M/s. Bharat Carpets Vs. Director, Enforcement Directorate
EmailAppeal: Criminal Appeal No. 38 of 2003
[From the final Judgment and Order dated 30.1.2002 of the Appellate Tribunal for Foreign Exchange, New Delhi in Appeal No. 372 of 1999]
[From the final Judgment and Order dated 30.1.2002 of the Appellate Tribunal for Foreign Exchange, New Delhi in Appeal No. 372 of 1999]
Petitioner: M/s. Bharat Carpets
Respondent: Director, Enforcement Directorate
Apeal: Criminal Appeal No. 38 of 2003
[From the final Judgment and Order dated 30.1.2002 of the Appellate Tribunal for Foreign Exchange, New Delhi in Appeal No. 372 of 1999]
[From the final Judgment and Order dated 30.1.2002 of the Appellate Tribunal for Foreign Exchange, New Delhi in Appeal No. 372 of 1999]
Judges: Dr. Arijit Pasayat & G.S. Singhvi, JJ.
Date of Judgment: Jul 07, 2008
Appearances:
Mr. Indra Makwana, Advocate for the Appellant.
Mr. M. Chandrasekharan, A.S.G., Mr. Manish Pushkarna, Mr. Vikas Sharma, Mr. Sanjeev Bhardwaj and Mr. B. Krishna Prasad, Advocates with him for the Respondent.
Mr. M. Chandrasekharan, A.S.G., Mr. Manish Pushkarna, Mr. Vikas Sharma, Mr. Sanjeev Bhardwaj and Mr. B. Krishna Prasad, Advocates with him for the Respondent.
Head Note:
Criminal Laws
Foreign Exchange Regulation Act, 1973
Sections 18(2) and 18 (3) – Non-realisation of export proceeds – Show cause notice issued to Appellant firm and its two partners – Appellants stating that in respect of GP 576895 they were in continuous correspondence with the authorised banker for remittance of export proceeds – As regards GR/PP No. AA-677411 despite clear instructions, due to negligence of the authorised banker title of documents wrongly delivered to the original consignee whose financial condition was weak -Contention that negligence of the banker could not be a factor against appellants – Moreover since the goods were not delivered to the intended consignee there was no export in terms of Section 18 – Respondents, however, contending that no repatriation of exports being submitted even after the stipulated period of six months and no extension of time having been sought from the RBI the impugned order of the assistant director imposing penalty was correct – Tribunal accepting Appellants’ stand as regards AA-677411 but in absence of material as regards GP 576895 and lack of arguments relating to individual liability of partners holding appellants guilty under Section 18(2) – However penalty reduced from Rs.80000/- to Rs.60000/-. Held Section 18(3) creates a rebuttable legal presumption against the exporter whenever the prescribed period expires without repatriation of the export proceeds to the effect that exporter had not
taken requisite steps to obtain repatriation of the payment. Appellants having not placed any material to rebut such presumption appeal deserves to be dismissed. (Para 7)
Foreign Exchange Regulation Act, 1973
Sections 18(2) and 18 (3) – Non-realisation of export proceeds – Show cause notice issued to Appellant firm and its two partners – Appellants stating that in respect of GP 576895 they were in continuous correspondence with the authorised banker for remittance of export proceeds – As regards GR/PP No. AA-677411 despite clear instructions, due to negligence of the authorised banker title of documents wrongly delivered to the original consignee whose financial condition was weak -Contention that negligence of the banker could not be a factor against appellants – Moreover since the goods were not delivered to the intended consignee there was no export in terms of Section 18 – Respondents, however, contending that no repatriation of exports being submitted even after the stipulated period of six months and no extension of time having been sought from the RBI the impugned order of the assistant director imposing penalty was correct – Tribunal accepting Appellants’ stand as regards AA-677411 but in absence of material as regards GP 576895 and lack of arguments relating to individual liability of partners holding appellants guilty under Section 18(2) – However penalty reduced from Rs.80000/- to Rs.60000/-. Held Section 18(3) creates a rebuttable legal presumption against the exporter whenever the prescribed period expires without repatriation of the export proceeds to the effect that exporter had not
taken requisite steps to obtain repatriation of the payment. Appellants having not placed any material to rebut such presumption appeal deserves to be dismissed. (Para 7)
JUDGEMENT:
Dr. Arijit Pasayat, J.
