Contravention of the Foreign Exchange Management Act or the Foreign Exchange Regulation Act creates strict liability, and such violations are considered economic offenses.

PINAKI CHANDRA GHOSE, J.

This appeal is against an Order and/or judgment dated 6th July, 2007 passed by the Learned Appellate Tribunal.

2. The facts of this case briefly are as follows:

An order was passed by the Special Director (Appeals) Foreign Exchange Management Act forming a common adjudication order dated 30th December, 2004 where the adjudicating authority imposed penalty of Rs. 10 lacs against the appellant company and Rs. 10 lacs against the appellant Managing Director for contravention of Section 10(6) of Foreign Exchange Management Act, 1999 (hereinafter referred to as “the said Act”) on the ground that the appellants after taking remittances of foreign exchange of US Dollars 35766 and FRF 374000 on 18th April, 2000 and 19th June, 2000 respectively for import of refrigeration machinery so as to use the same in Hotel Industry in fact failed to do so and also failed to file the proofs thereof.

3. It further appears that the appellant company filed an appeal before the Learned Tribunal and was allowed to make a pre-deposit of 25% of the said penalty and the Appellant Managing Director was also allowed to make pre-deposit of 15% of the amount of such penalty by an Order dated 23rd September, 2005 passed by the Learned Tribunal and it further appears from the fact that the appellants duly complied with the said order.

4. It is the case of the appellant/petitioner that one Mr. Aniruddha Roy Chowdhury and his associates, being the original promoters, with the objective of setting up of a 3-star category hotel in the Salt Lake Electronics Complex, promoted the appellant company M/s. Zoom Enterprises Ltd. in the year 1995. The appellant imported refrigeration machinery from Carrier SA, France in the year 2000. Upon import of the first consignment on 15th March, 2000, the goods were assessed by the Customs Authority in Calcutta but before the goods could be cleared by paying up the necessary duties, the erstwhile promoters ran into severe financial problems, as a result whereof the goods were warehoused under the provisions of the Customs Act, 1962.

5. The second consignment was imported on 15th May, 2000 and was directly warehoused due to which the Exchange Control Copy of the Bill of Entry could not be submitted. The Managing Director of the appellant company, Mr. Suborno Bose took over the Management of the Company in June 2002 and was unaware of the terms of the EPCG License relating to the import of the goods in question. According to the Appellant Managing Director, the previous promoter did not disclose the said fact and/or the liabilities to the appellant.

6. It further appears from the fact that the said import had been done against the EPGC License and had thereby incurred an obligation to earn foreign exchange upto four times the CIF value of the license and that a sum of Rs. 36 lacs was payable other than interest for delayed payment and warehousing rent amounting to Rs. 10 lacs.

7. Thereafter, the adjudicating authority issued a showcause notice on 19th May, 2004 to the appellant and on the ground that the foreign exchange taken had not been utilized for the purpose for which it was realised, as the Bill of Entry was not submitted. On 30th December, 2004, an order was passed by the adjudicating authority for contravention of provisions of Section 10(6) of the said Act read with Sections 46 and 47 of the said Act. On the basis that the appellant had failed to take delivery and had failed to take machinery imported and had failed to submit the Bill of Entry relating to the said import as the import formalities end with the submission of the Bill of Entry.

8. An appeal was filed from the said order which was dismissed on 13th June, 2005 and the appellant was asked to pay penalty of Rs. 10 lacs and thereafter an appeal was preferred before the Learned Tribunal which was also dismissed.

9. According to the appellant/petitioner, the appellant did not contravene the requirement of Section 10(6) of the said Act