2008 (1) TMI 892

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....obal Ltd., are companies engaged in export business of leather and other commodities. In the normal course of their business, the Directors and other officials purchase foreign exchange under Liberalised Exchange Rule Management System and make payment towards the same by way of crossed cheques from their banks. They purchase foreign exchange, but since company officials, including the Directors were not able to make foreign trip as planned, the appellants surrendered the foreign exchange so purchased through authorised money changers within a day or two and received the exchange value of foreign exchange by means of crossed cheque in their name. They also paid back the amount within the prescribed period to the money changer through whom they had purchased foreign exchange on credit. Whileso, the appellants received summons from the 1st respondent, Assistant Director, Directorate of Enforcement, Chennai, asking them to appear in person in connection with proceeding under the Foreign Exchange Management Act, 1999 (hereinafter referred to as 'FEMA') to produce copies of applications for purchasing foreign exchange under Liberalised Exchange Rule Management System as also details of ....

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....s have made out a case for waiver of the penalty amount for the purpose of hearing of their appeals on merits. 5. Learned senior counsel appearing on behalf of appellants, while relied on relevant facts, made the following submissions in support of the appellants claim for waiver : - (a)     Section 10(5) of FEMA relates to an authorised person, who were required to verify certain thing in accordance with law is not applicable to the appellants, who purchased foreign exchange from such authorised person. (b)     Though the appellants, who are other than authorised person, purchased foreign exchange for foreign travel of its Directors and Officials, foreign travel having cancelled, the foreign exchange was sold to another authorised person and the foreign exchange given on credit to the appellants by authorised person was returned within specified period of 30 days. Therefore, Section 10(6) of FEMA is not attracted in the case of the appellants. (c)     The company having not contravened any provisions of FEMA or any rule, direction or order made therein, no such allegation having shown in....

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....s Section 14 of the Central Excise Act. Such statements not being made before police officer are admissible evidence and could be solely relied upon for the purpose of any proceeding for violation. Reliance was placed on Supreme Court judgment in K.I. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate reported in 1997 (3) SCC 721 = 1997 (90) E.L.T. 241 (S.C.), wherein the Supreme Court, while noticed Sections 108 and 135 of the Customs Act, 1962, held that a confessional statement recorded by reason of statutory compulsion or given voluntarily by accused pursuant to his appearing against summons or on surrender cannot be said to have been obtained by threat, inducement or promise and held that such statement is admissible in evidence within the meaning of Section 24 of the Evidence Act. It is brought to the notice of the Court that Mr. Lodha had admitted that he purchased foreign exchange under Liberalised Exchange Rule Management System credit facility for about a month and used to roll the money back into the business of the said company. He further admitted that foreign exchange used to be purchased by post-dated cheques and issued to the said company and sold t....

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....tly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. ...." 8. We have noticed the rival contentions a made by the parties, the impugned orders and also noticed the decisions relied on by learned counsel appearing on behalf of the parties. 9. From the complaint dated 30th April, 2004, as on record, and impugned orders dated 31st Jan., 2005, it appears that Mr. Rajesh Lodha, in his statement dated 26th July, 2002, admitted that he and other Directors and employees used to avail foreign exchange under Liberalised Exchange Rule Management System for foreign visits from full fledged money changers and utilise the amounts for their business instead of foreign visits. In his subsequent statement dated 12th Aug., 2002, he had given year-wise break-up of foreign exchange availed in the following manner : - Year US$ - IC US$ - Currency 2000 187000 2000 2001 1948300 ....

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....sed by the appellants in the present case. However, as we are not supposed to decide such issue in the present appeals, which may be determined by the Appellate Authority, we refrain to give any finding on such issues. For determination of the issue, i.e., whether the appellants are entitled for waiver, we are of the view that the Revenue have made out a prima facie case, though the appellants may have also some prima facie case in their favour, but this is not the stage for determination. In this background, if a part of the appellate order regarding merit of the case has been set aside by learned single Judge by impugned order dated 7th Aug., 2007, no interference is called for against such part of the order. 12. So far as "undue hardship" is concerned, it was noticed by the Supreme Court in S. Vasudeva v. State of Karnataka & Ors. Reported in AIR 1994 SC 923 that in Indian conditions the expression "undue hardship" is normally related to economic hardship. "Undue" means something, which is not merited by conduct of the claimant or is very much disproportionate to it. Undue hardship is excessive hardship, that is not warranted by circumstances. In the case of M/s. B....