FINAL ORDER

26.11.2024 FPA-FE-119&121/MUM/2010 This appeal has been filed under Section 19 of the Foreign Exchange and Management Act, 1999 (in short `the Act of 1999’) against the common order dated 25.02.2010 passed by the Special Director of Enforcement. The penalty of Rs.30 lakhs has been imposed on M/s G. Tex Inc. and Rs.7,50,000/- on the appellant Rajesh Jhanwar and the same penalty on the appellant MadhusudanJhanwar. The penalty was imposed finding contravention of Section 10(6) of the Act of 1999 read with Para 6(1) of the Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulation, 2000.The appellants Rajesh Jhanwar and MadhusudanJhanwar along with Natwarlal Jhanwar were the partners of M/s G. Tex Inc., therefore, taken to be the persons responsible for the conduct of the business and thereby charged in terms of Section 42(1) the Act of 1999 for contravention of Section 10(6) of the Act of 1999.

2. The allegation has been made against the appellants for contravention of Section 10(6) of the Act of 1999 on the ground that while G. Tex Inc. made import of copper scrap in 10 containers but all the containers were found empty carrying no copper scrap. The import was made through M/s Koya International, Freetown, Sierraleon. The facts available on record shows that M/s G. Tex Inc. made import of copper scrap from M/s Koya International, Freetown, Sierraleon. M/s G. Tex Inc. sold the copper scrap on “high seas sales basis” to M/s Maruti Metal Industries. M/s Maruti Metal Industries filed five bills of entries dated 09.05.2006 with the Customs Authorities at Jawahar Customs House, Nava Sheva for clearance of the copper scrap.

3. During the course of examination of import consignment by the Customs Authorities, all the containers were found empty thus were not containing copper scrap. M/s G. Tex Inc., however, effected the remittance of US$6,56,864 through the Bank of India, Bangaluru. The remittance of foreign currency was without the receipt of materials, rather containers were found empty and thereby the appellants contravened Section 10(6) of the Act of 1999. As against the containers found empty, M/s G. Tex Inc. vide their letter dated 23.08.2006 confirmed to have effected the remittance of US$ 6,56,864/- to the company. In the light of the remittance of the amount without import of the goods, rather the import was directly routed through M/s Maruti Metal Industries who in turn paid the amount to M/s G. Tex Inc. anticipating receipt of the copper scrap which was not received by M/s G. Tex Inc. or even M/s Maruti Metal Industries which filed five bills of entries on 09.05.2006 with the Customs Authorities at Jawahar Customs House for clearance of the copper scrap. Since the remittance of the foreign exchange was made by M/s G. Tex Inc. even without receipt of the documents by their banker and, therefore, finding the contravention, penalty of Rs.30 lakhs has been imposed on M/s G. Tex Inc. and Rs.7.50,000/- each on the Directors.

4. The learned counsel for the appellants submitted that M/s G. Tex Inc. entered into transaction for the copper scrap with M/s Koya International. The amount was to be remitted on receipt of the containers of copper scrap. When the containers were received, they were found empty. However, the bank made remittance from time to time and it was even after the receipt of the empty containers.

5. The appellant Rajesh Jhanwar made all the efforts to recover the amount remitted to M/s Koya International and for that they approached the police at Sierraleon apart from the Chambers of Commerce to seek recovery of the amount paid to the company who sent empty containers. The appellant MadhusudanJhanwar was not having knowledge of the transaction for the reason that it was looked after by the appellant Rajesh Jhanwar. However, equivalent penalty has been imposed on both the appellants without showing the role of the appellant MadhusudanJhanwar and, therefore, the imposi