1. Challenge in this appeal is to the judgment of the Appellate Tribunal for Foreign Exchange, New Delhi (in short the `Tribunal’). In the appeal before the Tribunal challenge was made by three appellants i.e. the present appellant and two of its partners to the adjudication order dated 15.6.1999 passed by the Assistant Director, Enforcement Directorate imposing total penalty of Rs.1,00,000/- i.e. Rs.80,000/- against the appellant firm and Rs.10,000/- each against the two partners for alleged violation of Section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 (in short the `Act’).
2. Background facts in a nutshell are as follows:
A Show Cause Notice (in short `SCN’) No.T– 4/340/D/94-SCN/DD/8097 to 8100 dated 30.9.1994 was issued to Appellant M/s Bharat Carpets (a Partnership Firm) and two of its partners, i.e., (1) Abdul Rasheed; and (2) Abdul Waheed asking them to show cause why adjudication proceedings under Section 51 of the Act should not be held against them for non-realisation of export proceeds under GR (1) PP No. AA-677411 dated 2.4.1992 of the value equivalent to Indian Rs.2,18,833/- and (2) GP-576895 dated 13.5.1991 of the value equivalent to Indian Rs.2,93,338/-, i.e. a sum total of Rs.5,12,171/-, within the stipulated period of six months or the extended period of RBI, if any, in contravention of the provisions of Section 18(2) read with 18(3) of the Act and Notification No.F/67/EC/73-1 and3 both dated 1.1.1974.
The noticees gave written reply to the SCN stating that with regard to GP No. 576895 dated 13.5.1991 they have been continuously in correspondence with the authorized banker for the remittance of export proceeds from foreign buyer and final reply will be submitted after receipt of the same. With regard to other GR/PP No.AA-677411 dated 2.4.1992, it was replied that the shipment through Japanese Airlines was dispatched to the original consignee, i.e., M/s Rose Carpets. But within a short period but before delivery (either of goods or Bill of Lading); the appellants came to know the weak financial position of consignee; so they requested through their banker to intimate the foreign bank not to deliver documents of title of goods to M/s Rose carpets but to change such document delivery to new buyer M/s Roman -Inc., 100, Park Plaza Drives. The authorized dealer/banker instead of sending the requested communication dated 16/17th April, 1992, to the correct office of the foreign bank, sent it to a wrong place and that is why the title documents were wrongly handed over despite clear instructions to the contrary whereby the consignment was delivered to original consignee M/s Rose Carpets. In this way, the appellants cannot be held guilty of the non-realisation of the export proceeds of PP No. AA-677411 dated 2.4.1992 inasmuch as that the wrong delivery, despite appellant’s timely action, cannot only be attributed to the authorized dealer against whom the appellants are pursuing their remedies before the Civil Court and Consumer Disputes Redressal Forum. Because the financially weak original consignee did not pay, the appellants cannot be held guilty of the violations.
3. The stand of the appellants before the Tribunal was that consignment exported initially in the name of M/s Rose Carpets was directed to fresh/new consignee M/s Roman Inc. and intimation to this effect was given to the authorized banker well within time to hand over the Bill of Lading to the new consignee. It is because of the misfeasance and malfeasance or negligence of the authorized banker, the Bill of Lading was handed over to old consignee enabling him to take delivery of the goods. The appellants changed the consignee because of the anticipated non-payment by M/s Rose Carpets due to its weak financial position, and the negligence of the authorized banker cannot be a factor against the appellants and their conduct cannot be faulted. It was also contended that the exported goods never reached the intended consignee and, therefore, goods in question cannot be termed as exported goods under Section 18 of the Act. Further, the initiation of legal proceedings against M/s Rose Carpets, whose financial position is too bad, can be of little use except to add to the total loss of the appellants who had already suffered badly.
