ITC faces hefty fine

NEW DELHI, July 13: Tobacco giant ITC faces the prospect of imposition of heavy penalty by the Enforcement Directorate (ED) if found guilty...

NEW DELHI, July 13: Tobacco giant ITC faces the prospect of imposition of heavy penalty by the Enforcement Directorate (ED) if found guilty in the alleged $ 110 million Foreign Exchange Regulation Act (FERA) violation case.

Sources in the ED, which had issued show cause notices against top ITC functionaries including its chairman Y C Deveshwar, said the penalty under FERA could be even upto five times of the amount involved in the alleged violation.

The ED, which is a quasi-judicial body with the power to impose penalty against offenders through departmental adjudication, initiated the process by issuing five sets of show cause notices against the concerned executives of ITC including its directors and nominees of BAT.

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The sources said the adjudication proceedings would be conducted by ED’s special director here next month as the noticees have been given a month’s time to reply to the charges levelled against them. “Whenever necessary, the adjudication will be held in Calcutta,” they said.

The ED has charged ITC under various provisions of FERA for acquisition of foreign exchange, illegal payments abroad, issuing and negotiating bills of receipts and promisory notes in foreign countries, receiving payments for exported goods abroad in contravention of the law and not bringing in the proceeds of exports within the prescribed time limit.

The ED, which had conducted raids at least 36 premises of the company and its executives in several places including Calcutta, Mumbai, Delhi, Chennai, Guntur and Secundrabad, also accused the entire ITC board of over-invoicing and providing cash float to the US-based Chitalias.

It is learnt that ED is likely to issue another set of charge-sheets to eight or nine present and former directors and senior executives of ITC next week. Deveshwar reportedly flew into Delhi from London by a British Airways flight and immediately proceeded to Calcutta.Sources in financial institutions said that they had not received the first set of five charge-sheets issued to 20 ITC directors and executives on Friday.