Fera Violation Cases: Ed On Overdrive As Deadline Nears

Enforcement Directorate (ED) officials are working overtime these days, handing out letters and notices to companies like never before. As May 31 approaches -- the deadline to wrap up proceedings in all Foreign Exchange Regulation Act (Fera) violation cases -- the directorate has gone on an overdrive.

Fera was replaced by the Foreign Exchange Management Act on June 1, 2000. ED was then given two years to conclude proceedings in all pending Fera violation cases. Hence, the deadline of May 31, 2002.

According to ED officials, the Reserve Bank of India (RBI) -- the country's custodian of foreign exchange -- has referred some 80,000 cases to ED in the last six months. These are "Bill of Entry" cases, relating to companies which do not furnish documents of imports for which sanction was granted by the RBI. "The RBI is also keen to resolve as many cases as possible before May 31," sources in ED told Business Standard.

Companies are required to furnish documents of imports to the RBI within a stipulated timeframe. In the past, the RBI extended the deadline for companies failing to do so. But with the May 31 deadline just round the corner, it has referred a large number of these cases to ED.

Many of these cases deal with the same companies, simplifying the job of the ED officials. "We have written to these companies. In a majority of the cases, the companies are giving us the required documents," the officials said, adding that the proceedings in all the cases were likely to be completed before the May 31 deadline expired.

There has also been a step-up in the despatch of "opportunity notices" by the directorate. As per the rules, ED sends notices to companies against which it wants to initiate legal proceedings, giving them a chance to explain why action should not be taken against them. Violation of Fera is a criminal act, and is punishable with imprisonment of up to seven years. Several companies confirmed receiving a slew of such opportunity notices.