AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 478
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....ed above; c). Rs. 25 Lakhs on M/s Welcord Components and Rs. One Lac each on both partners for alleged contravention of Section 3(b) of FEMA, 1999, as stated above; d). Rs. 3 Lakhs on M/s Welcord Components and Rs. Fifty Thousand each on both partners for alleged contravention of Section 10(6) of FEMA, 1999, as stated above; 2. M/s. Welcord Components Ind., Pondicherry (a partnership concern) is engaged in exclusively manufacturing and supply of components for "Goodnight‟ liquidator to M/s Godrej Consumer Products Ltd., Pondicherry. Sh. Prasanna Bhautoria and Sh. Rankit Bhautoria are partners of M/s Welcord Components Ind. who procured raw material from the domestic market as well as from international market by way of imports. 3. Being aggrieved from the aforesaid impugned Order, Appellants have filed the above appeals on various grounds. 4. It has come to record that the officers of DGCEI based on certain information searched the factory premises of the firm on 8.12.2014 and seized certain documents in relation to alleged violation of Central Excise provisions. The said seized record included two volumes of cash book, which allegedly contained details of transactions....
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....nd had imported goods to the tune of Rs. 2.49 crore and had thus made excess payment of Rs. 95 lacs towards advance import remittances without actual import and accordingly contravened provisions of Section 10(6) of FEMA, 1999 and had rendered itself liable for penal action under Section 13(1) of FEMA, 1999 and further its partners were also liable for penal action under Section 13(1) of FEMA, 1999. The basis for the aforesaid allegations is that M/s Welcord was transferring excess funds on account of alleged difference in value of goods supplied by overseas supplier arising on account of alleged undervaluation of imports so made. 6. During the course of investigation by the department statements were recorded of Shri Prasanna Bhutoria on 20.7.2015 and that of Shri Rankit Bhutoria on 14.8.2015. The relevant extracts are mentioned as under:- (a) Statements of Shri Prasanna Bhutoria dated 20.7.2015. In the said statement, interalia, Shri Prasanna Bhutoria had stated that he was managing the entire affairs of the company and that his son Shri Rankit Bhutoria had recently joined. Further on subject cash book having been shown to him, Shri Prasanna denied the same and amongst oth....
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....y the department either in India or abroad to substantiate the allegations leveled against the Appellants, which allegations are unsubstantiated. The alleged cash book cannot be considered as substantive evidence of violation much less as has been held by the Ld. Respondent. 10. The partners had denied the cash book and had stated that they had no knowledge about the contents of the alleged cash book and that the same was maintained by Shri Pankaj and Shri Dinesh. As stated above, Shri Pankaj was the one responsible for registration of the subject case against the Appellants. 11. In regard to alleged contravention of Section 3(a) and Section 6(3)(g) of FEMA, 1999 by Shri Prasanna Bhutoria, the basis for the aforesaid allegations are that Shri Prasanna Bhutoria had procured the aforesaid foreign currency from grey market and had carried the same abroad in person in order to pay the overseas supplier to square off the alleged difference in value. The Respondent held (in the impugned order) that Shri Prasanna Bhutoria had acquired USD 41,000 as mentioned in the cash book from other than authorized persons and in as much as such acquisition tallied with the travel dates to overseas c....
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....e has been issued for alleged under valuation by the customs authorities and there is no dispute on this aspect. If department wished to prove the aforesaid allegations. As per department they had all information in this regard, which fact is apparent from the impugned complaint however department did not do anything in this regard, who only interpreted the cash book entries and come to the conclusion that these entries were factual and held against the Appellants, without any corroborative evidence available on record. 16. Pertaining to violation of Section 10(6) of FEMA, the basis of the said allegation is that the Appellant firm had made remittance to its foreign suppliers towards import advance payment of Rs. 3.44 crores through proper banking channel but have made actual import of Rs. 2.49 crores and excess payment of Rs. 95 lacs was made to square off alleged differential value arising on account of alleged under valuation of the imported goods. In this regard the Respondent held that there was no doubt that "advance remittances" for imports are permissible under law, however the Respondent held against the Appellants on this count only on the ground that there was no co-rel....
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....ants to produce Shri Pankaj and/or Shri Dinesh. It is submitted on behalf of the appellant that the failure of the department to summon there who were authors of the alleged entries made in the cash book. 20. It is evident that the entire basis of the case of the department is that the Appellants had made alleged violations in order to square off the alleged difference in value of the imported goods / components viz. under valuing the same and paying the alleged difference in value to its overseas supplier through non-banking channels. There no evidence on record to substantiate the said allegations. There is no statement or document or admission on record to substantiate the said allegations. No independent investigation was done by the department in India or abroad. No show cause notice has been issued in this regard viz. for under valuation by the Customs Authorities. 21. The department at least should have recorded statement of Shri Pankaj and Dinesh Goud to this effect from the sellers of the Appellant or other persons in India or abroad who were allegedly paid money being alleged differential value on behalf of overseas suppliers of Appellant. The Respondent only read and i....
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....that the onus to establish charge against the noticee was on the department, which onus could have been discharged by the department by gathering substantive evidence through independent investigation in India and abroad and further held that the entries made in the diary by itself were not sufficient to prove the allegations against the noticee. Accordingly the Hon‟ble Court held that the impugned order was based on improper appreciation of the probative value of evidence produced by the department in support of its allegations and accordingly the impugned order was set aside being unsustainable in law. Being aggrieved, department had filed SLP before the Hon. Apex Court against the aforesaid judgment rendered by Hon. Delhi High Court and the said petition was dismissed by Hon. Apex Court vide Order dated 23.11.2015. 25.1 Mittal Ispat vs Enforcement Directorate - 2017 (349) ELT 513 (ATFE) In this case also the basic allegation which was leveled by the department was that hawala payments were made to overseas suppliers to square off the differential amount arising out of under valuation of imports made by the Appellant Company, accordingly show cause notice was issued. In t....
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....e its partners as distinguish from a company which stands as a separate juristic entity. It was held that unless there is intention of the legislature to treat the firm and partners as distinct entities, no separate penalty can be imposed and in this regard reference was made to Income Tax Act where there was such intent. It is submitted that as per Section 3(u) of FEMA, 1999, which defines "person" as appearing in Section 13 of Act, there is no intention to treat the firm and its partners as distinct entities. Hence separate penalty cannot be imposed on partners on the partnership firm. 25.5 Vinod Kumar Gupta vs CCE - 2013 (287) ELT 54 (P&H) In this case also, as above, it was held that partnership firm in mercantile usage is the firm in its own, strictly in the eye of law, it is not a legal entity like a natural person. Hence it was held that no separate penalty can be imposed on the partners of the firm. Copies of the aforesaid judgments were handed over at the time of hearing. 26. Learned counsel for the respondent has relied upon the following judgements:- (a) Gian Chand & Brothers Vs Rattan Lal It is submitted that instant judgment has no application to the facts of the....