TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 1352
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....s. Mittal Ispat Ltd. also entered into the premises. As a result of the search three note books marked 'A', 'B' and 'C' and Rs. 1 lakh was found in the table drawer of P. Suryariarayanan. One essar quality slip pad-2 marked as 'D' was also recovered from the drawer of the table of D. Venkateswara Rao. Four sheets and one five rupee note were recovered from the pocket of the shirt of D. Venkateswara Rao and an amount of Rs. 8 lakhs and documents in 4 loose sheets from H.N. Mohammed Ummer were also recovered. Investigations revealed that during the period from December, 2002 to April, 2003 M/s. Mittal Ispat Ltd. and M/s. Sharda Castings Ltd. along with employees and Director Rajeev Gupta indulged in contraventions of the provisions of Section 3(d) of FEMA, 1999 and made payments totalling Rs. 1,62,62,388/- at the instructions from abroad in consideration of receipt of equivalent foreign exchange by the appellant companies on account of differential amount of under-invoicing of imports made by the said two companies. 3. After the conclusion of the investigation a complaint dated 17-3-2004 was filed before the Special Director of ED and on the basis of a complaint a SCN dated 30-....
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....n behalf of the noticees that Adjudicating Authority should consider the reply first and after due consideration, if it is found that the adjudication proceedings should be held a fresh date of hearing may be fixed. The noticees thereafter challenged the issue of SCN before the Hon'ble Madras High Court through W.P. No. 36259/2005 which was dismissed with the directions that since the proceedings were only against the SCN and the petitioners had also submitted the reply which would be sufficient to direct the respondent to furnish all the necessary details and records that are relied upon by them before proceeding further in the matter. 4. Aggrieved from the order of the Hon'ble High Court and appeal W.A. No. 72/2006 and WAMP No. 142/2006 were filed by M/s. Sharda Castings Ltd., Pondicherry before Hon'ble Madras High Court and the Hon'ble High Court in its order held that the SCN was issued after sufficient compliance of Rule 4 of FEMA, Rules and it was not necessary for the authority to again repeat or re-produce the entire complaint in the SCN and the competent authority has recorded its prima facie satisfaction and issued SCN in accordance with Section 16(3) of the Act & R....
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....n of the contraventions in the enclosed complaint and in the accompanied complaint, details of contraventions, manner of violation involved, etc. as per requirement of Rule 4(2) of 2000 Rules have been given. 7. Thereafter the case was adjourned for personal hearing on 27-1-2000 on which date nobody turned up. In this view the Adjudicating Authority decided to proceed in the matter and held appellant M/s. Mittal Ispat Ltd., M/s. Sharda Castings Ltd., and employees of the companies P. Suryanarayanan, D. Venkateswara Rao and Rajeev Gupta responsible for the conduct of business of the companies from December, 2002 to April, 2003 and also found that as per instructions from abroad they had made payments totalling to Rs. 1,62,62,388/- in consideration of the foreign exchange acquired by the appellant company towards the differential amount of under-invoicing for imports made by the said two companies and therefore the appellants were held guilty for contraventions under Section 3(d) r/w Section 42(1) and (2) of FEMA, 1999 and imposed a penalty of Rs. 30 lakhs each on M/s. Mittal Ispat Ltd. and M/s. Sharda Castings Ltd. under Section 13 of FEMA, 1999 and a penalty of Rs. 10 lakhs e....
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....en passed mechanically without due application of judicial mind. The findings are based on surmises and conjuctures. The statement by P. Suryanarayanan and D. Venkateswara Rao which have been relied upon by the Adjudicating Authority were retracted on the very next day and have no evidentiary value. It was not established that the alleged contraventions were committed by any of the appellants and there is no evidence that any instructions from abroad were actually received and in consideration thereof foreign exchange was acquired by the appellant companies towards the differential amount of under- invoicing of imports allegedly made by the two companies. There is no evidence on record to show that under-invoicing was ever made. The figures shown of Rs. 1,62,62,388/- is imaginary and principles of natural justice have been grossly violated. It was also not disclosed as to whom the alleged payments were made. The Adjudicating Authority was not competent to decide the matter. No specific role or involvement of appellant Rajeev Kumar Gupta has been alleged. Reliance has been placed on the judgments of Piyush Saxena v. Enforcement Directorate, 2010-TIOL-29-HC-DEL-FEMA, Vinod Kumar Saha....
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....ore, U.K. and Kuwait towards differential amount of under-invoicing of imports made by the two appellant companies. She has further contended that in addition to the above amount of Rs. 1,16,37,560/- figuring in the seized documents. Sh. P. Suryanarayanan has admitted that two payments totalling to Rs. 10,18,554/- were received by him during April, 2003. It has also been contended that the amount received in fact was Rs. 1,26,56,114/- out of which Rs. 1,24,62,388/- was distributed and the balance of Rs. 1,93,726/- includes small amounts of Rs. 50,000/- and Rs. 25,000/- paid to M/s. Galaxy on 4-4-2003 and 9-4-2003 respectively towards the agency commission. Further submission is that there is no ambiguity and vagueness in the conclusion. The fact that letterheads of the two companies have not been used has no significance or relevance. Submission is that the alleged retractions was an afterthought and no evidence of coercive or undue pressure has been led by the appellants. The sanctity of the submissions of P. Suryanarayanan and D. Venkateswara Rao cannot be doubted. P. Suryanarayanan used to write the accounts and it has come in his statement that D. Venkateswara Rao had also rece....
