Calcutta High Court (Appellete Side)
For The vs R.C. Fabrics Reported In 2002 (139) Elt ... on 23 February, 2011
Author: Indira Banerjee
Bench: Indira Banerjee
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23-02-2011.
03
W.P. No. 1930 (W) OF 2011.
Mr. Sagar Bondopadhyay,
Ms. Soma Kar Ghosh,
Mr. Sanjoy Kar Ghosh.
..for the Petitioner.
Mr. Pradip Kumar Tarafdar,
Mr. Joydeep Sen.
..for the respondents.
In this writ application the petitioner has inter alia,
challenged an Adjudication Order bearing No.21/FEMA/2010/DD(BKM)
under File No.T4/19/Kol/SCN/FEMA/2010/DD/Adj. 7207 dated 29th
October, 2010, of the Adjudicating Authority, Directorate of
Environment, (Foreign Exchange Management Act) imposing on the
petitioner penalty of Rs.15,00,000/- in exercise of powers under
Section 13(1) of the Foreign Exchange Management Act, 1999,
hereinafter referred to as FEMA.
The impugned adjudication order has mainly been challenged on
the ground of the petitioner having twice been penalized for the
same offence, there being an earlier order of adjudication being
Order No.08/2006 dated 31.05.06 of the Joint Commissioner of
Customs, Netaji Subhas Bose International Airport, Kolkata, inter
alia, imposing on the petitioner, a penalty of Rs.3,00,000/- under
Section 13 of FEMA read with Section 114 (i) of the Customs Act,
1962.
On 31st October, 2004 Officers of the Air Intelligence Unit of
the Netaji Subhas Bose International Airport intercepted the
petitioner, who was due to travel to Hongkong via Bangkok by Thai
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Airways flight No.TG 314, questioned the petitioner on the amount
of foreign exchange he was carrying, searched the person and hand
baggage of the petitioner and seized 33,000 U.S. dollars attempted
to be exported India out of India illegally in contravention of
the provisions of the Customs Act, 1962 read with Foreign Exchange
Act, 1999 along with envelopes and a trolley bag. The officers
arrested the petitioner. The petitioner remained in custody till
he was released on bail pursuant to an order dated 13th December,
2004 of the High Court.
Nothing incriminating was however recovered from the two
checked hand baggages. It appears that on demand the petitioner
could not produce any document to show that the aforesaid foreign
exchange had legally been acquired.
A show-cause notice was issued to the petitioner by the
Assistant Commissioner of Customs under Section 124 of the Customs
Act, 1962, calling upon the petitioner to show cause inter alia
why the seized foreign currency notes of Rs.33,000/- U.S. Dollar
should not be confiscated under Sections 113 D and 113H of the
Customs Act, 1962; why the seized brown envelope and gray colour
trolley bag, used for keeping the foreign currency should not be
confiscated under Section 118 (b) and 119 of the Customs Act, 1962
and why penal action should not be taken against the petitioner
under Section 114(i) of the Customs Act, 1962. Adjudication
proceedings were started, pursuant to the aforesaid show-cause
notice, which culminated in the order of adjudication being Order
No. 08/2006 dated 31.05.2006 referred to above was passed.
The operative part of the aforesaid order, passed by the
Joint Commissioner of Customs, Netaji Subhas Bose International
Airport, Kolkata, is set out hereinbelow:
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"In view of my above findings, I hereby confiscate the
seized US $33,000 under sub-section (2) of Section 13 of the
Foreign Exchange Management Act, 1999. Further, I also
confiscate the seized brown paper envelopes and grayish
colour trolley used for keeping and concealing the seized
foreign currency under Section 118(b) and 119 of the Customs
Act, 1962. I impose a penalty of Rs.3,00,000/- (Rupees three
lakhs only) on Shri Dinesh Kumar Gupta under Section 13 of
the Foreign Exchange Management Act, 1999 read with Section
114 (i) of the Customs Act, 1962."
The impugned order has been passed in adjudication
proceedings under Section 13 of FEMA that had been initiated
pursuant to show-cause Notice No. T-
4/19/Kol./SCN/FEMA/2010/DD/Adj./3300 dated 17th May, 2010, the
relevant parts whereof are extracted hereinbelow for convenience:
"2. On perusal of the complaint and after considering
the cause shown by the Complainant in his complaint bearing
No. T-3/Misc/27/Kol/2006/AD (AC) dated 17.05.2010 I am
satisfied that there is a prima facie contravention of
Section 3(a) of the Foreign Exchange Management Act, 1999
said complaint filed against you.
