Mr. Lakshmi Chand Jain (“The Appellant”) was entitled to commission for the services by him to the foreign supplier. Such commission is received in the form of a discount. The commission payable by the foreign supplier was adjusted in terms of the discounts given. Therefore, The Appellant has not received any commission in foreign exchange or Indian Currency through banking channels. The Appellant has not obtained any permission from the RBI for adjusting the commission payable to him by discounting the value of supplies made to him. Therefore, the Respondent held that the Appellant has contravened the provisions of FEMA and therefore, imposed penalty of INR 30 Lacs.
The Appellant contended that he has satisfied all the conditions specified in the circular No. 47 dated 17.11.2011 issued by RBI vide No. RBI/2011-12/264 for setting off export proceeds against import proceeds. Therefore, the contravention under FEMA is merely technical procedural lapse and not substantive.
The Respondent contended that “setting-off” cannot be regarded as arising due to procedural lapse because the Appellant has declared the value of the imported goods at the suppressed prices to the Customs Authorities and thereby evaded the customs duty.
Hon’ble Tribunal held that The order copies of the Additional Commissioner of Customs, Headquarters, Bangalore corroborate the fact that the Customs Duty were evaded by the Appellant. Therefore, we reject the contention of the Appellant that the netting off the import payables by the export receivables was mere procedural lapse. Further, contention of the Appellant that contravention of the FEMA was unintentional cannot be accepted. Nothing contained in Section 13(1) of the Act indicates directly or indirectly requirement of mens rea. Words like “willful”, “deliberately”, “intentionally” etc. are missing.
The Tribunal reduced the penalty amount to INR 10 Lacs.
1. Brief Facts of the case:
- The commission is paid to Mr. Lakshmi Chand Jain (“The Appellant”) for the services rendered by him to the foreign supplier in the form of discounts by the foreign suppliers, whom he represents in India, whenever he purchased from that supplier, on his account.
- The commission is paid to him only when the foreign supplier received payment from the Indian buyer.
- The commission payable by the foreign supplier was adjusted in terms of the discounts given.
- The Appellant has not received any commission in foreign exchange through banking channels.
- The commission payable was set off against the purchases made by the Appellant’s Firm from the foreign supplier. The amount of discount given by the suppliers ranged from 10% to 40%.
- No commission was paid to him by the foreign supplier either in foreign exchange or Indian rupees through bank or otherwise.
- He had not obtained any permission from the Reserve Bank of India (RBI) for adjusting the commission payable to him by discounting the value of supplies made to him.
- In response to the SCNs issued as above, the Appellant vide his reply dated 03/05/2013 pointed out that the commission payable, which was Rs.1,72,49,537/-, was adjusted and passed on as discount, when the Appellant made purchases from the foreign supplier.
- Therefore, the penalty is imposed on the Appellant vide Impugned order No. JD/04/BZ/2012-13/(FEMA)/(JD-SA)/2197 dated 06.12.2013 passed by Joint Director, Directorate of Enforcement, Government of India, Bangalore.
- As per the impugned order, a penalty is imposed of INR 30,00,000/- on the Appellant for contravention of provisions of Section 8 of FEMA Act read with Regulation 3 of FEMA (Realisation, Repatriation and Surrender of Foreign Exchange) Regulation, 2000.
- Therefore, the APpellant file appeal against the impugned order.
2. Relevant Legal extract:
Relevant provisions of the FEMA are reiterated below for ready reference:
- Section 13(1) of the FEMA:
“If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.”
- RBI/2011-12/264 A.P. (DIR Series) Circular No. 47 dated November17, 2011 on “Set-off" of export receivables against import payables-Liberalization of Procedure”
“Set-off" of export receivables against import payables-Liberalization of Procedure the exporters through their AD branches for set-off of export receivables against import payables are considered by the Reserve Bank of India. As a measure of further liberalization, been decided to delegate power to AD Category - I banks to deal with the cases of "set-off" of export receivables against import payables, subject to following terms and conditions:
…”
3. Contention of the Petitioner:
申立人は以下の通り主張した：
- The Appellant had received the commission payable by the foreign supplier by way of setting off the same against the value of goods purchased by the Appellant from such foreign supplier.
