M/s. Creative Materials and Innovations Pvt. Ltd.

(Applicant) In exercise of the powers conferred under sub-section (1) of Section 15 of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made thereunder, I pass the following Order The applicant has filed the compounding application dated May 14, 2019 received on June 04, 2019 for compounding of contraventions of the provisions of the Foreign Exchange Management Act, 1999 (the FEMA) and the regulations issued thereunder. The contraventions sought to be compounded are (i) delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares towards subscription to equity and (ii) delay in filing of FLA returns in terms of Paragraph 9(1) (B) and Paragraph 9(2) respectively of Schedule 1 to Foreign Exchange Management Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 03, 2000 (hereinafter

Compounding of contraventions under FEMA 1999 M/s Creative Materials and Innovations Private Limited CA No. HYD 431 referred to as Notification No. FEMA 20/2000-RB) as then applicable and Regulation 13.1(3) of Schedule 1 to FEMA 20(R) dated November 7, 2017(hereinafter referred to as Notification No. FEMA 20R/2017-RB) as amended from time to time. 2. The relevant facts of the case are as follows: a) The applicant is a resident company incorporated as Private Limited Company under the Companies Act, 1956 on 10.03.2005(CIN: U35301AP2005PTC045576). The company is engaged in research and development activities in the areas of process development of EMU oil extraction etc; b) The applicant had received foreign inward remittance from foreign investors as indicated below: S.No Name of the remitter Amount (INR) Date of Date of receipt reporting 1. Mr. Krishna Rajan 5227181 23.04.2012 16.05.2012 Eadara The applicant reported receipt of remittance towards share subscription amounting to ₹ 52, 27,181/- to the Regional Office of Reserve Bank of India within the stipulated time in terms of Paragraph 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000- RB dated May 03, 2000 as then applicable.

c) The applicant allotted shares and filed form FC-GPRs as indicated below. Name of the Date of No. of Amount for which Date of reporting investor allotment shares shares allotted (INR) to RBI of shares allotted Mr. Krishna 12.09.2012 522710 5227100 27.08.2018 Rajan Eadara

The applicant filed form FCGPRs for the allotment of shares amounting to ₹ 52, 27,100/- as indicated above which were reported with a delay of 5 years 10

Compounding of contraventions under FEMA 1999 M/s Creative Materials and Innovations Private Limited CA No. HYD 431 months 16 days approximately beyond the prescribed time limit. Whereas in terms of Paragraph 9(1)(B) of Schedule 1 to Notification no. FEMA 20/2000-RB, an Indian company issuing shares in accordance with these Regulations has to submit to Reserve Bank a report in form FCGPR along with documents prescribed therein within 30 days from the date of issue of shares to person resident outside India. d) The applicant has delayed in filing FLA Return (Foreign liabilities and Assets) as shown below:

S.No FLA returns for the F.Y Due date to file Actual date of filing

1. 2012-13 15.07.2013 2. 2013-14 15.07.2014 02.05.2019 3. 2014-15 15.07.2015 4. 2015-16 15.07.2016 5. 2016-17 15.07.2017 6. 2017-18 15.07.2018

The applicant had filed FLA returns for the financial years 2012-13 to 2017-18 with delays ranging from 9 months 18 days to 5 years 9 months 18 days approximately, whereas in terms of Paragraph 9(2) of Schedule I to Notification No. FEMA 20/2000- RB dated May 03, 2000 as then applicable and Regulation 13.1(3) of Schedule 1 to Notification No. FEMA 20 (R)/2017-RB dated November 07, 2017, “All Indian companies which have received Foreign Direct Investment in the previous year(s) including the current year shall submit to the Reserve Bank of India, on or before the 15th day of July of each year, [a report titled ‘Annual Return on Foreign Liabilities and Assets’ (FLA) as specified by the Reserve Bank from time to time].

