TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1802
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.... the case are that the Assistant Director, Directorate of Enforcement, Hyderabad Zonal Office, lodged a complaint under Section 16 (3) of the Foreign Exchange Management Act, 1999 (hereinafter referred to as 'the Act') against both the appellants herein for contravention of provisions of the Act and Rules thereunder, more particularly, Section 3(d) read with Section 42 of the Act. M/s. Vasavi Impex is a proprietary concern and the appellant-B. Sanjay is the proprietor and appellant-T. V. Madhusudhan Rao is its authorized signatory. Appellant-T.V. Madhusudhan Rao, assured appellant-B. Sanjay that he would get 25 to 30% interest per annum on the amount of Rs. 3,00,000/- invested in stone cutting tools business. Appellant-T.V. Madhusudhan Rao, was proprietor of M/s. Mark Stonex, which was trading in granite cutting tools, which was established prior to M/s.Vasavi Impex. Granite cutting tools were imported from China and were locally sold. While so, on 17.12.2007 officials of the Directorate of Enforcement searched the residence of appellant-T.V. Madhusudhan Rao and on 18.12.2007 they seized a laptop Rs. 5,00,000/- and certain documents. The statement of appellant-T.V. Madhusudhan Rao ....
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....e conducting business of import of stone cutting tools by M/s. Vasavi Impex and that the appellants have contravened Section 3 (d) of the Act for entering into financial transactions in India for creation of right to acquire foreign exchange of USD 2,77,251/- (equivalent to Rs. 1,10,79,435/-) by persons outside India. In view of the said findings, the Adjudicating Authority imposed penalty of Rs. 55,00,000/- on each of the appellants as proprietor and authorized signatory of M/s.Vasavi Impex under Section 13(1) of the Act. Further, an amount of Rs. 5,00,000/- seized at the residence of appellant-T.V.Madhusudhan Rao being found to be involved in contravention of Section 3 (d) of the Act was confiscated. It is further held that Section 42 of the Act cannot be invoked and the penalty amount was directed to be deposited within 45 days from the date of receipt copy of the said order. 6. Aggrieved by the said order, the appellants filed appeals in Appeal Nos.132 and 133 of 2011 before the Appellate Tribunal along with applications seeking to waive the pre-deposit. The Appellate Tribunal after considering the case of the appellants ordered to pay 30% of the penalty amount in cash and t....
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..... Madhusudhan Rao does not disclose about the involvement of appellant-B. Sanjay in the transactions of M/s.Vasavi Impex. The appellant-B.Sanjay is not aware of any payments in contravention of provisions of the Act. While so, the Directorate of Enforcement relied upon the documents relating to the year 2006, when M/s.Vasavi Impex was established in the year 2007. The contemporaneous imports were made at lower prices than those declared by M/s.Vasavi Impex. Even the domestic sale price of M/s.Vasavi Impex was more than the prices at which the other importers sold the identical goods. The allegations made by the Directorate of Enforcement are not corroborated with material evidence to bring home culpability with respect to allegation of undervaluation of imports or payment through illegal channels. The document dated 01.09.2007 which contains actual prices available in the files recovered from the appellant-T.V. Madhusudhan Rao was ignored. It is further argued that the Enforcement Directorate alleges payment of Indian currency by the appellants to one Prakash of Begum Bazar for onward payment to one Hukum at Chennai for onward payment to the China suppliers through hawala means. Ho....
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....lty. 13. Further, reliance is placed on Mohinder Kakar v. Assistant Director of Enforcement [2000] 112 TAXMAN 602 (FERAB), the said judgment is not applicable to the facts of the present appeals as in the said matter the subject matter is whether where charge is based on valuation of any imported item, that valuation has to be based on competent evidence so as to substantiate charge and it cannot be a matter of statement of person proceeded against or of any other person. Reliance is also placed on the judgment in the case of Union of India v. Adani Exports [2007 (11) TMI 18 - SC], the same is also not applicable because the said matter is about refund of confiscated amount and the present appeals are filed seeking waiver of the pre-deposit. The judgment in Mohtesham Mohd. Ismail v. Special Director, Enforcement Directorate [2007 (10) TMI 273- SC], relied upon by the learned counsel for the appellants is also not applicable as the issue dealt with therein is about Special Director appointed under the Act can himself prefer appeal before the High Court against the order passed by the Tribunal/Board. 14. Learned counsel for the appellants lastly relied upon the judgment in M/s.....
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....stence of undue hardship. 17. Further reliance is placed on the judgment of Bombay High Court in Rajkumar Shivhare v. Union of India (FERA Appeal No.18 of 2012, decided on), wherein it is held that ordinarily a writ petition against the order of the Tribunal on an application for waiver of pre-deposit would not be maintainable. Further, reference is made to the judgment of the Hon'ble Supreme Court of India in Ketan V. Parekh (Civil Appeal No.10301 of 2011, dated 29.11.2011), wherein it is held as follows: "27. In this context, reference can usefully be made to the judgment of this Court in Benara Values Ltd. v. Commissioner of Central Excise (2006) 13 SCC 347. In that case, a two Judge Bench interpreted Section 35-F of the Central Excise Act, 1944, which is pari materia to Section 19(1) of the Act, referred to the judgments in Siliguri Municipality v. Amalendu Das (1984) 2 SCC 436, Samarias Trading Co. (P) Ltd. v. S. Samuel (1984) 4 SCC 666, Commissioner of Central Excise v. Dunlop India Ltd. (1985) 1 SCC 260 and observed: "Two significant expressions used in the provisions are "undue hardship to such person" and "safeguard the interests of the Revenue". There....
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....appellants. Thereafter, proceedings were initiated before the Adjudicating Authority and opportunity was given to both the appellants to appear before the Adjudicating Authority to put-forth their respective defence. On the basis of the statements given by appellant-T.V.Madhusudhan Rao coupled with documents seized during the search in the residential premises of appellant-T.V.Madhusudhan Rao, the Adjudicating Authority held that both the appellants have indulged in under valuation of import goods i.e., stone cutting tools by showing 10% to 25% less of the actual value. It is held that the said findings is not based on the statement of appellant-T.V.Madhusudhan Rao, but is based on the statement which is inconformity with the documents at page 5 and 15 of the file marked 'b' seized from residence of appellant-T.V.Madhusudhan Rao. The facts revealed by the appellant-T.V.Madhusudhan Rao corresponded with the contents of the documents seized during search. 19. The missing links are that the person named Prakash, who was in Begum Bazar and who was in contact with one Hukum in Chennai were not identified. Further, there is no evidence on behalf of the overseas supplier about actual p....