2025 (12) TMI 1472

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....1.2019 (Impugned Order) passed by the Additional Director, Enforcement Directorate, Mumbai. Ld. Adjudicating Authority (AA) held that M/s Rajaram Bandekar (Sirigao) Mines Pvt. Ltd. (Respondent No.1) contravened the provisions of Sections 7 and 8 of Foreign Exchange Management Act, 1999 (FEMA) read with Regulations 3, 9 and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations 2000. Consequently, penalty of Rs. 25,00,000/- was imposed on Respondent No. 1. Penalty of Rs. 5,00,000/- was imposed in the Impugned Order on Shri Narayan Rajaram Bandekar (Respondent No. 2), the Managing Director of the aforementioned Company for the aforementioned contraventions in terms of Sections 42(1) and 42(2) of FEMA.  The charges a....

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....ed as legitimate payment of agency commission against export." As such, it was not open for the Ld. Adjudicating Authority to impose only 1.82 % of the amount involved in contravention as penalty on Respondent No. 1. The Ld. Adjudicating Authority in paragraph 5.8 of the Impugned Order dated 29.11.2019 observes that "Thus the facts of the case appear to confirm the charges of under-valuation. The significance of these charges from the FEMA perspective is failure on the part of the exporters to realize the export proceeds representing the commission amount, which was otherwise forming an integral part of the true value of the goods, which should have been realized as part of the export proceeds. Accordingly, the charges framed in the complai....

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....rial evidence has been found against the Respondent No. 3. In fact, the Ld. AA has observed that Shri N P Vasu Nair was the General Manager of the Respondent Company, who used to negotiate with the foreign buyer to whom Iron ore was exported.  However, the results of the negotiations were finally decided by the Managing Director Shri Narayan Rajaram Bandekar (Respondent No. 2). Ld. AA dropped the charges against Respondent No. 3 due to lack of evidence. We agree with the findings of the Ld. AA on this aspect. 7. The Ld. AA has found that the goods which were exported were undervalued and hence the export proceeds were not realized to the extent that the commission charges were paid and not included in the invoice value. We also obse....

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....ch may extend to five thousand rupees for every day after the first day during which the contravention continues." 8. On reading of Section 13(1) of FEMA, it is obvious that the maximum amount of penalty which can be imposed under the Section is three times the amount of contravention involved. From the language of the Section, it is clear that the Section has not prescribed either a fixed amount of penalty or minimum amount of penalty. It therefore, follows that the amount of the penalty which is to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before it. We find that the Ld. ....