AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 559
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....Amir Akbar Khan, as also to another company, namely, Greenways Shipping Agencies Pvt. Ltd. and its Directors. However, in the two appeals which are the subject matter of this order, we are concerned only with the first- mentioned company, namely, M/s. S.S.K. Exports Ltd., and only one of its directors, namely, Shri Anoop Kumar. The allegation against S.S.K. Exports Ltd. was regarding contravention of the provisions of Sections 8(1), 48 and 49 read with Section 72(c) of the Foreign Exchange Regulation Act, 1973 ('FERA, 1973'). Shri Anoop Kumar, Director of the said company, was charged for the aforesaid violations in terms of the provisions of Section 68 of the said Act which provided that where a person committing a contravention of any of the provisions of that Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. 3. The aforementioned SCN was issued base....
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....he then Appellate Tribunal for Foreign Exchange (ATFE), which has since been merged with this Appellate Tribunal. This Appellate Tribunal disposed of the appeals vide an order dated 21.11.2018, whereby the quantum of penalty imposed upon M/s SSK Exports Ltd. was reduced to Rs. 10,00,000/- (from Rs. 20,00,000/-) and the penalty imposed upon Shri Anoop Kumar was reduced to Rs. 2,00,000/- (from Rs. 5,00,000/-). The said single-member bench order of the Appellate Tribunal was challenged by the appellants before the Hon'ble Calcutta High Court. The Hon'ble High Court, in their order dated 14.02.2019, observed that the order lacked proper analysis of issues and proper findings, set aside the same, and remanded the matter back to this Appellate Tribunal for de novo adjudication. 7. In pursuance of the directions of the Hon'ble Calcutta High Court, the matters were listed for hearing on various dates but could not be heard on merits primarily on account of the Covid-19 pandemic, the inability expressed on several occasions by the learned counsel for the appellant, who is a senior citizen, to travel to Delhi from Kolkata, and the subsequent lack of coram in this Appellate Tribunal due the ....
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....ned by an L/C opening Bank after getting a consideration. Under the said Scheme, as per the RBI Circular, the Bank for Foreign and Economic Affairs, Moscow (BFEA) was to issue the L/C to any of the nominated banks. One such nominated bank was the United Bank of India, Ernakulam Branch. The said bank, after receiving the L/C, was required to have a confirmation from RBI of deposit from the Deposit Account Department, Mumbai before advising the opening of L/C to the beneficiary constituent. This could be done after the funds of L/C are made available which would mean that the L/C opening bank was to make the fund available for L/C for which the L/C opener was required to pay. In each of the Bills of Lading, the 'Port of Discharge' is mentioned as Moscow, and the port of loading is Cochin. 11. It is further submitted that since Moscow is a dry port, for the purpose of delivery, goods have to be unloaded at any other port as decided by the shipping company. Normally, for the shipment for Moscow, the consignment is unloaded at Kotka port in Finland. Each of the Bills of Lading was duly negotiated with the Bank and it was presented by the United Bank of India to the L/C opening Bank in ....
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....ai only, and did not pay tax up to Moscow. Such ITRs are filed before the vessel is permitted to leave and the shipping company has to pay tax upfront. Thus, this was a clear case of income-tax avoidance by the shipping company *The shipping company filed manifest on the basis of which it was permitted to leave Cochin port. In the said manifest the place of discharge of cargo is mentioned as 'Moscow in transit Dubai' 14. It is contended that under the Indian Bill of Lading Act, 1856, the Bill of Lading will represent the title of the goods, and Bill of Lading in the hands of the consignee is conclusive evidence of shipment as against the master. The RBI, in reply to an RTI query, has answered that the obligation of the exporter under the subject Circular is completed after the BL is issued and negotiated through the nominated bank. After the export is effected and the Bill of lading is issued, the international law governing the contract becomes operative. Under international law, BL enables the person holding it to dispose of the goods while the goods are in transit. An extract from Schmitthoff's 'Export Trade: The Law and Practice of International Trade' 2000 edition has b....
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.... undermines the prime duty to the shipper of the cargo. The decisions in Glynn vs. Margetson 1983 AC 351 and Leduce vs Wards 1888 20 QBD 475 are referred to. 20. It is contended that the learned adjudicating authority itself has disbelieved the story of the shipping company. After holding the story of the shipping company to be a cock and bull story, the adjudicating authority, contrary to its own finding, imposed a penalty on the appellant by revisiting the facts which were held by him to be a cock and bull story. As such, it is contended, that the order of the learned adjudicating authority was perverse. 21. It is further submitted that the order of the learned adjudicating authority, on the face of it, was bad also because it ignored the handwriting experts' opinion produced by the appellant. The learned authority held that the same is of no use as the original had not been identified and is not proved. The appellants contend that if the original signature is not identified and not proved, in that case the adjudicating authority could not have relied upon fax which he has himself disowned. 22. It is also contended that the exporter is not liable for any action of the fore....
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....nch of the documents relied upon the Show Cause Notice. For ready reference few instances of such nature are annexed and marked "C" collectively. These documents show that in any international trade, buyer can take delivery of goods at any place, by requesting the shipping company to get delivered the goods and get a new switch BL issued. 27. In the light of the above, it is submitted that the case against the appellant for breach of the RBI Circular is not sustainable and the appeal, therefore, should be allowed. It is also contended that the penalty in any event is excessive when there is no fault of the appellant. 28. It is also contended that the impugned order is even otherwise bad for the following reasons: (1) The adjudicating authority did not consider the submissions that, a) Section 73(3) of FERA had no applicability against the appellant, b) the circular of RBI did not apply to the appellant, c) the circular is not gazetted or notified, d) the show cause notice could not have been proceeded with as it was received by the appellant on 03.06.2002 and protection of Section 49(3) of the FEMA was not available (2) The Adjudicating authority gave no finding on the charge....
