Research › Search › Judgment

Delhi High Court · body

2014 DIGILAW 204 (DEL)

Director, Enforcement Directorate v. Maya Sanyal

2014-01-21

V.K.JAIN

body2014
Judgment : V.K. Jain, J.(Oral) 1. A show cause memorandum dated 8.3.2001 was issued by the Special Director of Enforcement to the respondents – House of Services and its Partners, Smt. Maya Sanyal and Smt. Indrani Sanyal, for contravention of provisions of Section 18(2) read with the Central Government Notification No.F1/67/EC/73-1 & 3 both dated 1.1.74 and Section 18(3) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as FERA) and Section 68(1) of FERA. 2. It appears that the respondents had obtained duty draw back in the form of export incentive for exporting goods out of India for which as many as 27 GRs, details of which are given in the order in original dated 5.11.2005 passed by the Special Director of Enforcement. The documents to the overseas buyers were sent through Syndicate Bank, Connaught Place, New Delhi. The case of the Department was that the respondents had failed to secure export value to the extent of Rs.1,32,53,844.00 in respect of the goods exported by them. The respondents were required to show cause as to why the adjudication proceedings as contemplated under Section 51 of the FERA read with sub-sections (3) & (4) of Section 49 of the Foreign Exchange Management Act,1999 should not be held against them. 3. The respondents applied to the Reserve Bank of India (for short ‘RBI’) seeking write off/set off of the unrealized amount. The RBI vide its letter dated 24.4.2003 addressed to Syndicate Bank, Connaught Place, New Delhi and copy endorsed to the Special Director Enforcement Directorate, New Delhi, agreed to allow the set-off/write-off of the unrealized amounts in respect of the outstanding GR forms, as per respondents’ letter dated 27.12.2002, subject to the exporter surrendering the amount of export incentives availed of, proportionate to the amount being written off and submitting to the Bank, appropriate documentary evidence for the same. 4. The Enforcement Directorate wrote a letter dated 18.8.2003 to Syndicate Bank, Connaught Place referring to RBI letter of 24.4.2003 and seeking to confirm the exact status of GR forms in view of RBI’s approval to write-off the twenty-seven (27) GRs shown outstanding in the annexure to the show cause notice. 4. The Enforcement Directorate wrote a letter dated 18.8.2003 to Syndicate Bank, Connaught Place referring to RBI letter of 24.4.2003 and seeking to confirm the exact status of GR forms in view of RBI’s approval to write-off the twenty-seven (27) GRs shown outstanding in the annexure to the show cause notice. In reply to the aforesaid communication from the Directorate of Enforcement, Syndicate Bank vide its letter dated 28.8.2003 confirmed having received permission from the RBI vide its letter dated 17.10.2003 for write-off/set-off of unrealized export bills outstanding as per XOS statement. It was further stated in the said communication that the GRs were still outstanding as per XOS statement since the exporters had failed to submit documentary evidence along with Chartered Accountant’s Certificate, certifying surrendering of proportionate incentives availed of by them. Subsequently, Syndicate Bank vide their letter dated 29.8.2003 and 30.9.2003 clarified that they had deleted the GRs mentioned in the said letter from XOS statement and only thirteen (13) GRs for a total sum of Rs.1,11,15,200/- were outstanding and the exporters had not submitted any documentary evidence of surrendering proportionate export incentive to the Government Departments as per the RBI directions. 5. Noticing that the RBI had given conditional write-off/set-off in respect of the above-referred thirteen (13) GR forms, the Special Director held the respondents guilty of contravention of Section 18 (2) and imposed penalty of Rs.20.00 lakh upon the partnership firm, House of Services, and penalties of Rs.10.00 lakh each on its Partners, Maya Sanyal and Indrani Sanyal. 6. Being aggrieved from the order of the Special Director of Enforcement, the respondents preferred an appeal before the Appellate Tribunal for Foreign Exchange (for short ‘the Tribunal’). The two-member Bench of the Tribunal delivered a split verdict with the Chairperson of the Tribunal Shri O.P. Nahar allowing the appeal filed by the respondents whereas the other Member of the Bench, Kumari Laxmi confirming the same. The matter was then referred to another Member of the Tribunal. The third Member Mr. R.N. Poddar, however, agreed with the Chairperson of the Tribunal holding that burden of proving quantum of export could not be absolutely thrown on the respondents before this Court when the Enforcement Directorate was not coming out with any figures whatsoever which otherwise was their duty to counter the pleadings of the respondents/exporters before this Court. The third Member Mr. R.N. Poddar, however, agreed with the Chairperson of the Tribunal holding that burden of proving quantum of export could not be absolutely thrown on the respondents before this Court when the Enforcement Directorate was not coming out with any figures whatsoever which otherwise was their duty to counter the pleadings of the respondents/exporters before this Court. It was also noted by the third Member that the exporter had produced evidence of export incentive by sending two cheques of Rs.1,88,176/- and Rs.1,17,841/- to the Commissioner of Customs and, therefore, they had discharged the burden placed on them. Being aggrieved from the order passed by the Tribunal dated 6.8.2007 read with order dated 21.7.2009, the Directorate of Enforcement is before this Court by way of these appeals. 