TaxTMI 
TaxTMI 
2026 (5) TMI 806
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....ary to the legal provisions. Ld. Counsel further submitted that the Complainant in the Complaint admitted the obtaining of the foreign exchange from The Authorized Dealer (AD) against furnishing of the relevant declarations for purchase of the goods from abroad. He further admitted to the amount having been paid to Metal Worldwide Inc. through their Banker J&K Bank Ltd., the Authorized Dealer, for the supply of the shredded steel scrap. The amount so paid for the above purchase was also admitted to be lying with the said overseas company. Thus, the above admissions made in the complaint made it abundantly clear that the foreign exchange procured by them for the purpose of purchase of the shredded steel from Metal Worldwide Inc. USA was paid to the above-named overseas company for the purchase of the goods and no unutilized foreign exchange so procured was left with them. So long as the foreign exchange procured or obtained was used for the purpose for which it had been obtained as per the declaration, the FEMA provisions are deemed to have been complied with and the consequent commercial dispute if any arising out of the said transactions between the person obtaining the foreign ex....
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....ent for the Appellant to approach the Reserve Bank of India (RBI) for realization of money from third parties. In any case payments received from TCC Metal were after 08.11.2013 when it had already been permitted by the RBI to receive third party payments. Ld. Counsel stated that inferences drawn in the Impugned Order are based upon mere suspicion. Ld. Counsel also stated that the SCN was issued only to the Company and not to the person in-charge which makes it bad in law. Ld. Counsel pleaded that the penalty amount is harsh and excessive. He pleaded to allow the Appeal. 5. Ld. Counsel for the Respondent Directorate submitted that M/s Garg Iron & Energy (P) Ltd. had placed order with M/s Metal World Wide Inc., USA for supply of 1436.236 MT of Shredded Steel Scrap (in 60 containers). Accordingly, the Appellant Company paid a total amount of US$ 534,135.31 through M/s. Jammu & Kashmir Bank, Chennai. An earlier order placed by M/s Garg for which a total amount of US$ 103,845.55 was remitted had not been executed and was still pending for shipment of the goods to India. Thus, a total amount of US$ 637,981.06 had been paid by M/s Garg to overseas supplier M/s Metal World Wide Inc. fo....
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....eign exchange, for the purpose of import of goods and had neither used the acquired foreign exchange for such purpose nor surrendered it to the authorized person within the specified period. Thus, the Appellant Company contravened the provisions of Section 10(6) of FEMA read with Regulation 6(1) of The Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 to the tune of Rs. 2,18,35,112/-. Accordingly, the Investigating Officer filed a Complaint under Section 16(3) of FEMA on 07.10.2014 against M/s. Garg Iron & Energy Pvt. Ltd. for the above-mentioned alleged contraventions proposing Penalty under Section 13(1) against them. Based on the said Complaint, a SCN was issued on 30.03.2015. 7. Ld. Counsel for the Appellant read the following findings of the Ld. AA in the Impugned Order: "5.1 ......... At the outset I find that both the Complainant and the Noticee do not differ on the facts of the case leading to issuance of the Notice viz., the remittances made by the Noticee to their Overseas Supplier viz., M/s Metal World Wide Inc. from time to time; imports made by the Noticee from the said Overseas Supplier etc.,;....
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....the imported goods of shredded steel scrap, from the US based Company M/s Metal Worldwide Inc., in spite of having remitted US $ 637981.06 for the said purpose over a period of time, acted in compliance to the provisions of Section 10(6) of the Foreign Exchange Management Act, 1999 (FEMA) read with Regulation 6 (1) of Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulation 2000 ? 9. The Appellant has contended that M/s Metal World Wide Inc., a Company owned by Shri Sachin Chhabra, was compelled to return the remitted money through a part of the amount adjusted against the forth coming imports, another part adjusted through imports from M/s TCC Wireless Inc., a Company owned by Shri Tarun Chabra, the brother of Sh. Sachin Chabra, yet another part as refund directly from M/s Metal World Wide Inc. and the final part as refund in January 2012 from the bank account of M/s TCC Wireless Inc. The contention of the Appellant has been that such adjustments of dues receivable from M/s Metal World Wide Inc. is lawful under FEMA. We observe from the facts of the case that on occasions the imported consignments which comprised of junk like broken t....
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....e Complainant assertion that imports are to be made from the same person to whom the remittance was made, is not acceptable as only from 8.11.2013, the Reserve Bank permitted an AD Bank to make Third party payments and that too subject to certain conditions. The situation of the Noticee upon finding that the goods ordered by them have not been actually shipped and the need for recovering the same from the supplier for such erroneous shipment is understandable, but the acts of the Noticee in continuing to make payments to the said supplier even after knowing that he had already cheated them and not adjusting the dues in total when there was an opportunity to do so, adds reasonable suspicion to the entire affairs and transactions between the Noticee and the Overseas supplier." 10. We are not convinced that the payment received from M/s TCC Wireless Inc., being Company of brother of the owner of M/s Metal Worldwide Inc. and that too for business compulsion, should be allowed to be adjusted. The Appellant has failed to produce any provision of law as to sustain this argument. It is also on record that the two Companies are separate legal entities and independent of each other. The a....