THIRUMALAI CHEMICALS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Leave granted.

(2.) The question that has come up for consideration in this case is whether the Appellate Tribunal constituted under the Foreign Exchange Management Act 1999 (in short FEMA) was right in rejecting a belated appeal filed under Section 19 of FEMA, applying the first proviso to Sub-section (2) of Section 52 of Foreign Exchange Regulation Act 1973 (in short FERA), instead of following the proviso to Sub-section (2) to Section 19 of FEMA.

(3.) M/s Tirumalai Chemicals Limited (in short the Company) had imported various consignments of benezene, orthoxalene etc. for home consumption. For the said purpose, the Company had opened Letters of Credit bearing No. MLCO 4359096 and No. 529/960487 on 28.09.96 and 07.08.96 respectively on their bankers ICICI Bank and Standard Chartered Bank (authorized dealers). By letters dated 07.12.96 and 18.01.97 Exchange Control Copies of bills of entry (in short, ECC - bills of entry) in relation to those imports were forwarded by the Company to the above mentioned Banks. As per the provisions of Exchange Control Manual (in short ECM), the authorized dealers had to submit the ECC-bills of entry submitted by the importers (the Company) to the Reserve Bank of India (in short RBI). The Company was under the bonafide impression that the documents submitted by it were forwarded by the authorized dealers to the RBI and that the RBI in turn had given due intimation to the Enforcement Directorate. The Company on 22.04.2004 received a telephonic communication from the office of the 3rd Respondent viz., Directorate of Enforcement, stating that it had passed various orders on 27.01.04 imposing a total penalty of Rs. 9,33,63,453/- on the Company on the ground that it had contravened the provisions of Sections 8(3), 8(4) of FERA read with Sub-sections (3) and (4) of Section 49 of FEMA. Copies of the orders dated 27.01.04 were then received by the Company on 22.04.04 on request. From those orders the Company came to know that the Directorate of Enforcement had issued four show cause notices dated 14.05.02 stating that the Company had contravened Section 8(3), Section 8(4) of FERA read with para 7A.20 (Chapter 7) of ECM and was required to show cause why adjudication proceedings be not initiated against the Company under Section 49 of FEMA for contravention of the above mentioned provisions. Further, it was also stated that the Company had failed to furnish the required bills/information/documents and did not avail of the opportunity of hearing in spite of notices issued to them on 29.08.02, 27.10.03 and 01.12.03. Orders dated 27.01.04 also indicated that an appeal would lie before the Appellate Tribunal after depositing the amount of penalty imposed within 45 days from the date on which the order was served. Reference was also made to Section 19 read with Section 49(5)(a) of FEMA.