TaxTMI 
TaxTMI 
2026 (2) TMI 847
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..../CHN/2017 filed by Shri S. Gowrishankar, FPA-FE-71/CHN/2017 filed by Shri Dhiraj Gupta, FPA-FE-72/CHN/2017 filed by M/s Shami Impex, FPA- FE-73/CHN/2017 filed by Shri Kamalesh Gupta and FPA-FE- 74/CHN/2017 filed by Smt. Mamta Gupta, against the Order No. JD/CEZO/Z-1/06/2017 dated 30.06.2017 (Impugned Order) passed by the Joint Director, Directorate of Enforcement, Government of India, Chennai Zonal Office. The Ld. Adjudicating Authority (AA) imposed the penalties of Rs. 1,00,000/- on Shri S. Gowrishankar, of Rs. 15,00,000/- on Shri Dhiraj Gupta, of Rs. 3,00,000/- on M/s Shami Impex, of Rs. 15,00,000/- on Shri Kamalesh Gupta and of Rs. 1,00,000/- on Smt. Mamta Gupta for the contravention of Section 3(b) of the Foreign Exchange Management Act, 1999 (FEMA), vide the Impugned Order. 2. Ld. Counsel for the Appellants stated that the Impugned Order is bad in law and has violated the principles of natural justice. The Order is arbitrary and passed hastily without proper investigation. Ld. Counsel contended that no investigation whatsoever was conducted to find out any evidence. The entire case has been made out on the basis of the statements recorded by DRI Officers. Ld. Counsel argued....
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....e argued that since the underlying case made against the Appellants fell then the Impugned Order against the Appellants cannot hold. He therefore, pleaded to allow the Appeals. 5. Ld. Counsel for the Respondent stated that the Impugned Order is speaking Order and was issued after providing a number of opportunities to the Appellants for representing themselves and offer explanation to the allegations made against them. Ld. Counsel stated that summons under Section 37 of FEMA were issued to the Appellants. Shri S. Gowrishankar, in his statement recorded on 20.01.2015, stated that as he was close to Shri Kamlesh Gupta, on whose advice he joined as partner of the Firm M/s Shami Impex. He stated that he used to sign all the documents including bank document without being aware of the actual imports and transactions carried out by the Firm. Summons under Section 37 of FEMA were issued to Shri Kamlesh Gupta and Shri Dhiraj Gupta, however, both did not appear to join the investigation. On one pretext or other both sought adjournment from appearance. They wrote back similar letters to state that they were threatened by DRI Officers with arrest. They also stated that they closed their bu....
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.... were paid through the agents of suppliers stationed in India; that the contact person of each overseas supplier used to inform him of the representative of the supplier stationed in India through whom the differential amounts were to be handed over in Indian rupees; that the differential amount handed over to the various supplier agents were in turn remitted to the overseas supper for which confirmation was received telephonically from the contact person of the respective overseas supplier, that the names of the contact persons of the overseas suppliers were mentioned in his statement dated 17.07.2009." 7. Ld. Counsel for the Respondent further submitted that Shri Kamlesh Gupta in his statements dated 17.07.2009 and 20.10.2009 tendered under the Customs Act, 1962 corroborated the statements of Shri Dhiraj Gupta. He clarified that only one invoice per import consignment was received through banking channels at the time of relevant import. The differential amount representing the difference between the value declared to Customs and the actual import value were paid through an agent of the respective overseas supplier. Ld. Counsel for the Respondent stated that during the course o....
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....ther gone on to deal with the non-cooperation of the two Appellants in paragraph 7.1 of the Impugned Order, which is as follows: "7.1. I have carefully gone through the Complaint along with the documents relied upon, the Show Cause Notice issued to the Noticees, the written submissions of the Noticee and the submissions made by two of the Noticees during the hearing. Before proceeding to finalize the issue on hand, I intend to place on record the conduct of the Noticees in participating in the investigations under FEMA, 1999. It is a matter on record that the investigation initiated under FEMA, 1999 emanates from the investigation conducted by the Directorate of Revenue Intelligence in the imports made in the name of M/s Shami Impex, by Noticee 2 and Noticee 3 viz., S/Shri Kamalesh Gupta and Dhiraj Gupta respectively. M/s Shami Impex is a Partnership firm consisting of Smt. Mamta Gupta, Noticee-5 and Shri. S. Gowri Shankar, Noticee-4 as its Partners. During the investigation under FEMA, 1999 despite being issued Summons under Section 37 of FEMA, 1999, none of the Noticees showed their intent or willingness to co-operate in the investigation by making their appearance in pu....
