TaxTMI 
TaxTMI 
2026 (7) TMI 330
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....tion, Surrender of FE) 2015 to the extent of Rs.14,74,099/-equivalent to Rs. 10,35,42,778/- Rs. 5,20,00,000 Rs. 52,00,000 Regulation 3 and 5(3) of FEMA (Borrowing or Lending), 2000, read with directions contained in Para A5 of A.P (DIR Series) Circular No. 106 dated 19.06.2003 of RBI on Imports of Goods; 32,72,280/- Rs. 33,00,000 Rs. 4,00,000 TOTAL Rs. 10,73,00,000 Rs. 1,08,00,000 Facts in brief 2. The brief facts of the case are that information was received by the Directorate of Enforcement (ED) from the Directorate General of Foreign Exchange (DGFT), Coimbatore, vide letter dated 18.5.2018 enclosing therewith a letter dated 4.5.2018 received from M/s. IndusInd Bank, to the effect that M/s RKM Overseas, Coimbatore, a proprietorship firm, had applied for import of 10 MTs of gold dore bars (upto 95% purity) for a CIF value of 2596.511 crore on 30.11.2016. Further, the firm had obtained IEC (Import Export Code), RCMC (Registration-cum-Membership Certificate), GJEPC (Gem & Jewellery Export Promotion Certificate), SSI (Small Sector Industry) and Pollution Control Board Certificate only in the second half of the year 2015. The information further stated th....
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....etters dated 23.01.2019, 22.4.2019 and 29.4.2019, furnished details of advance remittances made along with relevant import documents in respect of authorization no.4250000374, copy of bank statements, IT returns filed for the years, tripartite agreements M/s RKM Overseas had made with M/s. Evermore Global & M/s. Sahara Royal gold and M/s. Evermore Global & M/s. Venkateshwara Global, etc. 8. On perusal of documents/details obtained during the investigation and from the statement of Sh. Amit Kumar Mittal, it appeared that in respect of import of gold dore bars from M/s Evermore Global FZC, Dubai and M/s Vengateshwara Global Sources SAC, Lima, Peru as per the tripartite agreement, the overdue advances paid towards imports worked out to USD 14,74,099 (equivalent to INR 10,35,42,778). 9. Further, it emerged that M/s. RKM Overseas had not settled the import dues to M/s AA Minerals, Ghana, M/s Italtech, Ghana and M/s MN Khan Jewellers, Dubai, the overseas suppliers to the extent of USD 36,329, USD 6435 and USD 4387 respectively aggregating to USD 47,151 (equivalent to INR 32,72,280) within the RBI stipulated time limit of six months, in contravention of Para B5 of RBI Master Directi....
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....alty Under Section 3(b) of FEMA: 17. Under this provision, an amount of Rs. 5,20,00,000 has been imposed as penalty upon Smt. Rukmani Devi and an amount of Rs. 52,00,000 upon Sh. Amit Kumar Mittal, the proprietrix and the authorized signatory, respectively of M/s RKM Overseas, on account of overdue advances paid towards imports which was quantified as Rs. 14,74,099/-, being the difference between the aggregate amount of foreign exchange remitted and the BE value of imports. 18. The contention on behalf of the appellants is that for this provision to apply, three elements are necessary, namely, (i) that a payment is made to or for the credit of a person, (ii) that such person must not be an authorized person, and (iii) that the transaction must be without RBI's permission. In the present case, it is an admitted fact that all the remittances were made through an authorized person, namely, through Authorized Dealer Banks, towards genuine import transactions supported by 53 Bills of Entry. The payments were made for the credit of overseas exporters in the normal course of business. Thus, there was no instance of payment through a person who was not an authorized person. 19. On....
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....nge) Regulations 2015: 22. Under these provisions, an amount of Rs. 5,20,00,000 has been imposed upon Smt. Rukmani Devi and an amount of Rs. Rs. 52,00,000 upon Sh. Amit Kumar Mittal, the proprietrix and the authorized signatory respectively of M/s RKM Overseas, based on the finding that they have contravened the said provisions by purchasing foreign exchange from authorized persons but not utilizing the entire foreign exchange so purchased from the authorized person for the purpose declared under Section 10 (3) of FEMA, 1999, nor the unutilized foreign exchange was surrendered within a period of 60 days to an authorized person. 23. The contention of the appellants is that the provisions of Section 10(6) are attracted only in cases where foreign exchange acquired is not utilized for the specific purpose declared under Section 10(5). In the present case, there is no allegation in the Show Cause Notice that M/s RKM Overseas utilized the foreign exchange for any purpose other than that declared one. On the contrary, the materials relied upon by the Department, including the EDI (Electronic Data Interchange) communication, clearly establish that the Appellant imported gold dore ba....
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....egal provisions by not repatriating to an authorised person the excess advance payment of US $ 14,74,099 (equivalent to INR 10,35,42,778) made to M/s Evermore Global FZE, Dubai against which there is no corresponding entry of goods into India. 28. I have considered the rival submissions. The provisions of Section 10(6) and Regulation 6(1) of the Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations, 2015 are reproduced below for ready reference: "10(6). Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to authorised person under sub-section (5) does not use it for such purpose or does not surrender it to authorised person within the specified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction 9 or order made thereunder shall be deemed to have committed contravention of the provisions of the Act for the purpose of this section." Regulation 6(1....
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....on". Thus, in this case, the 'person' in question, being the proprietrix was an 'individual'. That being the case, I am in agreement with the submission of the Ld. Counsel for the appellant that the provision of Regulations 6(1) could not have been invoked against the appellants herein as the same would be contrary to the clear language of the said Regulation. Accordingly, the penalty of Rs. 5,20,00,000/- imposed on Smt. Rukmani Devi cannot be sustained in the eyes of law. Accordingly, the said penalty would stand deleted. As for the penalty imposed upon Sh. Amit Kumar Mittal, the issue has been discussed in para 36 to 38(infra). III. Penalty for contravention of Regulation 3 and 5(3) of FEM (Borrowing or Lending in Foreign Exchange) Regulations, 2000 and A.P. (DIR Series) Circular No. 106 dated 19.06.2003 of the RBI : 31. An amount of Rs. 33,00,000/- has been imposed upon Smt. Rukmani Devi and an amount of Rs. 4,00,000/- upon Sh. Amit Kumar Mittal, the proprietrix and the authorized signatory, respectively, of M/s RKM Overseas, based on the finding that balance import dues to the overseas supplier M/s AA Minerals, M/s Italtech and M/s MN Khan Jewellers to the extent of....
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....99, unlike the erstwhile FERA, 1973, infraction of the provisions of any rule, regulation, notification, direction or order arising out of the Act entails a monetary penalty and does not entail criminal liability. Needless to say, a vast majority of such rules, regulations, notifications and directions are in the nature of procedural compliances. Penalties have been prescribed under the Act for non-compliance thereof so as to ensure that the provisions are complied with in timely manner so as to meet the objectives for which the Act has been enacted. In the present case, the appellant has submitted some proof of making correspondence with one of AD Banks, namely, Yes Bank, requesting the bank to delete the outstanding. However, no proof of proper due diligence or serious efforts to pursue the matter in respect of other instances of non-settlement of overdue import payments, have been submitted. Considering the magnitude of the contravention and the material placed before the Bench, I am of the view that the ends of justice would be met if the penalty is sustained, but the quantum thereof is reduced to Rs.5,00,000/- in the case of Smt. Rukmani Devi. Penalties imposed upon Sh. Ami....