Page 127 - ELT_1_1st April 2020_Vol 372_Part

2020 ] SUBORNO BOSE v. ENFORCEMENT DIRECTORATE 13

take corrective measures until the action to impose penalty for such contraven-
tion was initiated, he cannot be permitted to invoke the only defence available in
terms of proviso to sub-section (1) of Section 42 of the FEMA Act that the contra-
vention took place without his knowledge or that he exercised all due diligence
to prevent such contravention. In the reply filed to the show cause notice by the
appellant, no such specific plea has been taken.
13. The appellant then invited our attention to the reply filed on behalf
of the Company on 27-1-2004 in which it is vaguely asserted that on the date
when the Memorandum of Understanding was signed, no disclosure was made
that the import was done under EPCG licence and the obligations under the said
licence remained to be fulfilled. To get benefit of the proviso to Section 42(1), the
appellant should have pleaded and proved that the contravention took place
without his knowledge or that he exercised all due diligence to prevent such con-
travention and made every effort to rectify the contravention in right earnest.
14. Be that as it may, once it is held that the contravention is a continu-
ing offence, the fact that the appellant was not looking after the affairs of the
Company in the year 2000 would be of no avail to the appellant until corrective
steps were taken in right earnest after his taking over the management of the
Company and in particular after becoming aware about the contraventions. The
appellant has placed reliance on the dictum of this Court in M/s. Hindustan Steel
Ltd. v. State of Orissa - (1969) 2 SCC 627 (paragraph 8). This decision has been dis-
tinguished in the case of Shriram (supra) as can be discerned from paragraph 34
of the reported judgment, which reads thus :-
“34. The Tribunal has erroneously relied on the judgment in Hindustan
Steel Ltd. v. State of Orissa, (1969) 2 SCC 627 which pertained to crimi-
nal/quasi-criminal proceedings. That Section 25 of the Orissa Sales Tax Act
which was in question in the said case imposed a punishment of imprison-
ment up to six months and fine for the offences under the Act. The said case
has no application in the present case which relates to imposition of civil li-
abilities under the SEBI Act and the Regulations and is not a crimi-
nal/quasi-criminal proceeding.”
We are in agreement with the view so expressed.
15. To sum up, we hold that no error has been committed by the adju-
dicating authority in finding that the appellant was also liable to be proceeded
with for the contravention by the Company of which he became the Managing
Director and for penalty therefore as prescribed for the contravention of Section
10(6) read with Sections 46 and 47 of the FEMA Act read with paragraphs A-10
and A-11 (Current Account Transaction) of the Foreign Exchange Manual, 2003-
04. The first appellate authority and the High Court justly affirmed the view so
taken by the adjudicating authority.
16. Accordingly, this appeal fails and the same is dismissed with no
order as to costs.

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EXCISE LAW TIMES  1st April 2020  175