TaxTMI 
TaxTMI 
2026 (4) TMI 436
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....vices) Regulation, 2000. The directors (appellants herein) of the J.B. Diamonds Ltd. have contravened the aforesaid provisions and penalized with a sum of Rs. 5,00,00,000/- as well as Rs. 5,000/- each as detailed in the impugned order. 2. The facts of the case reveal that intelligence was gathered in the Mumbai Zonal Office of the Directorate of Enforcement, that M/s J.B. Diamonds Ltd. engaged in the business of import and export of rough, cut and polished diamonds did not realize the proceeds of exports for more than twelve months from the date of exports. Based on the information, summons were issued to the appellants. 3. It was further revealed that one of the directors, Vallabhbhai P. Surani, in his statement recorded on 15.02.2010 stated that M/s J.B. Diamonds Ltd. was established in 1981 and in the year 2007 the company changed its status and became a limited company. Sh. Vallabhbhai P. Surani, Sh. Jivarajbhai P.Surani, Sh. Bhagwanbhai K Kukadia, Sh. Virjibhai K. Kukadia, Sh.Rajeshbhai J Surani, Sh. Suresh V. Kukadia and Smt. Kalavatiben V. Surani are the directors in M/s J.B. Diamonds Ltd.. He further added that the rough and polished diamonds were imported from Belgiu....
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.... Submissions of appellants: 6. The Ld. Counsel for the appellants argued that the respondent wrongly held that there was a willful inaction on the part of the appellants in taking necessary steps to realize the export outstanding. However, this claim of the respondent is based on the presumption that certain foreign buyers were the sister companies of M/s J.B. Diamonds Ltd. The respondent completely failed to appreciate that the company had received Rs.4,140 crores foreign exchange out of the total export of Rs. 4,459 crores during 2005 to 2009, a portion of which come from these very so-called sister concerns. 7. It was also argued that the respondent failed to appreciate that the provisions of section 8 of FEMA, 1999 does not define the terms "reasonable steps" to be taken by an exporter. Similarly, Regulation 15 of the Foreign Exchange Management (Export of Goods & Services) Regulation, 2000 also does not deal with the term "reasonable steps" to be taken by the exporter when there is a delay in receipt of payment. On the contrary, Regulation 15 requires RBI to give such directions as appears to it to be expedient for the purpose of securing the payment. There is no clear ....
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....gulation would take place only when the J.B Diamonds Ltd. was to refund the advance to the respective buyers after a period of one year without seeking RBI approval. 10. The appellant also submitted that they exercised all due diligence and took all the possible steps to realize the export proceeds including appointment of legal counsel to initiate and pursue liquidation proceedings against the concerned entities. Moreover, the appellants asserted that they have paid the pre-deposit of Rs.25,00,000/- in compliance of the statutory requirement under FEMA, 1999. 11. The appellant also submitted that one of the directors of the company has expired and the said director was in charge of the operations of the company and not the other directors i.e. the present appellants. Therefore, none of the appellants would be liable under section 42(1) of the FEMA, 1999. It was contended that the role and liability of the individual directors ought to have been considered separately and cannot be mechanically attributed. The appellants limited their arguments to the points mentioned above, despite an opportunity provided during the final hearing. Submissions of respondents: 12. The ....
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....ditions, is received without any delay, direct any exporter to comply with such requirements as it deems fit. (3) Every exporter of services shall furnish to the Reserve Bank or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relation to payment for such services. 16(1)(i) of Foreign Exchange Management (Exports of Goods & Services) Regulation, 2000- 16. Advance payment against exports. - (1) Where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall be under an obligation to ensure that- (i) the shipment of goods is made within one year from the date of receipt of advance payment; . . Provided that in the event of the exporter's inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilised portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank. ....
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....] [Inserted by G.S.R. 199(E), dated 27.2.2001 (w.e.f. 27.2.2001).] [by a Status Holder Exporter, as defined in the Exim Policy in force,] [Inserted by G.S.R. 473(E), dated 1.4.2002 (w.e.f. 8.7.2002).][then notwithstanding anything contained in sub-regulation (1), the amount representing the full export value of goods or software shall be realised and repatriated to India within twelve months from the date of export: Provided that the Reserve Bank may for a sufficient and reasonable cause shown, extend the said period of twelve months. (b) The Reserve Bank may for reasonable and sufficient cause direct that the [said exporter/s][shall cease to be governed by sub-regulation (2): [Inserted by G.S.R. 199(E), dated 27.2.2001 (w.e.f. 27.2.2001).] Provided that no such direction shall be given unless the [said exporter] [Inserted by G.S.R. 199(E), dated 27.2.2001 (w.e.f. 27.2.2001).] [has been given a reasonable opportunity to make a representation in the matter. (c) On such direction, the [said exporter/s] shall be governed by the provisions of sub- regulation (1), until directed otherwise by the Reserve Bank.]] The prescribed scheme under the Act a....
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....he value after deductions allowed under clause (iii), has not been made in the specified manner within the specified period. This contention of appellants is rejected as the appellants have violated the aforesaid Regulation by failing to realise export proceeds within the prescribed period and not by securing the full export value of exports. It is noted that a substantial portion of export proceeds remained unrealised, including amounts arising from transactions with sister concerns without obtaining permission from Reserve Bank of India or an authorized dealer. 18. We have perused the documents produced by the appellants to demonstrate liquidation of certain overseas buyers, however, the copy of these records was not obtained from any official sources but were merely printouts obtained from internet sources. We also find that there is no material on record to demonstrate that the appellants had filed claims before liquidators or initiated effective recovery proceedings against the overseas buyers in question. It is also noted that the companies have undergone liquidation after the Directorate of Enforcement started investigation in the matter. Even though the director appel....
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....ing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention. . . Explanation.-For the purposes of this section- (i) "company" means any body corporate and includes a firm or other association of individuals; and (ii) "director", in relation to a firm, means a partner in the firm. The said provision stipulates that where a contravention has been committed by a company, every person who at the time of contravention was in charge of and responsible for the conduct of its business shall be deemed to be guilty unless he proves that the contravention took....