- Section 8 of FEMA and Regulation 3 of FEMA (Realisation, Repatriation and Surrender of Foreign Exchange) Regulation, 2000 mandate that a person resident in India "shall take all reasonable steps to realise and repatriate to India such foreign exchange" which is due to such person.
- Therefore, the setting off the commission receivable against the import payables would lead to a conclusion that the Appellant had indeed realised the value of commission from such foreign suppliers.
- The amount to be repatriated had been passed on to the Appellant as discount, and the Appellant had paid the foreign suppliers only the discounted amount, therefore, there was no burden on the foreign exchange reserves.
- Therefore, the finding that the Appellant had violated the provisions is unsustainable in law and is therefore liable to be set aside.
- Further, as per A.P. (DIR Series) Circular No. 47 dated 17.11.2011 issued by RBI vide No. RBI/2011-12/264, the power is delegated to Authorized Dealer Category-I Banks to deal with the cases of “set-off” of export receivables against import payables subject to certain terms and conditions.
- The Appellant has satisfied all the conditions specified in the circular. Therefore, the contravention under FEMA is merely technical procedural lapse and not substantive.
- The only inadvertent omission is that the Appellant had not made a formal application with their Authorised Dealer Bank for allowing the setting-off.
- Reliance was further placed on decision of the Hon’ble Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd. vs. Deputy Commissioner reported in 1991 (55) ELT 437 (S.C.) and in the case of Hindustan Steel Ltd. vs. State of Orissa reported in 1978 (2) ELT 159 (S.C.).
- Also, the Appellant pleaded that the penalty commensurate to the failure of the Appellant, if in case the Appeal is decided against the Appellant, should be imposed.
4. 被申立人の主張
The Respondent submitted that:
- So called “setting-off” cannot be regarded as arising due to procedural lapse because the Appellant has declared the value of the imported goods at the suppressed prices to the Customs Authorities and thereby evaded the customs duty.
- Therefore, the contravention made does not demonstrate the bona fide of the Appellant.
5. Findings and Analysis by the Appellant Tribunal
The Appellant Tribunal made following findings and analysis:
- Rs. 1,72,49,537/- is the value of the imported goods for which no payment was made by the Appellant, since the Appellant claimed it to be the commission for the services rendered by him.
- The order copies of the Additional Commissioner of Customs, Headquarters, Bangalore corroborate the fact that the Customs Duty were evaded by the Appellant.
- Therefore, we reject the contention of the Appellant that the netting off the import payables by the export receivables was mere procedural lapse.
- 控訴人は、2011年11月17日付インド準備銀行（RBI）通達第47号に照らし、本件違反は手続き上の不備であると主張している。同通達によれば、「輸出債権と輸入債務の相殺」を取り扱う権限は、RBIからカテゴリーIの公認ディーラー銀行（AD銀行）のみに委任されている。
- 輸入業者または輸出業者が独自に相殺を行うことは認められていない。
- さらに、控訴人は税関当局に対して輸入貨物の価格を虚偽申告していたため、同通達に規定された条件を満たしていなかった。
- また、FEMA（外国為替管理法）違反は意図的なものではなく、1962年関税法違反の単なる付随的な結果に過ぎないという控訴人の主張は認められない。同法第13条(1)項のいかなる規定も、直接的または間接的に「犯意（mens rea）」の要件を示唆していない。「故意に」「意図的に」といった文言は含まれていないのである。
- また、最高裁判所は「SEBI会長 対 シュリラム・ミューチュアル・ファンド事件」[(2006) 5 SCC 361]において、次のように判示している。
- 法および規則が想定する法的義務への違反が立証された時点で、直ちに罰則が適用される。
- 罰則を伴う民事上の義務違反については、違反者が有罪の意図を持って違反を行ったか否かにかかわらず、直ちに罰金が科される。
- また、法令の文言が犯意の立証の必要性を示唆していない限り、当該違反が意図的であったかどうかを確認することは全く不要である。
- ただし、違反内容に見合った罰金額とするよう求める控訴人の主張には一理ある。
6. 結論：
控訴審裁判所は次のように判示した。
- 控訴人に対する罰金額を100万ルピーに減額する。控訴人が既に納付済みの罰金は、減額後の罰金額に充当されるものとする。
.avif)
