BHARAT CARPETS Vs. DIRECTOR ENFORCEMENT DIRECTORATE

JUDGEMENT

(1.) Challenge in this appeal is to the judgment of the Appellate Tribunal for Foreign Exchange, New Delhi (in short the Tribunal). In the appeal before the Tribunal challenge was made by three appellants i.e. the present appellant and two of its partners to the adjudication order dated 15.6.1999 passed by the Assistant Director, Enforcement Directorate imposing total penalty of Rs.1,00,000/- i.e. Rs.80,000/- against the appellant firm and Rs. 10,000/- each against the two partners for alleged violation of Section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 (in short the Act).

(2.) Background facts in a nutshell are as follows : A Show Cause Notice (in short SCN) No.T - 4/340/D/94-SCN/DD/8097 to 8100 dated 30.9.1994 was issued to Appellant M/s Bharat Carpets (a Partnership Firm) and two of its partners, i.e., (1) Abdul Rasheed; and (2) Abdul Waheed asking them to show cause why adjudication proceedings under Section 51 of the Act should not be held against them for non-realisation of export proceeds under GR (1) PP No. AA-677411 dated 2.4.1992 of the value equivalent to Indian Rs.2, 18,833/- and (2) GP-576895 dated 13.5.1991 of the value equivalent to Indian Rs.2,93,338/-, i.e. a sum total of Rs.5, 12, 171/-, within the stipulated period of six months or the extended period of RBI, if any, in contravention of the provisions of Section 18(2) read with 18(3) of the Act and Notification No.F/67/EC/73-l and 3 both dated 1.1.1974. The notices gave written reply to the SCN stating that with regard to GP No. 576895 dated 13.5.1991 they have been continuously in correspondence with the authorized banker for the remittance of export proceeds from foreign buyer and final reply will be submitted after receipt of the same. With regard to other GR/PP No.AA-676411 dated 2.4.1992, it was replied that the shipment through Japanese Airlines was dispatched to the original consignee, i.e., M/s Rose Carpets. But within a short period but before delivery (either of goods or Bill of Lading; the appellants came to know the weak financial position of consignee; so they requested through their banker to intimate the foreign bank not to deliver documents of title of goods to M/s Rose Carpets but to change such document delivery to new buyer M/s Roman -Inc., 100, Park Plaza Drives. The authorized dealer/banker instead of sending the requested communication dated 16/17th April, 1992, to the correct office of the foreign bank, sent it to a wrong place and that is why the title documents were wrongly handed over despite clear instructions to the contrary whereby the consignment was delivered to original consignee M/s Rose Carpets. In this way, the appellants cannot be held guilty of the non-realisation of the export proceeds of PP No. AA- 677411 dated 2.4.1992 inasmuch as that the wrong delivery, despite appellants timely action, cannot only be attributed to the authorized dealer against whom the appellants are pursuing their remedies before the Civil Court and Consumer Disputes Redressal Forum. Because the financially weak original consignee did not pay, the appellants cannot be held guilty of the violations.

(3.) The stand of the appellants before the Tribunal was that consignment exported initially in the name of M/s Rose Carpets was directed to fresh/new consignee M/s Roman Inc. and intimation to this effect was given to the authorized banker well within time to hand over the Bill of Lading to the new consignee. It is because of the misfeasance and malfeasance or negligence of the authorized banker, the Bill of Lading was handed over to old consignee enabling him to take delivery of the goods. The appellants changed the consignee because of the anticipated non-payment by M/s Rose Carpets due to its weak financial position, and the negligence of the authorized banker cannot be a factor against the appellants and their conduct cannot be faulted. It was also contended that the exported goods never reached the intended consignee and, therefore, goods in question cannot be termed as exported goods under Section 18 of the Act. Further, the initiation of legal proceedings against M/s Rose Carpets, whose financial position is too bad, can be of little use except to add to the total loss of the appellants who had already suffered badly.