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The Government has, in consultation
with the Reserve Bank of India,reviewed the procedures for compounding
of contravention under Foreign Exchange Management Act (FEMA). The procedures
have been reviewed to provide comfort to the citizens and corporate community
by minimising transaction costs, while taking severe view of willful, malafide
and fraudulent transactions. Accordingly, the responsibilities of administering
compounding of contravention cases under FEMA have been vested with the Reserve
Bank with exception of clause (a) of Section 3 of FEMA 1999 which deals essentially
with hawala transactions. The Directorate of Enforcement would continue
to deal with these cases.
Under FEMA, compounding of contravention
allows the contravener to settle an offence through imposition of a monetary
penalty without going in for litigation after the contravener acknowledges having
committed the contravention. .
The Reserve
Bank has since issued directions to the Authorised Dealers operationalising
the revised procedures for compounding of contravention under FEMA. These procedures
have been put on the RBI website ( www.rbi.org.in
). It may be noted that once a contravention has been compounded by the
Compounding Authority, no proceeding or further proceeding will be initiated
or continued, against the contravener.
Process
for Compounding
An application for compounding
in prescribed form with necessary fee may be submitted to the Compounding Authority
(CA) either on being advised of a contravention under FEMA or suo moto on
becoming aware of the contravention. The application may be made to The Compounding
Authority, [Cell for Effective implementation of FEMA (CEFA)], Reserve Bank
of India, Foreign Exchange Department, 11th Floor, Central Office
Building, S. B. Singh Road, Fort, Mumbai- 400 001.
On receipt of the application for
compounding of contravention committed under FEMA 1999 (i.e. w.e.f. June 1,
2000), the compounding proceedings would be initiated in accordance with the
compounding rules. This process would be concluded by the Compounding Authority
within 180 days from the date of the receipt of the application for compounding.
The compounding order would be passed after affording an opportunity to the
contravener and all other concerned to be heard.
This procedure for compounding
of contravention would be reviewed after six months and consider modification
as needed.
Alpana Killawala Chief General Manager
Press Release : 2004-2005/800
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