TaxTMI 
TaxTMI 
2022 (6) TMI 165
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....and INR 39,000/-. 3. The appellant was served a Show Cause Notice No. T-4/87D/2001 dated 5th November, 2001, by the Directorate of Enforcement (hereinafter "ED")/respondent no. 2, asking her to show as to why proceedings as provided under Section 51 of the Foreign Exchange Regulation Act, 1973 (hereinafter "FERA") should not be initiated against her for contravening the provisions under Section 18(2) and 18(3) of the Act. The contents of the Show Cause Notice alleged that the company of the appellant took or refrained from taking an action so as to affect security of export to the tune of USD 3,52,784.40 and INR 39,000/- in respect of goods that were shipped by it under the cover of GR forms. It was also alleged that this led to delay beyond prescribed period, without any permission of the Reserve Bank of India (hereinafter "RBI") for effecting the securing of receipt of the full export value of goods exported from the country of final destination of the goods. 4. The appellant furnished a reply to the said Show Cause Notice submitting that only some GR Forms were not realized and others were duly realized, however, the concerned Bank, that is, Indian Overseas Bank, continued....
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....ould not be executed since, the owner of the buyer company was missing and therefore, the recovery of the dues could not be made. It is submitted that despite all these reasonable steps and measures taken by the appellant, in accordance with the requirement of Section 18(3) of the FERA, the Appellate Tribunal passed the impugned order imposing the penalty of Rs. 15,00,000/-. 8. It is further submitted that Section 18(2) of the FERA stipulates that a person exporting goods is duty bound to take any action or refrain from taking any action to secure proceeds from such export. The same provision also provides for an exception clause where the person may refrain from doing anything or may refrain from taking any action for securing such payment, i.e., if he takes permission from the RBI. It means the obligation of the exporter is to secure the payment against the goods exported except in a situation where the permission has been granted by the RBI for waiver. It is submitted that the Indian Overseas Bank had, with the due permission of the RBI, written off all the pending and outstanding GRs of the appellant's firm and hence, there has been no contravention of the provisions of the ....
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....l its legal obligations. The learned counsel for the petitioner has also submitted that the RBI approved 'write off' in respect of the outstanding unrealised export value in respect of the GRIs involved in the complaint. It is contended that the adjudicating authority exonerated the petitioners of self-same charges placed on identical allegations because of the approval of the 'write off' by the RBI. It is submitted that in view of the grant of post facto approval for extension of time in respect of the GRIs involved in the impugned criminal proceedings by the RBI and the release all those GRIs by the State Bank of Hyderabad through which the export was negotiated, no violation of the Act can be said to have been committed by the petitioners relating to the GRIs in question and, as such, the impugned proceedings are liable to be quashed." 10. Reliance is further placed upon Kamal Suri vs. Deputy Director of Enforcement, 2008 SCC OnLine Del 22, where a Coordinate Bench of this Court observed as under:- "14. In Sunil Gulati this Court discussed the earlier judgments of the Hon'ble Supreme Court in Assistant Collector of Customs v. L.R. Malwani, (110) ELT 317 (SC), G.L....
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....rities themselves, in adjudication proceedings, record a categorical and unambiguous finding that there is no such contravention of the provisions of the Act, it would be unjust for such departmental authorities to continue with the criminal complaint and say that there is sufficient evidence to foist the accused persons with criminal liability when it is stated in the departmental proceedings that ex facie there is no such violation. The yardstick would, therefore, be to see as to whether charges in the departmental proceedings as well as criminal complaint are identical and the exoneration of the concerned person in the departmental proceedings is on merits holding that there is no contravention of the provisions of any Act. 15. Uttam Chand and G.L. Didwania were cases where the prosecution was launched simultaneously with the adjudication proceedings on the same set of facts. There was a complete exoneration on merits in the adjudication proceedings. The Court then concluded that such exoneration would render the criminal proceedings unsustainable in law. In P.S. Rajya v. State of Bihar, (1996) 9 SCC 1 apart from departmental proceedings against the appellant for owning....
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....thority is vested with any power nor may it assume to itself the power to decide the question whether permission may or may not be granted or whether it ought or ought not to have been granted. The question may not be permitted to be raised either directly or collaterally." 12. It is submitted that in light of the abovementioned submissions, observations of the High Courts as well as the Hon'ble Supreme Court, the impugned order is liable to be set aside alongwith the penalty imposed upon the appellant. It is also prayed that the amount of Rs. 15,00,000/- be refunded to the appellant by the respondent department. 13. Per Contra, Mr. Amit Mahajan, learned CGSC appearing on behalf of the respondent no.2/ED vehemently opposed the instant appeal and submitted that there is no error in the order of the Appellate Tribunal. It is submitted that the Show Cause Notice dated 5th November, 2001, was served upon the appellant since she could not repatriate the exports value to the tune of USD 3,52,784.40 and INR 39,000/-, thereby, contravened Section 18(2) of the FERA. 14. The learned CGSC for the respondent no.2/ED submitted that as per the requirements of Section 18(2) and 18(3) of ....
