TaxTMI 
TaxTMI 
2026 (4) TMI 699
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Impugned Order MISC. APPEAL (FEMA) No. 2/2025 Appeal No. 212/2010 31.05.2012 MISC. APPEAL (FEMA) No. 3/2025 Appeal No. 210/2010 31.05.2012 MISC. APPEAL (FEMA) No. 4/2025 Appeal No. 213/2010 31.05.2012 2. As the three appeals arise from the common facts and raise common issues, they are being taken up together for disposal by way of this common judgment. 3. The following Show Cause Notices were issued to the appellant(s), which resulted, first in the Adjudication Order No. ADJ/25-28/B/SDE/RAJ/2010/FEMA dated 17.08.2010 passed by the Adjudicating Authority and thereafter, the impugned order of the Appellate Tribunal. For the sake of easy reference, they are detailed hereinunder in the form of a chart: Appeal No. before this Court Appeal No. before the Appellate Tribunal Date of show cause notice Date of the order of the Adjudicating Authority MISC. APPEAL (FEMA) No. 4/2025 Appeal No. 213/2010 SCN No. T-4/07-B/SDE/KNR/2008 dated 12.09.2008 17.08.2010 MISC. APPEAL (FEMA) No. 2/2025 and 3/2025 Appeal No. 210/2010 and 212/2010 SCN No. T-4/16-B/SDE/KNR/2008 dated 31.10.2008 17.08.2010 MISC. APPEAL (FEMA) No. 3/2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lant(s), casts a duty only on the 'Authorised Dealer' and, therefore, any contravention of the same can only lead to a penalty proceeding against such 'Authorised Dealer' and not against the appellant(s) who had opened such accounts. 9. He further submits that, in any case, Regulation 5(1)(iv) of the Regulations stood omitted by a Notification dated 01.03.2002. As the show cause notices were issued thereafter, the same were not maintainable and liable to be quashed on this ground. In support, he places reliance on the judgment of the Supreme Court in Rayala Corporation (P) Ltd. & Anr. v. Director of Enforcement, New Delhi, (1969) 2 SCC 412. 10. He further submits that in terms of the Circular dated 04.03.2002 issued by the Reserve Bank of India, the maturity proceeds of the deposits under NRNR Accounts could be credited to the account holder's Non-Resident (External) Rupee Account ('NRE Account'), which was freely convertible. He submits that, therefore, even assuming a technical violation in opening the new accounts, the appellant(s) could not have been penalised. 11. He submits that without prejudice to the above, no reason has been assigned for confiscating the amount l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nk from persons resident outside India.-(1) An Authorised Dealer in India may accept deposit- (iv) under the Non-resident (Non-Repatriable) Rupee Account Scheme, (NRNR account), specified in Schedule 4, from any person resident outside India." 17. In terms of the above Regulation, an Authorised Dealer in India may accept, under an NRNR Account, amounts from any person resident outside India in accordance with the Scheme specified in Schedule 4 of the Regulations. 18. Schedule 4 of the Regulations, in turn, provides that any person resident outside India (except individuals/entities of Pakistan/Bangladesh nationality/ownership) may open NRNR Accounts with an Authorised Dealer, and that such accounts should be opened in Indian rupees out of funds remitted from outside India through normal banking channels. It further states that premature withdrawal of NRE/FCNR deposits for opening NRNR deposits with an Authorised Dealer other than the one with whom the NRE/FCNR account is maintained will attract a penalty, if any, as per the directions issued by the Reserve Bank of India from time to time. It further states that loans/overdrafts in India against the security of these ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "13. Penalties.-(1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues." 20. From the above, the submission of the learned counsel for the appellant(s) that penalty for the violation of Regulation 5(1)(iv) read with Schedule 4 of the Regulations can be imposed only on the Authorised Dealer and not on the appellant(s), therefore, cannot be accepted. 21. As regards the omission of Regulation 5(1)(iv) of the Regulations by the Notification dated 01.03.2002 and its effect on the subsequently issued show cause notices to the appellant(s), we shall first quote Section 6 and Section 6A o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ree expressions "delete", "omit", and "repeal", it becomes clear that "delete" and "omit" are used interchangeably, so that when the expression "repeal" refers to "delete" it would necessarily take within its ken an omission as well. This being the case, we do not find any substance in the argument that a "repeal" amounts to an obliteration from the very beginning, whereas an "omission" is only in futuro. If the expression "delete" would amount to a "repeal", which the appellant's counsel does not deny, it is clear that a conjoint reading of Halsbury's Laws of England and the Legal Thesaurus cited hereinabove both lead to the same result, namely, that an "omission" being tantamount to a "deletion" is a form of repeal. 14. The learned counsel's second argument that Section 6-A of the General Clauses Act when it speaks of an "omission" only speaks of an "amendment" which omits and, therefore does not refer to a repeal, is equally fallacious. In Bhagat Ram Sharma v. Union of India, this Court held that there is no real distinction between a repeal and an amendment and that "amendment" is in fact a wider term which includes deletion of a provision in an existing st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not retrospective unless expressly laid down or by necessary implication inferred." (emphasis supplied) 15. It is clear, therefore, that when this Court referred to Section 6-A of the General Clauses Act in Fibre Board case and held that Section 6-A shows that a repeal can be by way of an express omission, obviously what was meant was that an amendment which repealed a provision could do so by way of an express omission. This being the case, it is clear that Section 6-A undisputedly leads to the conclusion that a repeal would include a repeal by way of an express omission. 16. The learned counsel then argued that while distinguishing the Madhya Pradesh High Court judgment in Rayala Corpn. a Constitution Bench of this Court expressly held as the first reason that Section 6 applies only to repeals and not to omissions. The Fibre Board judgment has clearly held as follows : (SCC p. 354, para 31) "31. First and foremost, it will be noticed that two reasons were given in Rayala Corpn. (P) Ltd. [Rayala Corpn. (P) Ltd. v. Director of Enforcement, (1969) 2 SCC 412] for distinguishing the Madhya Pradesh High Court judgment. Ordinarily, both reasons would ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....use. This being the case, Section 6 can in any case have no application as Section 6 only applies to a Central Act or Regulation "unless a different intention appears". A different intention clearly appears on a reading of clause (2) as only a very limited savings clause is incorporated therein. In fact, this aspect is noticed by the Constitution Bench in para 18 of its judgment, in which the Constitution Bench states: (Rayala Corpn. case, SCC p. 425) "18. ...As we have indicated earlier, the notification of the Ministry of Home Affairs omitting Rule 132-A of the DIRs did not make any such provision similar to that contained in Section 6 of the General Clauses Act."" 23. In the present case, the only effect of the omission of Regulation 5(1)(iv) of the Regulations is that the Authorised Dealers cannot now accept NRNR Accounts. It does not obliterate the violation, if any, and the effect thereof prior to such omission. 24. In this regard, Regulation 2(a)(iii) of the Foreign Exchange Management (Deposit) (Amendment) Regulations, 2002, by which Regulation 5(1)(iv) of the Regulations was deleted, so far as it is relevant, is reproduced hereinbelow: "2. In the Fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsel for the appellant(s) that, in any case, the order confiscating the amount lying to the credit of the accounts of the appellant(s) is without any reason and, therefore, liable to be set aside, we find merit in the same. Section 13(2) of FEMA, which authorises the Adjudicating Authority to order confiscation, reads as under: "13. Penalties.-(2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Explanation.-For the purposes of this sub-section, "property" in respect of which contravention has taken place, shall include- (a) deposits in a bank, where the said property is converted into such deposits; (b) Indian curre....