Appellant’s Plea to Cross-Examine Witnesses in Forex Manipulation Case Denied as Statements Were Backed by Evidence

Case Details: Suresh Saluja @ Pappy Saluja v. Special Director Directorate of Enforcement - [2024] 165 taxmann.com 56 (SAFEMA - New Delhi)

Judiciary and Counsel Details

• Rajesh Malhotra, Member
• Deepak Gupta, Adv. for the Appellant.
• Surender Kumar, Adv. for the Respondent.

Facts of the Case

In the instant case, during an investigation conducted by ED, it was found that the appellant/partner at an exporter company made bogus purported exports of sub-standard goods to Russia with inflated invoices to obtain export benefits under Duty Drawback Schemes and goods exported never reached Russia, but their export proceeds were sent to India through illegally acquired foreign exchange which was deposited in different bank accounts with through fake/forged currency declaration forms.

The ED filed a complaint against the appellant for contravention of sections 3(a), 3(b), 4 and 4(2) of the FEMA, 1999, before the Adjudicating Authority and a show cause notice was issued to the appellant.

The appellant filed an interim reply and an application praying to summon some witnesses for cross-examination during adjudication proceedings. The Adjudicating Authority, vide the impugned order, declined the request prayed by the appellant.

On appeal, the appellant submitted that the whole case of ED was based on the statement of the said witnesses, and hence, their cross-examination was essential to highlight the truth.

It was noted that ED relied upon the statements of persons recorded under section 37 of the FEMA, which were duly corroborated with documentary evidence. Further cross-examination of any person would be material if the whole case was based on oral statements of different persons recorded without any corroborative documentary evidence.

AAR Held

The Appellate Tribunal observed that the appellant challenged the show cause notice at a premature stage before the High Court without filing his reply.

The Appellate Tribunal held that the appellant tried to stall adjudication proceedings as the said application was moved by the appellant to delay adjudication proceedings pending before the Adjudicating Authority, and, thus, the instant appeal was to be dismissed, being devoid of any merits.