Allowed

FPA-FE-82/DLI/2008 of Deep Swaroop Aggarwal v/s The Special Director Directorate of Enforcement, Delhi

ATFP2 May 2018FPA-FE-82/DLI/2008

Case brief

AI extract

What is this about?

This tribunal allowed the appeal against an adjudicating order penalising the appellant for alleged FERA violations. The court held that there was no evidence the appellant utilised export benefits or made payments under section 9(1)(d), noting the main perpetrator had already been cleared.

What did the court decide?

The impugned Adjudicating Order No. SDE/ SKP/ III/ 38/2007 dated 14.11.2007 was set aside.

FPA-FE-82/DLI/2008 of Deep Swaroop Aggarwal v/s The Special Director… — Corruption | ATFP (2018)

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APPELLATE TRIBUNAL, FOREIGN EXCHANGE MANAGEMENT ACT AT NEW DELHI

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Date of Decision:- 02.05.2018

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FPA-FE-82/DLI/2008

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Deep Swaroop Aggarwal … Appellant Versus The Special Director Directorate of Enforcement, Delhi … Respondent

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Advocates/Authorized Representatives who appeared

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For the appellant	: Shri Amit Khemka, Advocate Ms. Aditi Kharpate, Advocate
For the respondent	: Shri Pankaj Yadav, Legal Consultant
CORAM
JUSTICE MANMOHAN SINGH	: CHAIRMAN

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JUDGEMENT

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FPA-FE-82/DLI/2008

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The appeal has been filed against the Order dated 14.11.2007 passed by the Adjudicating Authority imposing the penalty of Rs. One Crore upon the appellant.

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The Show Cause Notice dated 07.05.2002 which forms the basis of the present proceedings were initiated. As per the said Show Cause Notice, the whole case started with the statement of Sh. Rajesh Jain, owner of M/s Mondial General Trading UAE. In para 4, Rajesh Jain deposed that he himself and one Naresh Jain of Dubai sent the remittance to Sh. Bimal Kumar Jain who used to distribute the money in India. He stated that he did not even know Sh. Deep Swaroop Aggarwal.

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FPA-FE-82/DLI/2008

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Page 1 of 6

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He also said that Sh. Naresh Jain was his uncle, however, he has alleged that bogus export of CD roms were made by Sh. Bimal Kumar Jain against which remittance were made by Sh. Naresh Jain of Dubai.

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The details of the allegations against the appellant are mentioned in para 10 and 11 of the Memorandum/show cause notice dated 7^th May, 2002 and the same are reproduced below:-

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“10. AND WHEREAS summons have been issued to Shri Deept Swaroop Agarwal and Shri Devinder Lal, CHA and their statements were recorded under section 40 of FERA, 1973 in which they admitted/ confirmed regarding purchase of CD Roms and export of CD Roms by M/s. Sundram Export (P) Ltd., on the instruction of Shri Rajesh Jain of Dubai. He further admitted that as a Commission Agent he met Shri Sunil Wadhwani of M/s. Super Cassettes Industries Ltd. and strucked the deal for purchase of CD Roms @ Rs. 19.00 per pc. He further stated that he is one of the Director of M/s. A.D. Exports Pvt. Ltd., and a Show Cause Notice has already been issued by the Special Director of Enforcement for non-realisation of export proceeds to him.

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11. AND WHEREAS summons have been issued to Shri Devinder Lal, CHA and his statement was recorded under section 40 of FERA, 1973 on 06.03.2002 in which in inter alia admitted that Shri Deept Swaroop Agarwal who is having a office at S-402, GK-I, New Delhi was a person who handed over the export documents to him. The goods were directly said at ICD Tuglakabad, New Delhi. He further stated that Shri Deept Swaroop Agarwal has handed over the cheques to their office person for clearing the shipments. He also stated that he never met a person namely Shri Rajesh Agarwal, however, on one occasion Shri Rajesh Agawal made a call at his office for some clarifications. Shri Devinder Lal submitted the relevant documents of export of CD Roms made by M/s. Sundram Exports (P) Ltd.”

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It is submitted on behalf of the appellant that as per allegations of department, Sh. Bimal Kumar Jain was the main person behind the whole transaction and same impugned order date 14.11.2007 against Sh. Bimal Kumar Jain was quashed vide order dated 29.03.2009 in Appeal No. 05 of 2008 by the Predecessor Tribunal (Appellate Tribunal of Foreign Exchange) of this Tribunal.

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FPA-FE-82/DLI/2008

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Page 2 of 6

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The finding in the impugned order against the Appellant are that the appellant was an important link in the execution of the deal of export of CD roms and he had availed export benefits like DEPB and other incentives. Counsel argued that the said conclusions are selfcontradictory to the allegations made in the Show Cause Notice and in the Adjudicating Order. Counsel for the appellant submitted that the appellant no role whatsoever in export of the CD roms and the only allegation against him was that he acted as intermediary between the Super Cassettes Industries Ltd. and Sh. Rajesh Aggarwal in purchase of CD roms.

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It is mentioned in para 10 of the Adjudicating Order that the only role played by the Appellant was of broker of deal of purchase of CD roms from Super Cassettes Industries Ltd. while the export benefits as per the shipping documents were to be taken by the Super Cassettes Industries Ltd. as admitted in the said para. It was admitted by the Super Cassettes Industries Ltd. that on shipping bills, it was mentioned that the export was towards fulfilment export obligation of the Super Cassettes Industries Ltd. against the EPC license, question of taking export benefits by the Appellant could not have arisen.