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....he payments should have been received in hard currency. Instead, the exporter received the payments through the Rupee Credit Scheme of Russia. The appellant, by diverting consignment to Dubai, generated hard foreign currency in Dubai and, therefore misused the said scheme. 30. Collusion between the appellant company and Greenways Shipping to carry out transactions in violation of FERA, 1973 is alleged. It is contended that the documents received from the Shipping Agent M/s Greenways Shipping Agencies Pvt. Ltd. revealed that the consignments of a total value of Rs. 1,91,37,094.70/- were diverted to Dubai on instructions of the exporter (the appellant company) vide written requisitions dated 16.09.1997, 24.09.1997, 31.10.1997 & 26.11.1997. Paragraph 71 page 43 of Adjudication order are relied upon in this regard. It is submitted that the said delivery was taken by M/s. Indem General Trading (LLC), Dubai who was the agent (or authorised representative) of the exporter. 31. Our attention is invited to paragraph 71 of the impugned order Ld.AA has recorded in its finding that "the exporter has failed to furnish any documentary evidence to show that M/s Arina Moscow or M/s Thermoecostro....
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.... behalf of the appellant that in Standard Chartered Bank v. Directorate of Enforcement, (2006) 4 SCC 278 it was held that Section 68 of FERA relating to offences by companies, by sub-section (1) introduces a deeming provision that the person who was in charge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty along with the company of the contravention of the provisions of the Act and liable to be proceeded against and punished accordingly. The proviso, no doubt, indicates that a person liable to punishment could prove that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. Sub-section (2) again speaks only of a contravention of the provisions of the Act and the persons referred to in that sub-section are also to be deemed to be guilty of the contravention and liable to be proceeded against and punished accordingly. That, the directors of the company are liable to be proceeded against as they had the knowledge of the said direction and have acted in the derogation of the provisions of the rules under FERA, 1973 with the company. Analysis and Fi....
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....y asking them to divert the consignment and deliver the same at Dubai to M/s. Indem General Trading LLC were forgeries. We find that this issue has been dwelled upon at length by the learned adjudicating authority. It would be beneficial to refer to the relevant paragraph of his order which reads as below: "64. I am unable to accept the contentions of M/s S.S.K. Exports Ltd. that they did not issue letters of request for diversion of the cargo in support of which a handwriting expert's opinion was submitted. To my mind, any such handwriting opinion, in the instant case, is not relevant. An opinion of handwriting expert is acceptable only if the writer's handwriting on a document is compared with that of the questioned document, i.e. identification of the person who generated that questioned document is an essential ingredient. M/s Greenways' version is only to the extent that they had received letters from M/s S.S.K. Exports Ltd. The question as to who wrote or issued these letters does not, therefore, come for evaluation. As far as the shipping agent is concerned, letters received on the shipper's letter-head alongwith complete details of the shipment container n....
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....ter, this fact together with the handwriting expert's opinion would prove that these letters originated from 'M/s Greenways' office. In regard to the aforesaid contention, I do not find that these letters were certainly in the nature of fax messages and submitted initially by Shri P. Sengupta, General Manager of M/s Greenways, Kolkata and, thereafter, copies of the said letters were furnished on various occasions during personal hearings/written submissions. If the Kolkata office of 'M/s Greenways' called up its Cochin counterpart and requisitioned copies of these letters, it is but natural that the said letters would reflect the fax number of Cochin office of M/s Greenways. In view of the trends noticed during the course of adjudicating hearings, I would tend to believe that the exporter's provocation for coming up with the cliam about the letters being forged was actuated by ulterior motives to misrepresent that no directions were conveyed to the shipping agent for diverting cargo to Dubai. Interestingly, the fact of off-loading consignment in Dubai stands conceded & accepted by both the shipper as well as the shipping agent. The dispute is to the effect that whil....
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....l findings of the learned adjudicating authority, we find ourselves substantially in agreement with his conclusions. Upon perusal, the letters in question appear to be authentic in all respects. As pointed out by the learned adjudicating authority, they are on the appellant company's letterhead, mention all the essential details such as the shipment container number, voyage number, name of the like vessel etc. The charge of forgery is a serious one under law. No facts have been placed before us to indicate that any criminal complaint was filed by the appellant against the shipping company for the alleged forgery and if so, what was the fate of the same. The learned adjudicating authority has also referred to the fact that delivery of the cargo to Dubai instead of Russia was in fact, against the commercial interest of the shipper as it would result in reduced freight charges, unless, of course, the shipping company, was in collusion with the exporter and benefitted by diverting the cargo to a hard currency area in order to generate hard foreign currency in Dubai on the one hand and at the same time also realised payment in rupees under the state credit scheme for export to Russia. ....
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....the foreign buyers, and other export documents on the pretext that the same could not be traced out because of shifting of the office premises further strengthens our view in the matter. 43. In sum and substance, we are of the view that the culpability of the appellant company is adequately established on the preponderance of probabilities, rendering them liable for imposition of penalty under FERA, 1973. 44.As regards the appellant in FPA-FE-175/KOL/2003, namely, Shri Anoop Kumar, it is not in doubt that he was a director of the company at the relevant time. Section 68 of FERA, 1973 reads as below: "68. (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the cont....