7. A perusal of the letter dated 24.4.2003 sent by the RBI to the Assistant General Manager, Syndicate Bank, Connaught Place would show that the respondents were allowed set-off/write-off of the unrealized amount in respect of the outstanding GRs as mentioned in their letter dated 27.12.2002, subject to the exporters surrendering the amount of export incentive availed of proportionate to the amount being written off and submitting the appropriate documentary evidence in this regard to the Bank. It would, thus, be seen that the approval granted by the RBI was not unconditional and was dependent upon the respondents before this Court satisfying the Bank that they had surrendered, to the Customs Department, all the export incentives which they had availed of in respect of the GRs for which write-off was sought by them. 8. Admittedly, the respondents did not produce any documentary evidence either before the Adjudicating Officer or before the Tribunal which would indicate the exact amount of export incentives availed of by them in respect of the thirteen (13) GRs which were subject matter of the communication dated 24.4.2003 from RBI. The plea taken by the respondents in this regard was that they had closed down their business quite a few years ago and, therefore, were not in possession of the relevant record in this regard. The plea taken by the respondents in this regard was that they had closed down their business quite a few years ago and, therefore, were not in possession of the relevant record in this regard. In my view, since the permission granted by the RBI for writing off was conditional, subject to the exporters submitting documentary evidence of having surrendered the export incentives which they had availed, it was for them to collect the necessary documentary evidence in this regard wherever it could be available and produce it either before the Bank and in case they were not able to do so before the Bank, at least, before the Adjudicating Officer. The Syndicate Bank vide its letter dated 27.12.2008 written to the respondents informed that they had not received any documentary evidence with regard to surrendering the export incentives and requesting them to submit the same so as to enable them to do the needful in the matter. Earlier vide its letter dated 5.12.2008, the Bank had informed the exporters that they were not in a position to provide any details regarding duty draw back returned to the exporters by them in case of GR forms which were allowed to be written off by the RBI since such record was not available with the Bank. It was also stated in the said letter that all details about the duty draw back received by them should be available with the exporters and they must be having all the documents connected with the export made by them as also the amount credited to their account. 9. In my view, the Tribunal was not right in concluding that the exporters had discharged the burden placed on them by producing before the Board two cheques of Rs.1,88,176/- and Rs.1,17,841/-, which they claimed to have sent to the Commissioner of Customs. Admittedly, the cheques referred to above were never encashed by the Commissioner of Customs. Obviously the cheques could not have been encashed by him without first verifying the extent of export incentive availed by the exporters in respect of GRs which were subject matter of RBI communication dated 24.4.2003. Admittedly, the cheques referred to above were never encashed by the Commissioner of Customs. Obviously the cheques could not have been encashed by him without first verifying the extent of export incentive availed by the exporters in respect of GRs which were subject matter of RBI communication dated 24.4.2003. In my view, the Tribunal was not right in law in saying that the burden with respect to proof of surrendering the export incentive shifted to the Directorate of Enforcement on account of their not producing any documents with respect to the extent of the export incentive availed of by the exporters. The burden in this regard, particularly, in view of the RBI communication dated 24.4.2003, always continued to remain with the exporters and it was for them to satisfy the Adjudicating Officer that all the export incentives which they had availed of in respect of GRs which were subject matter of the RBI letter dated 24.4.2003 had been fully surrendered by them. Even otherwise, an information of this nature is not expected to be in possession of the Directorate. The respondents had to either locate their own record or obtain the relevant information from the concerned Department, and then produce it either before the Bank, or before the Directorate of Enforcement. 10. The respondents have filed an additional affidavit dated 18.1.2014 enclosing therewith, inter alia a letter dated 11.11.2013 addressed to them by Syndicate Bank, Connaught Place, New Delhi, whereby the Bank sent to them, thirteen (13) duly attested GRs and also informed that in respect of GRs AE-800617, AF-531590, AF-531584, AF-531597, AF-531594, AF 531596, AG-290589 records have been removed from the XOS as per the RBI permission. 11. For the reasons stated hereinabove, the impugned order dated 6.8.2007 read with order dated 21.7.2009 passed by the Tribunal is set aside and the matter is remanded back to the Special Director of Enforcement to consider it afresh in the light of the additional documents which the respondents have filed along with affidavit dated 18.1.2004. The respondents are also at liberty to submit additional documents, if any, before the Adjudicating Officer within a period of four (4) weeks from today. The parties shall appear before the Adjudicating Officer on 25.2.2014 for his considering the additional documents, hearing the parties and then passing an appropriate order. The respondents are also at liberty to submit additional documents, if any, before the Adjudicating Officer within a period of four (4) weeks from today. The parties shall appear before the Adjudicating Officer on 25.2.2014 for his considering the additional documents, hearing the parties and then passing an appropriate order. A fresh order in terms of this direction shall be passed by the Adjudicating Officer within eight (8) weeks of the parties appearing before it. Once a fresh order is passed by the Adjudicating Officer in terms of this direction, the order he has passed earlier on 5.11.2003 shall merge in that order. The appellants shall not give effect to the aforesaid order of the Adjudicating Officer till a fresh order in terms of this direction is passed by the Adjudicating Officer. The appeals stand disposed of. The LCR be sent back along with a copy of this order.