KPR PLASTIC LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS miscellaneous second appeal is filed under the provisions of the Foreign Exchange Regulation Act, 1973 (for short Act) questioning the appellate order dated 15.09.2008 passed in Appeal No. 206 of 2002 by the appellate tribunal for foreign exchange under the said Act. To state the question of law raised in this appeal, the circumstances which led to the filing of this appeal should be noted and they can be stated thus. The second appellant is the Managing Director of the first appellant which is KPR Tele -products Limited, Hyderabad. They remitted foreign exchange to the extent of Rs. 69,02,727/ - equivalent to Sw. Francs 2,43,660/ - to the account of a Swiss company namely M/s. Buss -Ag -Bassel, Switzerland for import of certain machinery called Ko -kneader plant for the purpose of their business for a total price of Sw. Francs 16,24,400/ -. The above remittance of the amount equivalent to Sw. Francs 2,43,660/ - constitutes 15% of the price and for the balance of 85%, the appellants arranged for a loan from the concerned branch of the Andhra Bank and the payments were to be made under a deferred payment guarantee.

(2.) SUBSEQUENTLY , the Andhra Bank did not release the above amounts as the first appellant allegedly failed to meet some conditions. It is stated that when the first appellant wrote to the above Switzerland company for refund of the advance taken by them for the above machinery, the latter informed the first appellant that the machinery was manufactured to its (first appellant) specifications and it had no market and consequently it cannot refund the advance and on the other hand, it demanded the appellants to pay the balance.

(3.) THE version of the Enforcement Directorate is that the above acts of the appellants in remitting the above foreign exchange to a foreign company and failing to import goods and also failing to inform the authorities concerned about their failure to secure the goods would amount to contravention of the provisions of Section 8(3) and Section 8(4) of the Act to the extent of the value of Sw. Francs 2,43, 660/ - and therefore the appellants are liable for penalty under Section 50 of the Act.