The Respondents made export against 51 invoices during the period of August 2000 to December 2000 to the extent of INR 12.41 Crores. However, the Respondent failed to release the export proceeds. Accordingly, the Adjudicating Authority imposed a penalty of INR 12.50 Crores on both the respondents for contravention of Section 7 & 8 of FEMA, read with Regulation 9(1) & 13 of Foreign Exchange Management (Export of Goods & Services) Regulations, 2000. Such a penalty is more than 200% of the amount contravened. The Notice could not be served on the Respondent, and accordingly, they were served by way of affixation on the last known addresses. Hence, they were proceeded against ex parte by the Adjudicating Authority.
However, the appellant ED filed the appeal for enhancement of the penalty, contending that the penalty imposed is quite meagre and nominal. No serious efforts were made by the respondent company to realize the export proceeds by filing any suit for recovery against them.
Hon’ble Appellate Tribunal held that as per Section 13(1) of the FEMA, the maximum penalty that can be imposed is up to 3 times the amount of contravention involved. Section 13(1) has not prescribed either a fixed amount of penalty or a minimum amount of penalty. Therefore, the penalty imposed by the Adjudicating Authority is a matter of discretion which is to be exercised judiciously after taking into account the facts of the case and the evidence. The FEMA Act itself gave an explicit scope to the Adjudicating Authority to exercise its discretion, albeit judiciously, for the imposition of a penalty. In the given case, the total penalty imposed is about 200% more than the contravened amount. However, instead of executing the said order for recovery, the appellant ED has filed an appeal for enhancement of penalty, by ignoring the fact that the respondents are not traceable, and thereby, any chance of recovery of the penalty amount became negligible during this intervening period. Hence, the practice of filing such appeals for enhancement of the penalty amount by the appellant ED needs to be deprecated.
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Therefore, the order of the Adjudicating Authority needs no interference. The appeal for enhancement of the penalty fails and is hereby dismissed.
1. Brief Facts of the case:
- In the present case, Sh. Bharat Kumar and Sh. C Sharavan Kumar (“The Respondents”) made exports against 51 invoices from August 2000 to December 2000, to the extent of ₹12,41,89,927.
- However, the Respondents failed to realize such export proceeds.
- Therefore, the Adjudicating Authority imposed penalties on the respondents for contravention of Section 7 & 8 of FEMA, read with Regulation 9(1) & 13 of Foreign Exchange Management (Export of Goods & Services) Regulations 2000.
- The Penalty was imposed of Rs 1,2,50,00,000/- each of the respondents.
- The present appeal is filed by the Assistant Director, Chennai Zonal Office, against the order issued bythe Adjudicating Authority.
- The said Noticee could not be served, and accordingly, they were served by way of affixation on the last known addresses. Hence, they were proceeded against ex parte by the Adjudicating Authority.
- Being satisfied with the allegations made, the Adjudicating Authority imposed the penalty on the noticees.
- Aggrieved by the said order, the appellant ED filed the present appeal for enhancement of the penalty.
2. Contention of the Appellant
The Appellant submitted that:
- The Respondent has contravened Sections 7 & 8 of FEMA, read with Regulation 9(1) & 13 of Foreign Exchange Management (Export of Goods & Services) Regulations 2000, for failing to realize export proceeds amounting to Rs. 12,41,89,927/-.
- However, the penalty imposed on them is quite meagre and nominal to the extent of 100% of the contravened amount.
- No serious efforts were made by the respondent company to realize the said amount from foreign-based importers of Dubai & Jamaica by filing any suit for recovery against them.
- Therefore, the present appeal is filed to enhance the penalty amount as the said penalty is on the lower side, without considering the quantum of contravention.
3. Contention of the Respondent
None appeared on behalf of the appellants even during the adjudication proceedings, and ex parte order was passed against them.
4. Analysis by Hon’ble Tribunal
控訴審裁判所は、以下の通り分析した。
- 外国為替管理法（FEMA）第13条(1)に基づき、課される罰金の最大額は違反金額の3倍までであることは明らかである。
- 第13条(1)には、罰金の固定額や最低額は規定されていない。したがって、裁定当局が課す罰金は、事案の事実関係および証拠を考慮した上で、慎重かつ公正に行使されるべき裁量事項である。
- 控訴人は、裁定当局が違反金額、すなわち海外の輸入業者から回収できなかった輸出代金の100%に相当する罰金を課したと主張している。
- 本件において、裁定当局は事案の事実関係を認識しただけでなく、記録上の証拠を評価した上で、100%の範囲内で罰金を課したものである。
- マディヤ・プラデーシュ州対バーラト・ヘビー・エレクトリカルズ事件［(1997) 7 Supreme Court Cases 1］において、最高裁判所は次のように判示した。
- 入場税の10倍に相当する罰金を規定する法令は、上限のみを定めたものであり、最低額を規定したものではないため、査定当局の裁量を奪うものではない。
- 査定当局は、入場税額の10倍という固定された罰金を課す義務を負うものではない。
- FEMA法自体が違反金額の3倍までの罰金を規定しており、裁定当局が罰金を課す際に（公正に行使されることを前提として）裁量を行使する明示的な余地を与えている。
- 本件において、課された罰金総額は違反金額の約200%に相当する。
- しかし、控訴人である執行局（ED）は、当該回収命令を執行する代わりに、被控訴人の所在が不明であるという事実を無視して罰金の増額を求める控訴を提起した。その結果、この期間中に罰金額を回収できる可能性は皆無となった。
- したがって、控訴人である執行局によるこのような罰金増額を求める控訴の提起は、非難されるべき慣行である。
5. Final Order
控訴審裁判所は次のように判示した。
- 裁定当局によって適切な罰金が課されているため、我々は罰金額を増額する意向はない。
- したがって、裁定当局の命令に介入の余地はない。罰金増額を求める控訴は理由がないものとして棄却する。
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