manager of Andhra Bank (now Union Bank of India) HELD THAT:- When the alleged contravention took place in the Cannaught Circle Branch of the then Andhra Bank Ltd., appellant was working there. In view of contention of respondent, specific query was put to the Ld. Counsel for the appellant to disclose the place of posting of the appellant in July, 2012 and December, 2012, so as to rule out his posting in the said Branch. But the Ld. Counsel for the appellant, instead of clarifying this factual position, consistently asserted that the appellant was working in the said Branch only from 04.08.2014 to 17.01.2017. This evasive answer on the part of the Ld. Counsel for the appellant, in-spite of specific query shows that he is trying to conceal the material fact regarding the posting of the appellant in July 2012 and December, 2012 by producing the posting order, and hence, he is intentionally trying to misguide this Tribunal just by relying upon subsequent posting order of the appellant in the Cannaught Circle Branch from 04.08.2014 to 17.01.2017. It was duty on the part of the appellant to request his Bank to issue the letter reflecting his posting order for the period of July, 2012 to December, 2012, which he failed to do so. Thus, we are of considered view that in absence of any positive evidence to negate his posting from July, 2012 to December, 2012 in the concerned Branch, the present appeal needs to be dismissed being devoid of any merit. Present appeal is hereby dismissed being devoid of any merits. The penalty of Rs. 10,000/- is hereby maintained, which is already on the lower side seeing the quantum of contravention. The said penalty is already deposited by the appellant, and accordingly, the said pre-deposit of Rs. 10,000/- stands adjusted against the said penalty amount. However, the appellant is at liberty to move the review petition along with his posting order from July, 2012 to December, 2012, within the period of limitation, if his contention is factually correct. 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.