3. AND WHEREAS Section 3(a) of the Foreign Exchange
Management Act, 1999 (as specified in the enclosed complaint)
provide as under:
"3.Dealing in foreign exchange, etc.- Save as otherwise
provided in this Act, rules or regulations made
thereunder, or with the general or special permission of
the Reserve Bank, no person shall-(a) deal in or
transfer any foreign exchange or foreign security to any
person not being an authorized person."
4. You are, therefore, required to Show Cause in writing
within 30 days from the date of receipt of this Notice as to
why adjudication proceedings as contemplated under Section 13
of the Foreign Exchange Management Act, 1999 should not be
held against you for contravention of the provisions of
Section 3(a) of the Foreign Exchange Management Act, 1999."
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The relevant/operative part of the impugned order is set out
hereinbelow for convenience:
"In view of above, I am satisfied that the charges
framed against Shri Dinesh Kumar Gupta for contravention of
Section 3(a) of the Foreign Exchange Management Act, 1999 for
dealing in foreign exchange to wit US$ 33,000 without the
general or special permission of Reserve Bank of India stands
established.
O R D E R:
Keeping in view of my findings, I hold Shri Dinesh Kumar Gupta, S/o Kishan Chand Gupta of the given address guilty of the charges framed in the subject Show Cause Notice dated 17.05.2010.
In exercise of powers conferred on my under Section 13(1) of the Foreign Exchange Management Act, 1999, I impose on Shri Dinesh Kumar Gupta penalty of Rs.15,00,000/- (Rupees Fifteen Lakhs) only for the sake of natural justice.
The amount of penalty of Rs.15,00,000/- (Rupees Fifteen Lakhs) only imposed on him should be deposited in the office of the Deputy Director, Directorate of Enforcement, Kolkata by cheque/demand draft drawn in favour of the Chief Enforcement Officer (Admn.), 3rd MSO Building, 6th floor, C&D Wing, Salt Lake, Kolkata-700064 within 45 days from the date of receipt of this order."
Offence under Section 3(a) of FEMA is an independent offence different from offence under Section 6(3)(g) of FEMA and/or the offences under the Customs Act for which the petitioner had been penalized.
In exercise of power conferred under Sub-Section 1 of Section 16 of the FEMA the Central Government issued notification No.1155 (E)(20/2000), dated 26-12-2000 appointing Joint Commissioner of Customs to adjudicate the contravention of Section 6(3)(g) and 5 7(1)(a) of the FEMA Section 6(3)(g) and Section 7(1)(a) of the FEMA are set out hereinbelow for convenience:
"6. Capital account transactions.
1)...........
2).. ..
3. Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by regulations, prohibit, restrict or regulate the following--
(g) export, import or holding of currency or currency notes;
7. Export of goods and services.
1) Every exporter of goods shall-
a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, containing true and correct material particulars, including the amount representing the full export value or, if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, exports to receive on the sale of the goods in a market outside India."
From the aforesaid Notification No.1155(E)(20/2000) dated 26- 12-2000, relied by Mr. Bondopadhyay it is patently clear that Joint Commissioner of Customs was authorized to adjudicate contravention of Section 6(3)(g) and 7(1)(a) of FEMA. The Joint Commissioner who passed the order dated 31.05.2006 had no jurisdiction to adjudicate and, therefore, could not have adjudicated contravention of Section 3(a) of FEMA.
A judgment is a precedent for the issue of law which is raised and decided. The judgment of the Supreme Court in Union of India vs. R.C. Fabrics reported in 2002 (139) ELT 12 (SC) was 6 rendered in the particular facts of that case. In any case, the Supreme Court proceeded on the basis that res judicata and/or constructive res judicata would only apply where the issue subsequently raised had either been considered and/or could have been considered in the earlier proceeding. The Supreme Court, therefore, held that the impugned show-cause notice would not attract res judicata and/or constructive res judicata as the test reports relied upon for issuing the impugned show-cause notice could not have been considered by the Assistant Collector before he passed the order of release.
There can be no doubt that a person cannot twice be penalized for the same offence. However, a person can be penalized separately for different offences. The first penalty was for the offence of attempt to illegally export foreign currency in contravention of the provisions of the Customs Act. The impugned order imposes penalty for the offence of illegally dealing in foreign exchange in contravention of the provisions of Section 3(a)of FEMA. As observed above, the Joint Commissioner had no jurisdiction to adjudicate an offence under Section 3(a)of FEMA.
The argument that the petitioner has twice been penalized for the same offence cannot be sustained.
The writ application is dismissed.
( INDIRA BANERJEE,J.)