MITSUBISHI CORPORATION Vs. DIRECTOR OF ENFORCEMENT

JUDGEMENT

(1.) This appeal is directed against the impugned order dated 30th October 2007 passed by the Foreign Exchange Appellate Tribunal ('AT'), dismissing the Appellant's Appeal No.348 of 2004 directed against the adjudication order ('AO') dated 10th February 2004 passed by the Special Director, Enforcement Directorate ('ED') which held that the Appellant had contravened Section 8(1) of the Foreign Exchange Regulation Act ('FERA'), 1973 and imposed a penalty of Rs. 2,00,00,000 on it under Section 50 of the FERA.

(2.) The Appellant is a liaison office ('LO') of Mitsubishi Corporation ('Mitsubishi'), Japan, which is an entity incorporated under the laws of Japan. It is stated that these LOs are not incorporated bodies in India and merely an extension of Mitsubishi, Japan. It is stated that the LOs of Mitsubishi function within the parameters of permissible activities for the LOs of a foreign company in India under the FERA, the Foreign Exchange Management Act, 1999 ('FEMA'), the rules and regulations framed thereunder, and the Circulars of the Reserve Bank of India ('RBI'). The LOs of Mitsubishi are subject to the terms and conditions on which the RBI has granted approval for their operation in India.

(3.) It is stated that, in the course of carrying out the liaison activities, Mitsubishi, Japan deputed/seconded some of its employees from Japan to India. The Appellant states that the said expatriated employees, continue to be the employees of Mitsubishi and are not employees of the Appellant. Their salaries and emoluments are payable by the Head Office ('HO') in Japan. However, in order to enable the expatriate employees to meet their day-do-day expenses while they are in India, the Appellant pays the Indian component of their salaries from the amount remitted to it by the HO for that purpose.