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.... find that the W.P. No. 36259/2005 was initially filed challenging SCN before Hon'ble Madras High Court which, while dismissing the petition observed that since the impugned proceeding only involved SCN and the petitioners had already submitted their reply, therefore, the Hon'ble Court found it appropriate to direct the respondent to furnish all the necessary details and records that was relied upon, before proceeding further in the matter in order to apply principles of natural justice. Connected petitions were also dismissed. Aggrieved from the order noticees filed WAMP No. 142/2006 and the Hon'ble Division Bench of the Madras High Court in its order dated 15-3-2006 held that SCN in sufficient compliance with Rule 4 of FEMA Rules and that there was no infraction of the provisions of Act and FEMA Rules. Thereafter, M/s. Mittal Ispat Ltd. filed SLP No. 10226/2006 before Hon'ble Supreme Court which too was dismissed by the Hon'ble Supreme Court with the direction to raise their contentions before the Adjudicating Authority. It has come in the Impugned order in Para 20 that during personal hearing the contraventions as contained in the SCN were explained and in view of the legal issu....
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....Rs. 2 lakhs were paid to M/s. New National Jewellery, Chennai by D. Venakteshwara Rao on 29-4-2003 and another sum of Rs. 10 lakhs was paid on 28-4-2003 to the said New National Jewellery. He further stated that out of the above payments totalling to Rs. 1,25,38,054/- except Rs. 50,000/-, Rs. 25,000/- and Rs. 666/- mentioned in the transaction on 4-4-2003 and on 9-4-2003 in the said pad. All other payments totalling to Rs. 1,24,62,388/- were made as per the instructions from abroad in consideration of the foreign exchange acquired by the sellers abroad towards differential amount of under-invoicing of imports made by M/s. Mittal Ispat Ltd. and M/s. Sharda Casting Ltd. He has also given details of sellers' company in Sri Lanka, Singapore, U.K. and Kuwait 8 in number and has further stated that D. Venkateshwara Rao also used to make payments as per foreign instructions in his absence and most of payments were made to the persons who used to visit his office and after ascertaining their identity payments were made. He also stated that note book marked 'A' contains details of imports made from 1999 to 29-4-2003. During the second week of December, 2002 he made payments of Rs. 8 lakhs i....
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....He has also stated that the name of Sandeep was used for receiving the said amount by him. In para 28 of the Impugned Order the Adjudicating Authority has mentioned the documents marked 'C' and 'D' and stated that the follow up action has been taken against Narendra Kumar Mangal (Nakoda) on 12-5-2003 who has stated to have admitted that during April, 2003 amounts totalling to Rs. 42,49,5000 were collected from him by P. Surayanarayanan and the amount relates to local angadias. Some documents were also reported to have been seized from the premises of Nakoda. He has also explained various comments and the abbreviations, etc. of the names and the number of currency notes and follow up action was also taken against M.M. Fazal Mohd. (Rishi) on 2-5-2003 which has been referred in para 29 of the Impugned Order. Statement of H.M. Mohd. Ummer has been referred in para 30 of the Impugned Order who has admitted that he has received two payments of Rs. 8 lakhs each from P. Surayanarayanan. 16. We find that though it has come in the statement of the key witnesses P. Surayanarayanan and D. Venkateshwara Rao that the payments were made as per the instructions from abroad in consideration o....
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....thority do not appear to be correct from the perusal of the SCN dated 30-6-2004 in which no provisions of the alleged transactions under FEMA has been mentioned. The ingredients of any provisions of FEMA are also missing. In the enclosed complaint dated 17-3-2004 of the Assistant Director, in para 3.14 the complainant has stated "from the foregoing it appears that during the period from December, 2003 to April, 2003 the said M/s. Mittal Ispat Ltd. and M/s. Sharda Castings Ltd. have contravened the provisions of Section 3(s) of FEMA, 1999 in having made payments totalling to Rs. 152,62,388/- (as detailed below) as per the instructions from abroad in consideration of foreign exchange so acquired by the appellant companies towards the differential amount of under-invoicing of imports made by the above said two companies". There is no mention in the complaint regarding unauthorised entering into any financial transactions in India as a consideration for or any association with acquisition or creation or transfer of right to acquire any asset available in India by any person as has been stated by the Adjudicating Authority in para 38 of the Impugned Order. It is also not clear as to how....
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....een recovered. There is no corroboration evidence of the fact that the payments allegedly made by the appellants were made as per the instructions from abroad. There is no evidence available to establish that the payments so made were in consideration of foreign exchange so acquired by the appellant companies towards the differential amount of alleged under-invoicing of imports made by the above said two companies. The appellants are stated to be involved in import of MS Ingots/Scrap from abroad, therefore, for this they were supposed to make payments in foreign exchange. It has not been explained in the Adjudication Order as to what benefit did the appellant gain by under-invoicing and payment in Indian currency by the appellants at the behest of sellers abroad as has been alleged. 21. There are discrepancies, contradictions and vagueness apart from non-adherence to the principles of natural justice affecting the process of fair trial. The case laws relied upon by the ld. CA are on the value of retracted confession and it has been held by the Hon'ble Supreme Court in Vinod Solanki v. UOI that the burden is on the prosecution to show that the confession is voluntary in nature....