APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI (1) FPA-FE-171/BNG/2010 M/s. Tamori Textiles (P) Ltd. … Appellant Versus The Special Director Directorate of Enforcement, Bangalore … Respondent (2) FPA-FE-172/BNG/2010 Shri Lokesh … Appellant Versus The Special Director Directorate of Enforcement, Bangalore … Respondent (3) FPA-FE-173/BNG/2010 Shri Ramesh N. … Appellant Versus The Special Director Directorate of Enforcement, Bangalore … Respondent (4) FPA-FE-174/BNG/2010 Shri S.C. Subramanian … Appellant Versus The Special Director Directorate of Enforcement, Bangalore … Respondent Advocates/Authorized Representatives who appeared For the Appellants : Chidananda URS BG, Advocate For the Respondent : Shri Vivek Gurnani, Advocate Shri Kanishk Maurya, Advocate CORAM JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN

ORDER

02.05.2024 By this appeal, a challenge has been made to the order dated 31.05.2010 passed by the Adjudicating Authority under the Foreign Exchange Management Act, 1999 (in short the “Act of

1999”).

2. It is submitted that a show cause notice was issued on the appellant on 20.02.2009 pursuant to the complaint filed by the Assistant Director of Enforcement Directorate. The Company alleged to have made export of garments from January 2000 till August 2000 though effected by M/s Sunwear, and M/s Sun Overseas Trading Corporation, a partnership firm. The export dues remain pending for realization. It was alleged that a sum of 9,17,543.20 USD could not be realized by the appellant from their buyers in Singapore, USA and Malaysia.

3. The respondents accordingly proceeded against the appellants for contravention of section 8 and 13 (1) of the Act of

1999 read with Regulation 9 and 13 of Foreign Exchange Management (Export of Goods and Services) Regulation 2000.

4. The appellants filed reply to the show cause notice. It was submitted that the Company had not effected the export, rather it was by two different partnership firms named in the show cause notice. The show cause notice could not have been issued to a company whose name does not exist as an exporter in any of the documents. It cannot be only for the reason that the appellant Company alleged to be the partner in the firm or said to have taken over the partnership firm.

5. The challenge on proceedings under the Act of 1999 was also made because it was given effect from 1^st June, 2000 while the export was even prior to it. It was in the FERA regime. The Adjudicating Authority did not accept the arguments and accordingly passed the impugned order imposing a penalty of Rs. One Crore Fifty lakhs on the appellant company for contravention of section 7 and 8 of the Act of 1999 and Regulation

8, 9 and 13 of the Regulation of 2000.

6. The penalty of Rupees One crore was imposed on Sh. S.C. Subramanian, Ex-Director of the Company under section 13 (1) of Act of 1999 for contravention of section 7 and 8 of the Act of 1999 read with the Regulation 8, 9 and 13 of the Regulation of 2000 and section 40 (2) of the Act of 1999. Penalty of Rs. 50 lakhs was imposed on Sh. K.G. Suresh Kumar, Ex-Director of the Company and equivalent penalty was imposed on Shri Ramalingam Palaninadan, Ex-Director of the Tamori Textiles Private Limited. Both are not the appellant herein. Penalty of Rs. 20 lakhs was imposed on Sh. Ramesh and Sh. Lokesh, the Director of the appellant Company.

7. The learned counsel for the appellant submitted that the impugned orders and even the show cause notice are not sustainable in the eye of law as they are given with the delay of more than eight years.

8. Delay in issuance of the show cause notice for taking action under the Act of 1999 and Regulation of 2000 is fatal in the light of the recent judgement of the Apex court in the case of Union of India Vs. Citi Bank reported in 2022 (141), Taxmann.com 409 (SC).

9. The delay in initiation of action was an issue of challenge before the Apex Court. There the transaction had taken place in the financial year 1992 and 1993 while the show cause