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Para 59 of the Order dated 14.11.2007 passed in the case of Bimal Kumar Jain are read as under:-

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Examination of the documents relied upon in the SCN and those came up during adjudication proceedings and the circumstantial evidence revealed that the whole export transactions were devised by Shri Bimal Kumar Jain to get funds for making hawala payments in India by way of remittances so as to give a colour of legitimacy to the ill-gotten funds which were received in the guise of remittances against exports. Shri Rajesh Agarwal, director of M/s. Sudram Exports (P) Ltd., S/Shri Deep Swaroop Agarwal and Sulekh Chand Jain had assisted in execution of the transactions of procurement and export of CD Roms of no value to M/s Mondial Trading which consignments were reportedly

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FPA-FE-82/DLI/2008 Page 3 of 6

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abandoned in Dubai on arrival. No doubt, the statements of Shri Rajesh Agarwal given over a period of time were inconsistent. But in such situations, the adjudicating officer has to look into other evidences/materials and also circumstantial evidences and draw his findings independently. S/Shri Rajesh Agarwal and Sulekh Chand Jain were known to Shri Bimal Jain, were his employees, it is but natural that during cross-examination proceedings they had made certain depositions in favour of Shri Bimal Jain. Further, Shri Rajesh Jain of M/s. Mondial Trading to whom the shipments of CD Roms were made was related to Shri Bimal Jain. In the circumstances and considering the material before me and also the circumstantial evidences, I find that Shri Bimal Jain was behind the entire transactions which ultimately resulted in the violations of Section 9(1)(d) of the FERA, 1973.

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There is no exact and clear evidence on record to show that Appellant in any way utilised any DEPB or export benefits or incentives. At the best even it is admitted that the Appellant had played role of broker for acquisition of CD roms and that he has taken any export benefit, no offence under section 9(1)(d) of the FERA,1973 is made out against him.

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There is not even an allegation in the Show Cause Notice or the Adjudicating Order that the Appellant even had any knowledge or role in distribution of foreign exchange. The authority cannot go to beyond of show cause notice which contains the allegation. The adjudicating authority strictly has to decide the matter against the party as per allegation made in show cause.

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The plain reading of section 9(1)(d) states that an offence is made out only when a person in resident in India, make any payment to, or for the credit of, any person by order or on behalf of any person resident outside India.

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The allegations against the present appellant are mentioned in Para(s) 8, 10 and 11 of the Memorandum. It has been alleged that he has acted as agent for procurement of CD roms from Super Cassette Industries Ltd. and that he was a commission agent for the said purpose.

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FPA-FE-82/DLI/2008

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Page 4 of 6

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The other allegation is that of he having handed over the export documents and some alleged cheques to the CHA Devinder Lal. There is no evidence about him giving any cheque, even if such cheques were given by him, it does not constitute any offence under FERA or section 9(1)(d).

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In the impugned order, the role of Sh. Bimal Kumar Jain has been mentioned. shown. Sh. Rajesh Jain in his statement in Para 3 deposed that Sh. Naresh Jain and Sh. Bimal Kumar Jain were his uncles and he was the one who had placed order of import of CD roms and money was distributed by Sh. Bimal Kumar Jain. He also said that, he did not know Sh. Deep Swaroop Aggarwal. Sh. Rajesh Aggarwal, owner of Sunderam Exports Pvt. Ltd. (firm which imported CD roms) said in his statement that he was only a director for namesake and all the company matters were handled by Sh. Bimal Kumar Jain.

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Sh. Bimal Kumar Jain in his statement admitted that Sh. Rajesh Jain of Dubai was his relative. Sh. Sulekh Chand Jain in his statement said that he had opened the bank account and withdrawn. In para 50, it has been held that Sh. Rajesh Jain was appointed as director by Sh. Bimal Kumar Jain who had purchased from M/s. Sunderam Exports Pvt. Ltd. and exported them to Rajesh Jain who was his close relative. In para 51 of findings, (later portion at page 79), it has been concluded that amount realised for export in question received by Sh. Bimal Kumar Jain which was utilised for payment to various persons. In para 59 of the findings, it has been concluded that “evidence revealed that a whole export transactions were deviced by Sh. Bimal Kumar Jain to get funds for making hawala payments in India.” In the same para, it has been concluded that Sh. Bimal Kumar Jain was behind every transaction which ultimately resulted in violation of section 9(1)(d). Counsel for the

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FPA-FE-82/DLI/2008

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Page 5 of 6

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respondent has not denied that the proceeding against him are quashed and no appeal was filled and the said order attained finality.

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There is no allegation in the Show Cause Notice or the Adjudicating Order that Appellant either made any payment of any such foreign exchange or was aware about any such payment. In any case, a person who had done the whole transaction has been let off and the same Adjudicating Order against him has been quashed, the order against the Appellant can be sustained even on parity.

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In view of the above referred to facts and circumstances, I set aside the impugned Adjudicating Order No. SDE/ SKP/ III/ 38/2007 dated 14.11.2007 which is passed against the appellant.

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