RAGHAVAN NAIR Vs. DEPUTY DIRECTOR ENFORCEMENT DIRECTORATE

JUDGEMENT

(1.) We had dismissed the appeal for default as per judgment dated 11th January, 1988. Counsel for the appellant filed C.M.P. No. 3947 of 1988 to set aside that order and restore the appeal and hear it afresh. After hearing both sides, we allowed the petition on 18-2-1988. The appeal was heard immediately thereafter.

(2.) The appellant was a coir exporter. He had appointed a Commission Agent, M/s. Gover Horowitz & Blunt Ltd., London, to act as his agent abroad During the year 1972-73, he had exported 530/bales of coir yarn valued at ' 9,895.50 to that London, firm; but he realised only ' 9.568.60. During the year 1974, he exported 1165/balas of coir yarn valued at ' 31417.82 through the same agent, but he realised only ' 28,445.63.

(3.) The Enforcement Directorate, Madras issued two show cause notices to the appellant, the former on 29-2-1980 tinder S.10(1) and 12(2) of the Foreign Exchange Regulation Act, 1947 for short the 1947 Act for realising less than the export value of goods and by not taking action for repatriating the full amount payable by the foreign firm. The second show cause notice dated 29-2-1980, related to the export realisation for the period 1974. The Department alleged contravention on the part of the appellant of the provisions of S.16(1) and 18(2) of the Foreign Exchange Regulation Act, 1973 for short the 1973 Act. The appellant stated, that the real export value as covered by the relevant provisions had been realised by him, and the higher value mentioned in the cables exchanged between him and the commission agent was inflated by him, and was adopted for the purpose of enabling the commission agent to sell the goods to his advantage. The matter was adjudicated by the Deputy Director of Enforcement, Madras in his order dated 15-4-1980, which was passed after hearing counsel for the appellant in detail. The adjudicating officer found, that the contraventions of the 1947 Act in respect of the period 1972-73 and in respect of the year 1974 were fully made out. He imposed a cash penalty of Rs.3,000/- each on the petitioner for violation of S.10(1) and 12(2) of the 1947 Act. and Rs. 25,000/- each for violation of S.16(1) and 18(2) of the 1973 Act. The appellant filed Appeal No. 265 of 1980 before the Foreign Exchange Regulation Appellate Board. The appellant contended that the price of goods exported by the appellant was evidenced by the agreement with the foreign firm and the price indicated in the cables exchanged between the appellant and the agent prior to the agreement was an inflated figure intended to enable his agent to sell the goods to his customers to his advantage. Counsel submitted that the price advantage was not a component of the export proceeds and was not an amount payable to the appellant. It was, therefore, submitted that there was no contravention of any of the statutory provisions alleged and found against him. The Department countered (his submission by stating, that if there was no price advantage in the foreign market, over and above the fair price fixed by the Board and as mentioned in the agreement, there was no justification for the correspondence preceding the agreement indicating a higher price. The Appellate Board, after hearing counsel, held, that there was no convincing reason given by the appellant for incorporating a price in the agreement different from that disclosed from the correspondence. The Board also found that the explanation offered by the appellant that the correspondence anterior to the agreement was intended to help only the foreign firm in securing for them the price advantage did not appeal to it. The Board adverted to the normal forms of human conduct and the pattern or behaviour of business firms, particularly in export business, and found that the ultraistic concept advanced by the appellant appeared to it to be unrealistic. The Board also referred to the decisions in Director of Enforcement v. K. O. Krishnaswamy, AIR 1979 SC 1969 , and Collector of Customs v. Bhoormull, AIR 1974 SC 859 , and held, that the former decision did not apply to the facts of the case and the Department had discharged its burden in making out the contraventions as alleged against the appellant. However, the Board reduced the aggregate penalty of Rs. 56,000/- by half, viz., Rs. 28,000/-. It is against the order of the Appellate Board that the appellant has come up in further appeal to this court under S.54 of the Foreign Exchange Regulation Act, 1977.