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....bition in relying upon statements made under the Customs Act 1962 for the purposes of the adjudication proceeding under the FEMA, more so when reliance is placed upon documents to the complaint made to the Adjudicating Authority. 22. Section 3(b) provides that no person shall make any payment to or for the credit of any person resident outside India in any manner. In the present case, there is a complete absence of any legitimate consideration, such as the supply of goods against which an inward remittance as high as Rs. 75.39 crores was received. Hence, the only possible inference that would arise is that the inward remittance of Rs. 75.39 crores was matched by a hawala transaction involving transactions through a person resident outside India. Similarly, under Section 3(d), no person shall enter into any financial transaction in India as consideration for or in association with the acquisition or creation or transfer of a right to acquire any asset outside India. Money is a form of assets. The acquisition of money outside India is the acquisition of an asset. This acquisition would be subject to the FEMA and has to be in accordance with law. The Appellant was a party to ....
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....ent and cogent evidence, which would lend adequate assurance to the court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded." In K.T.M.S Mohamed Vs. Union of India [(1992) 3 SCC 178] the Hon'ble Supreme Court held that merely because statement is retracted, it cannot be regarded as involuntary or unlawfully obtained. In this regard, following observations were made in paragraph 34: "34. ... But suffice it to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom Authorities or the officers of the Enforcement under the relevant provisions of the respective Acts is a sine qua non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means then statement must be rejected brevimanu.....
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....prematurely issued and incorrect legal provisions invoked. xxxxx 7.3 Its only after final assessment that the relevant date for issue of a notice to recover duty which has not been levied or has been short levied etc. involving fraud, if any, becomes operative. By issuing a legally defective notice, the opportunity to examine the probative value of the documents including statements on which reliance was placed by the department, in support of its allegations, was lost. The judgments cited by revenue regarding fraud are hence not found relevant in the peculiar facts of this case." We observe that there is no such requirement under the provisions of FEMA, as are statutorily provided under the Customs Act, 1962. The SCN under the Customs Act, 1962 became defective because it arose from the provisional assessment of the goods imported and not from the final assessment of the said goods under the Customs Act, 1962. This initial defect has been held to have vitiated the demand for the Customs duty from the Appellants. We do not find that the Complaint and the SCN issued under FEMA suffers from any defect in the absence of any such statutory provisions under the Act. The a....
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....n as to documents in certain cases.- Where any document- (i) is produced or furnished by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law; or (ii) has been received from any place outside India (duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation of any contravention under this Act alleged to have been committed by any person, and such document is tendered in any proceeding under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him, the court or the Adjudicating Authority, as the case may be, shall- (a) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have ....
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....e Complaint under FEMA (Annexure I of the SCN of DRI). On perusal of the Annexure B of the Complaint under FEMA (Annexure II of the SCN of DRI) it is noticed that the following consignments have also been found to have been imported from the same supplier viz., M/s Cycle Plant SDN BHD. Bill of Entry No. 614751/ 04.12.2007; 555066/ 17.09.2007, 564101/ 27.09.2007; 575017/ 11.10.2017, 902320/ 12.01.2008. Inasmuch as it has been proved with documentary evidences that a supply made in December 2007 was actually worth US$ 850, there cannot be any doubt about accepting that the actual values of the consignments imported during that period are of the same value only whether it is mentioned in Annexure A(I) or B(II). Similarly, vide Bill of Entry No. 951245 dated 11.02.2009 (Annexure-A), LDPE Reprocessed Granules were imported from M/s. Eubicon Sdn Bhd by declaring the value as US$ 300 whereas GEQD evidence showed that the actual value is US$ 650 and the same was admitted by Shri Kamalesh Gupta and Shri Dhiraj Gupta. Vide Bill of Entry No. 982491 dated 30.03.2009, the same product could be seen to be imported declaring at US$ 300. Thus, though it figures in Annexure B(II), the value adopted....