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....enough to be considered as taking reasonable steps so as to exonerate the appellant therein from its liability under FERA. The appellant herein admittedly had sent some letters to the foreign buyer in France, which were not sufficient or reasonable steps in order to absolve the liability of the appellant. The relevant paragraphs of the said judgment are reproduced hereunder:- "9. In view of the submissions made by the learned counsel on either side, the short question that has to be decided in this appeal is, whether any requisite and reasonable steps had been taken by the appellant to recover the export proceeds from the overseas buyers? From the evidence on record, I find that out of 6 shipments, two G.R. forms were pertaining to the export made to N.X. General Trading Company, UAE. Since one of the partners in the said firm viz., Chandrasekaran died and as such, the company had been closed, which would be evident from the letter sent by the foreign buyer to the appellant. Similarly, a bunch of correspondences exchanged between the appellant, their Agent-Commercial and their Legal Representatives in respect of the export made to SA, Arguel, France, would show that the sa....
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....f failure to obtain extension from the Reserve Bank of India. 12. A reading of the above would show that the word "reasonable" has to be viewed under the circumstances of each case. So far as this case is concerned, this Court is of the considered opinion that the word 'reasonable' has to be interpreted in consonance with the object of the Act. The object of FERA is to see that the country's foreign exchange resources were not wasted under any circumstances and were properly utilised to advance the national interest. When the object of the Act is to see the proper utilisation of the country's foreign exchange resources for national interest, in my considered opinion, that merely based on the correspondence that has between the appellant, their Agent-Commercial and legal representative of the foreign company, it cannot be construed that the appellant had taken reasonable steps to secure the amount. Be that as it may, when the Act envisages the legal requirement for getting the extention of time from the Reserve Bank of India, the appellant ought to have approached the Reserve Bank of India for getting extension of time to realise the foreign proceeds. Therefore, I a....
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....spondent. The letter correspondence between the appellant and their foreign buyers is not sufficient enough to prove the reasonableness of the appellant to secure the foreign proceeds within the purview of the Act. Therefore, I am not inclined to accept the submissions made by the learned senior counsel for the appellant." 18. It is further submitted that the writing off of the outstanding amount by the RBI was carried out towards a number of cases, including the instant case, for the reason that the export bills were of value less than Rs. 2,00,000/- and more than 10 years old. It is submitted that the RBI waiver was obtained in the instant matter on technical ground that the case pertained to the bracket where the bills were less than Rs. 2,00,000/- and was more than five years old. Therefore, the write off by the RBI could not have had any implication on the penalty imposed under the provisions of the FERA. It is submitted that if such a plea of the appellant is accepted it would defeat the purpose of the law in relation to foreign exchange for repartition of the foreign exchange of the Country and the parties would be free to not get the foreign exchange back to the country ....
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.... goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of subsection (2)." 22. With respect to the question before this Court, the provision stipulates that any person effecting an export of goods is also responsible, rather duty bound, to also effect the securing of proceeds from such export/sale. The only exception, as per the language of the provision, is permission from the RBI, which if obtained may lead to granting of the leverage of not securing the proceeds within the stipulated and prescribed period. Further, sub-section 3 makes a presumption against the person who has not been able to secure the proceeds from exports that he/she has not taken all reasonable steps so as to recover the amount to be realized from the proceeds of sale. The purpose behind these provisions becomes clearer when seen from the standpoint of the legislature and its intention and purpose of bringing into the Act into existence. The preamble of the FERA states as hereunder:- "An Act to consolidate and amend the law regulating certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and the import....
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.... the lapse in payment as well as with the RBI seeking its permission under Section 18(2) of the FERA, by way of sending the abovementioned letters. These communications were sent by the appellant personally and internally to the said entities in order to effect the recovery, however, these steps and measures taken by the appellant, although efforts made towards the recovery of the proceeds of sale, were infact not sufficient to meet the requirement of the provision necessitating "reasonable steps" to be taken for securing the sale proceeds of exports. These communications, in the nature of mere intimations, demands and requests did not equate with effecting recovery by means of taking all reasonable steps as stipulated by Section 18(3) of the FERA for recovery of outstanding amount. Further, another remedy was sought by the appellant by way of filing of a Civil Suit, however, the same was not pursued by her or anyone on her behalf, which in itself is a testament to the casual approach for securing and effecting recovery from the foreign buyer. Moreover, a decree was obtained against the same foreign buyer by the sister concerned of the appellant's firm, which was also not executed.....