4. On the other hand, learned counsel for the respondent contended that the appellants exported the goods in the year 1991-92 and what to say of repatriation of export proceeds within six months the export proceeds have not been repatriated even long after. No extension from RBI was obtained either, so the impugned order is perfectly correct and requires to be maintained.
5. So far as the consignment dated 2.4.1992 is concerned, the Tribunal accepted the stand of the appellants before it and exonerated them. It was noted, however, by the Tribunal that the appellants did not place any material so far as the repatriation of Rs.2,93,338/- relating to goods exported by PP-576895 dated 13.5.1991 and no arguments was advanced in the facts of the individual liability of the partners. In that view of the matter, the Tribunal held that the appellants have been rightly held as guilty for having committed violation of Section 18(2) of the Act. The penalty amount was, however, reduced to Rs.60,000/- so far as present appellant is concerned. Since deposit of Rs.80,000/- had been made by it, the remaining amount of Rs.20,000/- was directed to be refunded.
6. In support of the appeal, learned counsel for the appellants submitted that because of the deficiency in services of the bank, action has been taken and, therefore, the appellant should not have been held guilty.
7. Learned counsel for the respondent on the other hand submitted that so far as the goods sent by GR/PP No. AA 677411 dated 2.4.1992 is concerned, material was placed by the appellants to show that it had taken for all possible score. Therefore, the Tribunal has held that the appellants are not guilty. So far as the other consignment is concerned, as rightly noted by the Tribunal, no material was placed relating to repatriation of the amount involved. He, therefore, submitted that no interference is called for. Additionally, it is submitted that the appellant had an alternative remedy under Section 54 of the Act which has not been availed and, therefore, the appeal should be dismissed. We need not go into the question relating to the alternative remedy. Appellants had placed no material whatsoever as to what steps were taken for repatriation of the amount involved. According to Section 18(2) without general or special permission of the Reserve Bank of India, the exporter is required to repatriate the sale proceeds within the prescribed period of six months. Section 18(3) creates a rebuttable legal presumption against the exporter whenever the prescribed period expires without repatriation of the export proceeds to the effect that exporter had not taken requisite steps to obtain repatriation of the payment.
8. Above being the position, we find no merit in the appeal which is accordingly dismissed.
1. Challenge in this appeal is to the judgment of the Appellate Tribunal for Foreign Exchange, New Delhi (in short the `Tribunal’). In the appeal before the Tribunal challenge was made by three appellants i.e. the present appellant and two of its partners to the adjudication order dated 15.6.1999 passed by the Assistant Director, Enforcement Directorate imposing total penalty of Rs.1,00,000/- i.e. Rs.80,000/- against the appellant firm and Rs.10,000/- each against the two partners for alleged violation of Section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 (in short the `Act’).
2. Background facts in a nutshell are as follows:
A Show Cause Notice (in short `SCN’) No.T– 4/340/D/94-SCN/DD/8097 to 8100 dated 30.9.1994 was issued to Appellant M/s Bharat Carpets (a Partnership Firm) and two of its partners, i.e., (1) Abdul Rasheed; and (2) Abdul Waheed asking them to show cause why adjudication proceedings under Section 51 of the Act should not be held against them for non-realisation of export proceeds under GR (1) PP No. AA-677411 dated 2.4.1992 of the value equivalent to Indian Rs.2,18,833/- and (2) GP-576895 dated 13.5.1991 of the value equivalent to Indian Rs.2,93,338/-, i.e. a sum total of Rs.5,12,171/-, within the stipulated period of six months or the extended period of RBI, if any, in contravention of the provisions of Section 18(2) read with 18(3) of the Act and Notification No.F/67/EC/73-1 and3 both dated 1.1.1974.
