TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 1712
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....Adjudication Order No. 01/FEMA/2015-16/JD(SDC) dated 10.02.2016 and the related Show Cause Notices have no legal basis. The Appellants were found to be in contravention of the charges under Section 3(a) and 3(d) read with Section 39 of the Foreign Exchange Management Act, 1999 ("FEMA"), and accordingly the penalties of Rs. 5,00,000/- (Rs. Five Lakhs Only) were imposed on each of the two Appellants herein. 3. The Ld. Counsel for the Appellants stated that Shri Bharatlal Agarwala was engaged in running a STD Booth under the name and style of M/s. Biswa Lakshmi Communication. The Appellant was also carrying import- export business under the name and style of MDB Enterprise, wherein he was one of the partners of the said firm. The officers of the Respondent Directorate visited the Appellant's STD Booth on 17.05.2006 on receipt of information that the Appellants were engaged in unauthorized transactions in foreign exchange and transfer of funds outside India. The Respondent Directorate recovered one loose sheet which contained a series of numbers and names, from the premise. The officers also visited the premises of the Appellant Sh. Omendra Kumar Chowdhury, another partner of M/....
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....e failure to complete the adjudication proceedings within a reasonable time vitiates the impugned adjudication order and brings the sustainability of the impugned order into question. Ld. Counsel has placed reliance on Jackson Engineers Ltd. versus Union of India, 2006 (199) ELT 34 (Guj); Sunrise Remedies Pvt. Ltd. versus Union of India, 2019 (366) ELT 994 (Guj); Surendralal Girdharilal Mehta versus Union of India, 2018 (364) ELT 81 (Cal); Bhagwandas S Tolani versus BC Aggarwal and Ors., 1982 (07) LCX0003 and Cambata Indus Pvt. Ltd. vs. Additional Director of Enforcement, Mumbai, 2010 (254) ELT 269 (Bom.). 7. Ld. Counsel has argued that since the Impugned Order cannot be sustained on prima-facie basis and the sustainability of the Impugned Order is in itself in doubt, then waiver of the pre-deposit should be granted on the ground of undue hardship. 8. Ld. Counsel for the Appellants did not raise any other grounds in support of his plea for dispensation of the statutory pre-deposit, despite being given the opportunity to do so. 9. Ld. Counsel for the Respondent Directorate has argued that there is a prima facie case of the contraventions of FEMA provisions against the Appel....
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....-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 been so executed or attested; (b) admit the d....
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....alleged that the content of the said account sheet relates to the transactions of unauthorized dealings in Foreign Exchange. 18. We observe that the Respondent Directorate has repeatedly requested the Appellants to explain the nature and purpose of the said document seized from the premises occupied by the Appellant Bharatlal Agarwala. However, even though, the Appellants have repeatedly disowned the documents, they have not been able to explain it otherwise as to what the contents on the seized document reflects. We agree with the relevant findings of the Impugned Order herein below: - "I further find that during personal hearing and also in reply to the show cause notice, the Advocate of the Noticees i.e. S/Shri Bharatlal Agarwala and Omendra Kr. Chowdhury submitted that the said seized account sheets were not of his client Sri Bharatlal Agarwala and the case has been made out on assumption and presumption and there is no admission on the part of the Noticees nor there is any evidence of proof of the contents of the seized documents. I am unable to agree with the submissions made during hearing by the Advocate as because the Noticees were asked to clarify the contents....
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.... present case. The Hon'ble Supreme Court has repeatedly observed that the principles of natural justice are flexible principles and cannot be applied in any straitjacket formula. Therefore, the absence of any formal opportunity of cross-examination per se does not invalidate or vitiate the decision arrived at fairly unless the Appellants can prove the definite inference of the likelihood of prejudice flowing from the refusal to allow cross-examination of the concerned witness. 22. The decision of the Hon'ble Supreme Court in Kanungo & Company vs. Collector Of Customs And Ors, AIR 1972 SC 2136, has laid down that in all cases cross-examination of a witness may not be necessary: - "12. We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show-cause notice issued on August 21, 1961, all the material on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enabl....
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....thing." In such situations, fair procedures appear to serve no purpose since the "right" result can be secured without according such treatment to the individual. 40. In this behalf, we need to notice one other exception which has been carved out to the aforesaid principle by the courts. Even if it is found by the court that there is a violation of principles of natural justice, the courts have held that it may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non- grant of hearing has not caused any prejudice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that the order passed is always null and void. The validity of the order has to be decided on the touchstone of "prejudice". The ultimate test is always the same viz. the test of prejudice or the test of fair hearing." 24. The three Judge bench decision of the Hon'ble Supreme Court in State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706, has summarized the effects of the violation of the prin....
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....remises of the appellants the Adjudicating Authority also placed reliance upon documents produced by Miss Anita Chotrani and Mr. Raut. These documents were, it is admitted disclosed to the appellants who were permitted to inspect the same. The production of the documents duly confronted to the appellants was in the nature of production in terms of Section 139 of the Evidence Act, where the witness producing the documents is not subjected to cross examination. Such being the case, the refusal of the Adjudicating Authority to permit cross examination of the witnesses producing the documents cannot even on the principles of Evidence Act be found fault with. At any rate, the disclosure of the documents to the appellants and the opportunity given to them to rebut and explain the same was a substantial compliance with the principles of natural justice. That being so, there was and could be no prejudice to the appellants nor was any demonstrated by the appellants before us or before the Courts below. The third limb of the case of the appellants also in that view fails and is rejected." 26. Ld. Counsel for the Appellants has placed reliance on judgments in Andaman Timber Industries vers....
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....s Ltd. versus Union of India, 2006 (199) ELT 34 (Guj); Sunrise Remedies Pvt. Ltd. versus Union of India, 2019 (366) ELT 994 (Guj); Surendralal Girdharilal Mehta versus Union of India, 2018 (364) ELT 81 (Cal); Bhagwandas S Tolani versus BC Aggarwal and Ors., 1982 (07) LCX0003 and Cambata Indus Pvt. Ltd. versus Additional Director of Enforcement, Mumbai, 2010 (254) ELT 269 (Bom.). We observe that the judgments in Surendralal Girdharilal Mehta (Supra), Bhagwandas S Tolani (Supra) and Cambata Indus Pvt. Ltd. (Supra), are dealing with cases where the adjudication proceedings had not come to a conclusion despite an inordinate delay of time. The judgement in Jackson Engineers Ltd. (Supra) deals with the dismissal by the Tribunal for non- prosecution of the stay application for pre-deposit. The judgement in Sunrise Remedies Pvt. Ltd. (Supra) is also distinguishable from the present case since it involved transfer of the case to and from the Call Book without notice to the parties involved. In the present case before us, the Show Cause Notice was issued on 29.04.2009 and the adjudication proceedings were completed on 10.02.2016 with the issuance of the Impugned Order. Therefore, the said ju....
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....tion of penalty. 11. Two significant expressions used in the provisions are "undue hardship to such person" and "safeguard the realization of penalty". Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the realization of penalty have to be kept in view. 12. As noted above there are two important expressions in Section 19(1). One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka and Ors. MANU/SC/0199/1994 : [1993]2SCR715 that under Indian conditions expression "Undue hardship" is normally related to economic hardship. "Undue" which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances. 13. For a hardship to be `undue' it must be shown that the particular burden to have to observe or perform the req....