SAFEMA Reduces Penalty on Appellant for Alleged FERA Contraventions Considering 22-Year Delay and Peculiarity of Case

Case Details: Maulik Dave v. Assistant Director, Directorate of Enforcement, Mumbai - [2024] 166 taxmann.com 326 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Munishwar Nath Bhandari, Chairman & Balesh Kumar, Member
• Raghavendra M. Bajaj, Ms Garima Bajaj, Shagun Agarwal, Adarsh, Advs. for the Appellant.
• Surender Kumar, Adv. for the Respondent.

Facts of the Case

In the instant case, the Respondent served a Show Cause Notice upon the appellant alleging that he, apart from others, was involved in receiving payments in foreign exchange during 1996-97 through fake export documents and, in fact, without any export of goods to overseas parties.

The Adjudicating Authority, finding contravention in the hands of the appellant, imposed the penalty of Rs. 5 lakhs for contravention of Sections 8 and 9 of the Foreign Exchange Regulation Act, 1973. By instant appeal, a challenge had been made to the order of the Adjudicating Authority.

According to the appellant, the total penalty of Rs. 5 lakhs was disproportionate to allegations made against the appellant and accordingly be reduced appropriately.

It was noted that an instant appeal arose out of the matter, for which a Show Cause Notice was given in 2002 alleging contravention of provisions of the 1973 Act.

Further, a period of more than 22 years had already passed from the date of the Show Cause Notice, and even otherwise, the appellant had deposited Rs. 2 lakhs as against the total penalty of Rs. 5 lakhs.

Appellate Tribunal Held

The Appellate Tribunal observed that, taking into consideration the peculiarity of the case and the total penalty amount of Rs. 5 lakhs, for which a prayer was made to reduce it to Rs. 2 lakhs, it would be appropriate to reduce the penalty to Rs. 2 lakhs.

The Appellate Tribunal held that since the amount aforesaid had already been deposited to satisfy the condition of pre-deposit, and thus, on reduction of penalty amount, the appellant would not be required to deposit Rs. 2 lakhs, the amount deposited towards pre-deposit should be treated in satisfaction to reduced penalty amount.