Penalty u/s 13 of FEMA for Non-submission of Proof of Import Reduced as Co. was Regularly Making Substantial Imports | SAFEMA

Case Details: Akzo Nobel India Ltd v. Joint Director Directorate of Enforcement, Delhi - [2023] 154 taxmann.com 105 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• • Balesh Kumar, Member
  • R. Rajgopalan, Adv. for the Appellant.
  • Mahip Datta Parashar & Rahul Mehta, Advs. for the Respondent.

Facts of the Case

In the instant case, a complaint was filed under section 16(3) of FEMA. The complaint alleged that for 12 outward remittances totalling Rs. 2.39 crore sent abroad from the account of the appellant company in Deutsche Bank, no Exchange Control Copy of Bills of Entry had been submitted and the said foreign currency had not been surrendered to the Authorized Dealer, Deutsche Bank.

The Adjudicating Authority (NCLT), in its order, held the director of the company guilty for 10 out of 12 remittances made abroad. For 2 remittances of the amount Rs. 29.58 lakhs, he accepted alternative documents like a Bill of Lading copy, Certificate of Analysis, Certificate of weight and Packing List submitted by the appellant as proof for having imported goods.

The NCLT thus, imposed a penalty of Rs. 25 lakhs on the appellant company. The Appellate Tribunal disposed of the appellant’s application for a waiver of pre-deposit of the penalty by directing the appellant to pay a sum of Rs. 5 lakhs.

Appellate Tribunal Held

The Appellate Tribunal held that since the appellant company had been making regular imports of substantial amounts and it was only in a miniscule percentage of cases that the company failed to submit proof of imports against 10 remittances, in the interest of justice, penalty under section 13(1) was to be reduced to Rs. 5 lakhs.

Thus, the amount already paid by the appellant company as a pre-deposit of the penalty was to be fully adjusted against the reduced penalty.

List of Cases Reviewed

• • Innovative Tech Pack Ltd. v. Special Director of Enforcement [2017] 78 taxmann.com 156 (Delhi); (para 15) allowed.
  • Tamil Nadu Housing Board v. M. Meiyappan [2010] 14 SCC 309 (para 16)
  • Raj Kumar Shivhare v. Assistant Director, Directorate of Enforcement [2010] 100 SCL 211 (SC)
  • Karnataka Rare Earth v. Senior Geologist, Department of Mines & Geology [2004] 2 SCC 783 (para 17) distinguished.

List of Cases Referred to

• • SEBI v. Shriram Mutual Fund [2006] 68 SCL 216 (SC) (para 7)
  • Director of Enforcement v. MCTM Corporation (P.) Ltd. 1996 taxmann.com 805 (SC) (para 12)
  • Hindustan Steel Ltd. v. State of Orissa [MANU/SC/0418/1969] (para 12)
  • Xerox Modi Corp. Ltd. v. Special Director Enforcement Directorate [2015] 54 taxmann.com 311/129 SCL 705 (Delhi) (para 13)
  • Deepak Prashar v. Union of India 2014 SCC Online P&H 19523 (para 14)
  • State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd. [2007] 11 SCC 363 (para 14)
  • Innovative Tech Pack Ltd. v. Special Director of Enforcement [2017] 78 taxmann.com 156 (Delhi) (para 15)
  • Chennai Metropolitan Water Supply and Sewerage Board v. T.T. Murali Babu [2014] 4 SCC 108 (para 16)
  • Tamil Nadu Housing Board Chennai v. M. Meiyappan [2010] 14 SCC 309 (para 16)
  • Raj Kumar Shivhare v. Asstt. Director, Directorate of Enforcement [2010] 100 SCL 211 (SC) (para 17)
  • Karnataka Rare Earth v. Senior Geologist, Department of Mines & Geology [2004] 2 SCC 783 (para 17)
  • CIT v. Anwar Ali [1970] 2 SCC 185 (para 17)
  • U.P. Jal Nigam v. Jaswant Singh [2006] 11 SCC 464 (para 17).