2024 (9) TMI 1036

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....ion of India, 1950, seeking quashing of the impugned compounding order dated 19.08.2024, passed by the respondent/Reserve Bank of India ['RBI'], whereby the petitioner has been levied with a fine of Rs. 41,04,675/-for violation of the provisions of the FEMA 1999 [Foreign Exchange Management Act, 1999], which has been directed to be deposited with the respondent/RBI within 15 days of the order, failing which he has been intimated that the same would be recovered in terms of Rule 10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000. 4. Learned counsel for respondent/RBI is present on advance notice. 5. Shorn off unnecessary details, suffice to state that the petitioner is a citizen of United States of America and Overseas Ci....

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....ent/RBI thereby selling the properties an Indian Citizen, the petitioner has been levied an exorbitant penalty without any basis. 9. Learned counsel for the respondent/RBI has relied upon the notification providing Master Direction-Compounding of Contravention under the FEMA, 1999, and has referred to 'Guidance Note on Computation Matrix' at Sub-Clause [4] of Part-I of Clause 7.4 of the aforesaid Master Direction, which provides as under:- 4] All other contraventions,-including all contraventions of FEMA 20(R)/2017/NDIR,2019/FEMA 395/2019/, except contravention pertaining to FLA returns and corporate guarantees Rs.5000+given percentage: 1st year: 0.50% 1-2 years: 0.55% 2-3 years: 0.60% 3-4 years: 0.65% 4-5 years: 0.70% ....

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....e of agricultural property (Contravention A) and mode of payment (Contravention B), penalty was calculated in terms of para 7.4.1, Guidelines Note on Computation Matrix, of Master Direction on Compounding. a. Penalty for Contravention A = Rs. 50,000 (Base penalty) + Rs. 10,261.69 (0.75% of the amount of contravention, i.e., Rs. 13,68,225/-) b. Penalty for Contravention B = Rs. 50,000 (Base penalty) + Rs. 8,686.69 (0.75% of the amount of contravention, i.e., 11,58,225/-) c. Undue gain = Rs. 1,48,31,775/- d. Total calculated penalty = Rs. 1,49,50,723.38/- vi. However, as per Para 7.4(II) of Master Direction on compounding, the amount imposed should not exceed 300% of the amount of contravention. Ac....