ED’s Plea to Enhance FEMA Penalty Rejected by Appellate Tribunal

Case Details: Union of India v. Access Diamonds (P.) Ltd. - [2025] 174 taxmann.com 182 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• G.C. Mishra & Rajesh Malhotra, Member
• Pranav Mishra, Adv. for the Appellant.
• Apoorv Singhal, Adv. for the Respondent.

Facts of the Case

In the instant case, the Respondent Company had exported diamonds but failed to realise export proceeds within the stipulated period. The Adjudicating Authority had imposed a penalty on respondent for contravention of section 8 of FEMA, read with regulation 3 of FEM (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000.

The appellant had filed an appeal, seeking to enhance the penalty on the ground that it was quite meagre and nominal, being only 1% of the contravened amount.

It was noted that in past, the business of the respondent exporter had been quite impressive, seeing the quantum of exports, as it had exported diamonds to overseas suppliers and received payment for export proceeds. Approximately more than 85% of export shipment proceeds had been recovered.

However, shipments made to overseas companies yielded adverse results, whereby said companies did not pay amounts towards invoices raised against them. Further, the Adjudicating Authority had not only taken notice of the facts of the case but also had evaluated the evidence on record to infer the imposition of a penalty on the lower side.

Appellate Tribunal Held

The Appellate Tribunal held that nothing on record showed that the Adjudicating Authority had not properly and judiciously exercised its discretion, and, therefore, the order of the Adjudicating Authority needed no interference.