TATA ENGINEERING AND LOCOMOTIVE COMPANY LIMITED Vs. DIRECTOR OF ENFORCEMENT OF THE FOREIGN EXCHANGE REGULATION APPELLATE BOARD

JUDGEMENT

(1.) THE appellants have taken exception to the penalty imposed by the two authorities below, imposing penalty of Rs. 2,500/- on the appellants for the alleged contravention of sub-sections (3) and (4) of section 8 of the Foreign Exchange and Regulation Act, 1973.

(2.) THE facts leading to the present controversy, briefly stated, are as follows. The appellants held Import Licence dated 9-8-72 for a c. i. f. value of Rs. 120 lakhs covering the import of spare parts required for their plant/machineries. The said Licence was issued under the Import Policy No. AM-73. The appellants had, pursuant to the said import licence, imported spare parts i. e. jolt valves, vibrator valves, squeeze valves and lift valves from Germany on 23rd March 1974 for their moulding machines installed at Jamshedpur. The total value of the goods imported was c. i. f. Rs. 56,389/- for which they had opened letter of credit with the Bank of Baroda who are, admittedly, authorised agents under the provisions of the F. E. R. A. , 1973. On 9-7-74 the Customs Authority held that the appellants had exceeded the limit under the import licence to the extent of Rs. 26,389/- as the same were not covered by the subject licence on the ground that the appellants were allowed to import six items each valued at Rs. 5,000/- that is to say up to the total limit of Rs. 30,000/- for all items together. As the value of the c. i. f. imports was Rs. 56,389/- the Customs Authority held that the import of the goods to the extent of Rs. 26,389/- was not covered by the subject licence and, therefore, the appellants were allowed to clear the goods on payment of redemption fine of Rs. 13,150/ -. The said order, when challenged by the appellants before the Collector of Customs, was confirmed on 6-5-77. However, in Revision filed before the Central Government, the penalty was reduced to Rs. 6,500/- by the order dated 7-11-79. In the meantime, i. e. after the order of the Collector of Customs, the Directorate of Enforcement, F. E. R. A. , by its order dated 4-10-78 sought information from the appellants with regard to the said import which was furnished on 20th December, 1978. Thereafter, show-cause notice was issued under the provisions of the F. E. R. A. to the appellants on 5-5-80 to which reply was filed by the appellants on 26th June 1980. The Deputy Director i. e. respondent No. 2 herein by his order dated 17-2-81 held that the appellants contravened the provisions of section 8 (3) and 8 (4) of the F. E. R. A. , 1973 and, therefore, imposed the penalty of Rs. 2,500/- on the appellants. The said order was challenged by the appellants before the F. E. R. A. Board in Appeal No. 132 of 1981. The F. E. R. A. Board by its order dated 28th August 1982 upheld the order of the 2nd respondent imposing the penalty of Rs. 2,500/- on the appellants after confirming the finding that there was contravention of the F. E. R. A. provisions viz. section 8 (3) and 8 (4) of the F. E. R. A. . The said orders have been challenged in this First Appeal.

(3.) MR. Divan, the learned Counsel appearing on behalf of the appellants, contended that there was no F. E. R. A. violation at all. He submitted that the goods in question were imported under the import licence and the value of the said imported goods was paid through the authorised agents i. e. Bank of Baroda. He further pointed out that the foreign exchange was acquired for the purpose of import of the aforesaid goods i. e. jolt valves, vibrator valves, squeeze valves and lift valves under the import licence dated 9-8-72 issued to the appellants and the foreign exchange was utilised for the purpose of the said imports only. Secondly, he contended that the lower authorities have not pointed out any contravention with regard to the kind, quality or quantity of the goods which were imported by the appellants for which the foreign exchange was acquired. According to him the letter of credit was opened with the authorised dealer i. e. Bank of Baroda for the purpose of import of their State-wise goods which were covered by import licence. The particulars of the spare parts which were imported under the said import licence were furnished to the authorised agents, under the provisions of the F. E. R. A. , i. e. Bank of Baroda who after verifying the same and satisfying themselves had paid value of the imported goods. He further pointed out that the authorities have not been able to show that the goods imported did not conform to either the kind, quality or quantity specified under the import licence for which the foreign exchange was acquired and the payment was made through the authorised agents. He submitted that the Customs Authority had imposed penalty only because the value of the six items which were imported had exceeded the limit of Rs. 5,000/- each which was prescribed under the Customs Regulations. The goods imported by them were treated as items banned for imports by the Calcutta Customs as per Sl. No. 72 of Appendix 3 of AM 73 of the Policy and, therefore, there was a limit prescribed for the import upto 12?% of the value of the licence subject to the condition that the value of each item should not exceed Rs. 5,000/ -. It was submitted on behalf of the appellants that they had imported only six items of valves, as per the permission but the value of each item exceeded Rs. 5,000/- and, therefore, they had to pay penalty under the provisions of the Customs Act. However, there was no contravention to any of the F. E. R. A. provisions, much less, sub-sections (3) and (4) of section 8 of the F. E. R. A. as the foreign exchange was utilised by the appellants for the purpose for which it was acquired and the goods which were imported were of the kind, quality and quantity specified by them at the time of acquisition of the foreign exchange while opening the letter of credit with the Bank of Baroda.