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Issues: Whether the appellant contravened the FEMA provisions by failing to import goods or realize and repatriate the foreign exchange remitted for the imports, and whether the penalty required interference.
Analysis: The appellant remitted foreign exchange to an overseas supplier for import of shredded steel scrap, but the imports were not fully completed and a substantial part of the remittance remained unutilized. The attempt to justify adjustment through supplies and refunds routed through a different company was rejected because the entities were separate legal persons and there was no admissible evidence or RBI permission showing that third-party adjustments were permissible. The Tribunal also held that proceedings under customs law were independent and did not control liability under FEMA. However, on the facts and circumstances, the Tribunal found that the penalty imposed by the adjudicating authority was excessive and warranted reduction.
Conclusion: The appellant was held liable for contravention of Section 10(6) of FEMA read with Regulation 6(1) of the 2000 Regulations, but the penalty was reduced.
Final Conclusion: The appeal succeeded only to the extent of reduction in penalty, while the finding of contravention was maintained.
Ratio Decidendi: Foreign exchange remitted for a specific import purpose must be either applied to that purpose or lawfully realized and repatriated, and ad hoc third-party adjustments without admissible evidence or RBI cannot satisfy that obligation.
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