Issuance of summons under section 37 (1) & (3) of fema act 1999
tarunexports
(Querist) 18 September 2013
This query is : Resolved
Dear Experts,
I want to know whether the Enforcement Directorate is legaaly authorized to issue Summons under Section 37(1) & (3) of FEMA Act 1999 read with Section 131(1) OF Income Tax Act 1961 after the alleged contravention(it is only 5% less foreign remittance which is not been received) of Section 13 of FEMA Act 1999 AFTER NINE YEARS of EXPORT.
2) In the same case the remittance received is only 5% short and even that is allowed under RBI circular dated 01st July 2013.
Kindly quote any citation/authority on the above.
harinder dhingra
Raj Kumar Makkad
(Expert) 18 September 2013
Yes is the only answer to your query. Even if RBI circular has allowed 5% short remittance then also directorate is empowered to issue notice.
tarunexports
(Querist) 18 September 2013
The RBI vide its Master Circular allows 10% self write of/of export outstanding /remittances.
Please understand that I am asking is whether, as per law, the Enforcement Directorate can initiate/start an enquiry after NINE long years? Is there no time limit to all this.
If what respected Expert Mr Raj Kumar Makkar is saying is correct than the ED can initiate any enquiry on the said subject any time they wish to. It s strange. There must be some time limit and that is what I am looking for.
Kindly help me with the relevant rule/citation/authority. Shall be grateful
Advocate Sastry
(Expert) 19 September 2013
Can you please clarify the following points.
1. Date of Export
2. Date of realization of 95% of value.
3. Date of your writing off of 5% in your books.
4. Date of reporting to your AD bank regarding your decision to write off.
5, Why you are referring the RBI circular of 1st July 2013 when according to you the export was of nine years back.
tarunexports
(Querist) 19 September 2013
1) 1-1-2004 to 31-12-2004
2) 90% by 30th June 2005 & 5.00% by 2005 Dec
3) 2006-2007,2007-2008 & 2008-2009 (writing off by 1.75% per year approx in above mentioned years
4) same as above
5) RBI circular was mentioned because it is the same circular which is being issued since 2006 every July for one year. For that reason only;
6) One more thong which I forgot was that similiar Summons were issued to same person/firm by ED, Delhi in July 2010 & the reply was submitted & receipt acknowledged by ED office in July 2010. Now the summons are from Chandigarh Office.
Hope I have answered all your queries.
Advocate Sastry
(Expert) 19 September 2013
Good to see your response... I forgot to ask you the value of the consignment and amount written off... Have you informed your AD Bank about write off...Has the bank closed the bill in their books and disposed GR/SDF.... If Chandigarh Office raise the same query which was earlier asked by Delhi Office, please submit the same reply... ED can issue summons if they get any doubt or unconvincing replies or the amount written off is high...
tarunexports
(Querist) 19 September 2013
Thank You Mr Sastry for the quick response. It is very heartening to note that intelligent and relevant queries by you. To answer your queries,
a)The total Export was Rs 69 Crore and written of amount was only Rs 3.28 Crore. The AD Bank was informed but they wanted Rs 3-4 Lacs being their service charges which were not deposited. But the RBI was informed about all these developments.
My queries remain unanswered and these are/were:
1) Can Enforcement Directorate initiate an enquiry after NINE years and issue Summons under Section 37(1) & (3) of FEMA 1991 along with Section 131(1) of Income Tax Act 1961?
2) If an explanation was submitted to the Department way back in three years, could the Department again rake the issue?
Is there no time bar for initiating investigation under FEMA? And if that is so, what is the safeguards of this Act is not misused?
Advocate Sastry
(Expert) 20 September 2013
Thanks for clarifications... please note that you have finally written off the bill during 2008-2009...After this the GR/SDF might have been sent to RBI... It appears that RBI might have felt that the amount written off looks to be on higher side.. Hence matter must have been referred to ED...If the transaction is genuine you may reply to ED/RBI... I do not understand why AD has asked you 3 to 4 lakhs and according to my knowledge they can not claim like this...
For your queries:
My reply is YES for both the queries.
tarunexports
(Querist) 20 September 2013
Thank You so much Mr Sastry. I am still looking for any citation/authority/rules /circular which substantiate your reply.
It is strange but true that AD has asked for the amount to strike off written off GR/s from XOS.
No, the RBI file has been inspected and they have not corrosponded with ED after 2005-06 on this subject.
Sastry Sir, You have tried and took the pains to reply but the answer to undersigned and quest for any rule which falicitate the reissuance of Summons under Section 37 by FEMA in the circumstances as mentioned above.
Advocate Sastry
(Expert) 20 September 2013
I have given replies from the facts provided by you and out of my previous exposure... I have not seen your papers/file for giving my opinion... Please note that if ED issues fresh notice means that from somewhere the file got reopened... How can you say that RBI have not corresponded with ED after 2005-06 ? If I find the rule regarding reissuance of summons, I will send you a private message..
tarunexports
(Querist) 20 September 2013
Thank You Mr Sastry, You have been great help. The file was inspected today by our prop in RBI. Thank you so much. You have very nice and kind. GOD BLESS YOU
Ziaur Rahman
(Expert) 20 July 2018
Under which procedure of law ED conducts the search and seizure under FEMA? I mean whether section 100 of Cr.PC is applicable or not? If not so then which section is applicable for making seizure list under FEMA? Another doubt is that whether self dictated statement without the signature of the ED official in whose presence it was made incriminating the person himself through his statement is a confession under FEMA? The other issue is that whether the statement of the person accused of violation can be taken his own handwriting without administering oath as per section 131(4) Income Tax Act read with section 37 of FEMA? Kindly enlighten me.
