FINAL ORDER

05.12.2024 FPA-FE-80/CHN/2022 This appeal challenges the order dated 01.09.2022 passed by the Commissioner of Customs (Appeals-1), Chennai/ Competent Authority under Section 37A(3) of the Foreign Exchange Management Act, 1999 (hereinafter referred to as ‘the Act of 1999‟).

2. By the impugned order, the seizure order made by the appellant/Directorate of Enforcement has been set aside. Aggrieved by the order aforesaid, the Assistant Director of Directorate of Enforcement preferred this appeal and has given brief facts of the case which are as under:

Brief facts of the case:

“2.1 M/s. Sunshine Global Importers, hereinafter referred to as "SGI", is a Proprietorship firm having one Shri Ramash Babu Srinivasan as the sole Proprietor of the firm. The registered address of the firm SGI is at Plot No.80, Door No.7, 1st Floor, E Street, Sri Devi Vaishnavai Nagar, Annanur, Avadi, Chennai-600 109, Tamil Nadu whereas the declared residential address of Proprietor of the firm is at No.50, Gandhi Nagar, Chennai-600 081.

2.2 The firm SGI opened a Current Account No.200012921144 with Kilpauk Branch of Indusind Bank, Chennai. The firm SGI also opened a current account having C. A. No. 010386700000236 with Parrys Branch of Yes Bank, Chennai. The declared business of the firm SGI with Indusind Bank was Marketing Consultancy and with Yes Bank was export/import. The Current Accounts were opened for the firm SGI with evidence of Permanent Account Number (PAN) ASHPR0917J and Ration Card having Number 01/G/0151163.

2.3 The firm SGI during the period from December, 2012 to February, 2013 had received funds to the tune of Rs.58,00,72,330/- by way of RTGS and Rs. 26,45,86,100/- by way of cash deposits in the Bank Account being maintained at Kilpauk Branch of Indus Ind Bank. Further the firm SGI during the period from February, 2013 to March, 2014 received funds to the tune of Rs.29,97,55,103/- by way of NEFT in the Bank Account being maintained a Parrys Branch of Yes Bank, Chennai.

2.4 The firm never paid any taxes to the government either by way of payment towards Value Added Tax, Customs Duties, Transportation Charges, Miscellaneous expenses towards running the firm, salaries of the employee etc. However, the firm SGI made continuous payments towards advance import remittances to offshore entities located in United Arab Emirate (having bank account in Hong Kong) and Hong Kong. Thus, all the credits received in the bank accounts were completely and absolutely utilized by way remitting foreign exchange abroad to offshore entities. The total remittances done to offshore entities during the period of operation of current accounts was to the tune of Rs. 112.27 Crore. However, no import documents were submitted by the firm SGI to the respective Banks in lieu of proof of import against import advance remittances. As no import took place in respect of the outward remittances, there was a prima facie case of violations of various provisions of Foreign Exchange management Act, 1999, hereinafter referred to as FEMA, 1999. Therefore, an investigation under FEMA,1999 was initiated in respect of firm SGI.

2.5 The foreign exchange to the tune of Rs. 112.27 Crore was remitted in the name of importing goods from five different suppliers namely M/s Splendid Masters Limited, M/s Rich Kind Industrial Limited, M/s Suntronic Innovator Limited and M/s Sea Marine Global Limited all located in Hong Kong and M/s Ramp International DMCC, Dubai whose business address was that of Hong Kong too, the details of foreign exchange remitted to all three suppliers are as detailed below:

2.6 Despite remitting foreign exchange to the tune of Rs. 112.27 Crore within a short span of few months, no import took place against those outward remittances. The Customs authorities were requested to confirm so as to whether any import has been undertaken by the firm SGI. The Customs department vide letter no. S/MISC.02/2020.Sys. unit dated 07.10.2020 informed that no import has taken place in res