https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=772489 https://www.taxtmi.com/caselaws?id=772489 Violation of the provisions of FEMA, 1999 - short-realization of export proceeds as against the invoiced value of the exports - penalties arose from two export transactions HELD THAT:- First transaction, i.e., the export made through M.V. Vincentia, we are of the view that while there has undoubtedly been short-realization of export proceeds as against the invoiced value of the exports, the same was for reasons completely outside the control of the appellant company. Furthermore, the appellant company made appropriate efforts to mitigate the loss by moving the Hon'ble High Court and succeeding in obtaining relief in the matter. As regards the unrealized amount, the Appellant company, on 17.03.2012, submitted 'REX' form with the AD Bank to obtain necessary approval from RBI. Further, since, there was no communication by the AD Bank regarding to the acceptance of REX application by RBI and closure of the transaction, M/s BEML issued letter dated 10.12.2012, once again requesting the AD Bank to follow the matter up with RBI and close the transaction at the earliest. Evidently, the said application remained pending and as late as in 2018, the AD Bank, vide its letter dated 20.03.2018, informed the Ld. AA that the RBI had requested to resubmit the whole set of documents once again for their perusal and that SBI would submit the same to the RBI shortly. The above facts, in our view, adequately establish the bona fide of the appellants herein insofar as the first transaction is concerned. No doubt, existence of mens rea is not an essential element of penalties under FEMA, 1999 which are leviable for failure to adhere to procedural and technical compliances which do not necessarily involve contumacious conduct. However, the language of the statute, read together with the rules framed thereunder, does not indicate that there is an absolute bar on non- realisation of full export proceeds under all circumstances. Rather, in an appropriate case, the RBI has been empowered to authorise short- realization or non-realization of full export value of goods. Under the circumstances, we are of the view that no penalty was imposable on the appellant in respect of this transaction. The respondents have not been able to point out any specific provision of the Act, rule or any guideline issued by the RBI which makes the levy of penalty mandatory in each and every case where full value of export proceeds was not realized and even where the appellant had acted bona fide and taken all necessary steps as per law. Furthermore, we find that the impugned order does not record the reasons for the decision to impose penalty. It appears that the authority was of the view that the very fact of short realisation of export proceeds invites a mandatory penalty. For the reasons discussed hereinabove, we are unable to agree with the Ld. AA and are of the view that no penalty was imposable on the appellants in respect of the first transaction. Coming to Transaction No. 2, i.e., export through MV Riva the submission of the appellant company is that based on the analysis report issued at the discharge port, it was only entitled to receive USD 17,59,154.09 against which it had already received advance payment of USD 33,20,464.11, which amounts to an excess receipt of USD 15,61,310.02. It is claimed that because of the business relationship between the appellant company and the Buyer, the latter could be persuaded not to claim refund of the excess paid from the appellant company. We do not wish to comment on these claims made on behalf of the appellants which have otherwise not been disputed by the respondents on facts. However, respondents have asserted that there was a huge loss of foreign exchange on account of negligence and inaction on the part of the appellants, without specifying the nature of such alleged negligence and how the appellant company could have realised value in in contravention of the terms of the contract with the Buyer and the LC. Thus, no penalty was imposable on the company even in respect of the second transaction. The penalties imposed on the individual appellants herein were in consequence of the finding of contravention by the company. Consequently, we find that the facts on record do not make out a case for imposition of penalty on the individual appellants either. Case-Laws FEMA Fri, 30 May 2025 00:00:00 +0530