JAIN ENGINEERING CO. Vs. ENFORCEMENT DIRECTORATE

JUDGEMENT

(1.) These three appeals are directed against the common judgment dated 19th November 2007 passed by the Appellate Tribunal for Foreign Exchange ("AT") dismissing the Appellants' Appeal Nos. 352 of 2004, 353 of 2004 and 355 of 2004 respectively. Thereby, the AT confirmed the adjudication orders ("AOs") dated 13th February 2004 and 16th February 2004 passed by the Commissioner, Directorate of Enforcement, New Delhi holding the Appellants guilty of contravention of Sections 8 (1) read with Sections 68 (1) and 68 (2) of the Foreign Exchange Regulation Act, 1973 ("FERA") and imposing penalties of Rs. 75 lakhs, Rs. 15 lakhs and Rs. 50 lakhs on each of the Appellants respectively.

(2.) M/s. Jain Engineering Co. ("JEC"), M/s. Munni Export House ("MEH") and M/s. International Auto Suppliers ("IAS"), are three firms in which Mr. Sital Prasad Jain along with his three sons were partners. The case against them was that they were importing tractor parts at highly under-invoiced values from the suppliers in the United Kingdom ("UK") and Italy. It was stated that the main suppliers in the UK, M/s. Gen Diesel, UK and M/s. Mayphil Limited, were arranging low value invoices for the purposes of transactions through the bank. However, the balance amount of the true value invoice was later paid by the importing firm to the importer over a period of time in cash by the representative of the aforementioned firms when they visited the UK. The Italian suppliers also followed dual invoicing with the balance payments made to them by the importers through their foreign banks in other countries.

(3.) By a letter dated 31st July 1997 written by H.M. Customs and Excise, London to the First Secretary, High Commission of India, London it was stated that the priced quoted by M/s. Mayphil Limited in its invoice No. 902586 dated 28th February 1997 for supply of tractor parts to M/s. IAS was not correct; the actual value of the goods was much higher than that given in the import invoice; that the supplier had stated that this under invoicing was done for foreign exchange reasons to keep their value below the licensing restrictions imposed on them by the Indian authorities.