The Tax Publishers 2019 TaxPub(CL) 0544 (ATFEMA)

FOREIGN EXCHANGE ACT, 1999

Sections 19 & 3

Where Enforcement Directorate imposed penalty upon exporter on the ground that the exporter received foreign exchange from the overseas buyer in contravention of provisions of FEMA, however, the ED failed to furnish evidence to prove the same, thus, the order of imposition of penalty upon the exporter was to be set aside.

Appeal to Appellate Tribunal - Imposition of penalty on exporter for dealing in foreign exchange - Lack of evidence to prove exporter guilty - Whether imposition of penalty justified

– Enforcement Directorate (ED) imposed penalty upon GIL on the ground that GIL had not exported any goods, but with regard to their domestic supply of goods in India, it received foreign exchange from the overseas buyer without the general or special permission of the RBI, which was in contravention of section 3(a) of the Act. Further, GIL did not append SDF to the shipping bill at the time of export, which was mandatory compliance. GIL filed an appeal against the order denying the allegations. Held: It was the obligation of the Authorized Dealer (AD) to ensure compliance of all conditions before acceptance of documents for negotiations. The letter of credit opened by the overseas buyer was negotiated by the AD against the shipping bill, therefore it could be presumed that all conditions prescribed under Regulation 12 were duly complied with including the condition with respect to SDF. In absence of any evidence, it could not be assumed that the AD had accepted the shipping documents without SDF. The burden of proof to show contravention of a particular statutory provision was on the respondent and not the appellants. Hence, appeal was allowed and the order passed by ED was set aside.

REFERRED : Mangalore Chemicals and Fertilizers Limited v. Deputy Commissioner 1991 (55) ELT 437 (SC) : 1991 TaxPub(EX) 0624 (SC) and UM Cables Limited v. UOI [2013-TIOL-386-HC-MUMCX : UM Cables : 2013 TaxPub(EX) 990]

FAVOUR : In favour of appellant

A.Y. :



IN THE ATFEMA

MANMOHAN SINGH CHAIRMAN, J.

Graphite India Ltd. v. Jt. Director, Directorate of Enforcement

FPA-FE-12/CHN/2016, FPA-FE-13/CHN/2016

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