The noticees gave written reply to the SCN stating that with regard to GP No. 576895 dated 13.5.1991 they have been continuously in correspondence with the authorized banker for the remittance of export proceeds from foreign buyer and final reply will be submitted after receipt of the same. With regard to other GR/PP No.AA-677411 dated 2.4.1992, it was replied that the shipment through Japanese Airlines was dispatched to the original consignee, i.e., M/s Rose Carpets. But within a short period but before delivery (either of goods or Bill of Lading); the appellants came to know the weak financial position of consignee; so they requested through their banker to intimate the foreign bank not to deliver documents of title of goods to M/s Rose carpets but to change such document delivery to new buyer M/s Roman -Inc., 100, Park Plaza Drives. The authorized dealer/banker instead of sending the requested communication dated 16/17th April, 1992, to the correct office of the foreign bank, sent it to a wrong place and that is why the title documents were wrongly handed over despite clear instructions to the contrary whereby the consignment was delivered to original consignee M/s Rose Carpets. In this way, the appellants cannot be held guilty of the non-realisation of the export proceeds of PP No. AA-677411 dated 2.4.1992 inasmuch as that the wrong delivery, despite appellant’s timely action, cannot only be attributed to the authorized dealer against whom the appellants are pursuing their remedies before the Civil Court and Consumer Disputes Redressal Forum. Because the financially weak original consignee did not pay, the appellants cannot be held guilty of the violations.
3. The stand of the appellants before the Tribunal was that consignment exported initially in the name of M/s Rose Carpets was directed to fresh/new consignee M/s Roman Inc. and intimation to this effect was given to the authorized banker well within time to hand over the Bill of Lading to the new consignee. It is because of the misfeasance and malfeasance or negligence of the authorized banker, the Bill of Lading was handed over to old consignee enabling him to take delivery of the goods. The appellants changed the consignee because of the anticipated non-payment by M/s Rose Carpets due to its weak financial position, and the negligence of the authorized banker cannot be a factor against the appellants and their conduct cannot be faulted. It was also contended that the exported goods never reached the intended consignee and, therefore, goods in question cannot be termed as exported goods under Section 18 of the Act. Further, the initiation of legal proceedings against M/s Rose Carpets, whose financial position is too bad, can be of little use except to add to the total loss of the appellants who had already suffered badly.
4. On the other hand, learned counsel for the respondent contended that the appellants exported the goods in the year 1991-92 and what to say of repatriation of export proceeds within six months the export proceeds have not been repatriated even long after. No extension from RBI was obtained either, so the impugned order is perfectly correct and requires to be maintained.
5. So far as the consignment dated 2.4.1992 is concerned, the Tribunal accepted the stand of the appellants before it and exonerated them. It was noted, however, by the Tribunal that the appellants did not place any material so far as the repatriation of Rs.2,93,338/- relating to goods exported by PP-576895 dated 13.5.1991 and no arguments was advanced in the facts of the individual liability of the partners. In that view of the matter, the Tribunal held that the appellants have been rightly held as guilty for having committed violation of Section 18(2) of the Act. The penalty amount was, however, reduced to Rs.60,000/- so far as present appellant is concerned. Since deposit of Rs.80,000/- had been made by it, the remaining amount of Rs.20,000/- was directed to be refunded.
6. In support of the appeal, learned counsel for the appellants submitted that because of the deficiency in services of the bank, action has been taken and, therefore, the appellant should not have been held guilty.
7. Learned counsel for the respondent on the other hand submitted that so far as the goods sent by GR/PP No. AA 677411 dated 2.4.1992 is concerned, material was placed by the appellants to show that it had taken for all possible score. Therefore, the Tribunal has held that the appellants are not guilty. So far as the other consignment is concerned, as rightly noted by the Tribunal, no material was placed relating to repatriation of the amount involved. He, therefore, submitted that no interference is called for. Additionally, it is submitted that the appellant had an alternative remedy under Section 54 of the Act which has not been availed and, therefore, the appeal should be dismissed. We need not go into the question relating to the alternative remedy. Appellants had placed no material whatsoever as to what steps were taken for repatriation of the amount involved. According to Section 18(2) without general or special permission of the Reserve Bank of India, the exporter is required to repatriate the sale proceeds within the prescribed period of six months. Section 18(3) creates a rebuttable legal presumption against the exporter whenever the prescribed period expires without repatriation of the export proceeds to the effect that exporter had not taken requisite steps to obtain repatriation of the payment.
8. Above being the position, we find no merit in the appeal which is accordingly dismissed.