Compounding of contraventions under FEMA 1999 M/s Creative Materials and Innovations Private Limited CA No. HYD 431 3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/279/14.66.003/2019-20 dated July 30, 2019 for further submission in person and/or producing documents, if any, in support of the application. (b) Shri M R Rao Prasad, Director and Mr. B.Venka Reddy, Company Secretary, appeared for personal hearing on August 01, 2019. They admitted the contraventions for which the compounding has been sought. During the personal hearing it was submitted that the delay was not wilful or with a malafide intention but was on account of administrative lapses. In view of the above, the applicant requested to take a lenient view in disposal of the application. The application for compounding is, therefore, being considered on the basis of the averments made in the application as well the submissions made in this context by the applicant during the personal hearing.

4. I have given my careful consideration to the documents on record. Accordingly, I hold that the applicant has contravened the following FEMA provisions issued in terms of: - (a) Paragraph 9(1)(B) of Schedule 1 to Notification No. 20/2000-RB for delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares to persons resident outside India and the contravention relates to an amount of ₹ 52,27,100/- with a delay of 5 years 10 months 16 days approximately. (b) Paragraph 9(2) of Schedule 1 to Notification No. FEMA. 20/2000-RB for delay in filing of Annual Return on Foreign Liabilities and Assets to Reserve Bank of India for the financial years 2012-13 to 2016-17 with delays ranging from 1 year 9 months 18 days to 5 years 9 months 18 days approximately. (c) Regulation 13.1(3) of Schedule 1 to Notification No. FEMA 20 (R)/2017-RB dated November 07, 2017 for delay in filing of Annual Return on Foreign Liabilities and Assets to Reserve Bank of India for the financial year 2017-18 with a delay of 9 months 18 days approximately.

Compounding of contraventions under FEMA 1999 M/s Creative Materials and Innovations Private Limited CA No. HYD 431 5. It has been declared in the compounding application dated May 14, 2019 that the particulars given by the applicant in the application are true and correct to the best of their knowledge and belief. It has been declared in the declaration dated May 14, 2019 that the applicant was not under any enquiry/investigation/adjudication by any agency as on the date of the application and has, in this regard, not informed of initiation of any such enquiry/investigation/adjudication proceedings against it thereafter. It has further been declared that the applicant has not filed any appeal under section 17 or section 19 of FEMA, 1999. Accordingly, the above contraventions which are being compounded in this Order are subject to the veracity of the above declarations made by the applicant and this order is without prejudice to any other action which may be taken by any authority under the extant laws if the said declarations are subsequently discovered to be false and/or incorrect.

6. In terms of Section 13 of the FEMA, any person contravening any provision of the Act shall be liable to a penalty up to thrice the sum involved in such contravention upon adjudication. However, taking into account the relevant facts and circumstances of the case as stated in the foregoing paragraphs, I am persuaded to take a lenient view on the amount for which the contravention is to be compounded and I consider that an amount of ₹ 1,11,440/- (Rupees One Lakh Eleven Thousand Four Hundred and Forty Only) will meet the ends of justice. 7. Accordingly, I compound the admitted contraventions, namely, the contraventions of Paragraph 9(1)(B), Paragraph 9(2) of Schedule 1 to FEMA.20/2000-RB and Regulation 13.1(3) of Schedule 1 to Notification no. FEMA 20(R)/2017-RB by the applicant on the facts discussed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an amount of ₹ 1,11,440/- (Rupees One Lakh Eleven Thousand Four Hundred and Forty Only) which shall be deposited by the applicant with the Reserve Bank of India, Foreign Exchange Department, 1st Floor, Saifabad, Hyderabad - 500004 by a demand draft drawn in favour of the "Reserve Bank of India" and payable at Hyderabad within a period of 15 days from the date of this order.

In case of failure to deposit the compounded

Compounding of contraventions under FEMA 1999 M/s Creative Materials and Innovations Private Limited CA No. HYD 431 amount within the above mentioned period, Rule 10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 dated May 3, 2000 shall apply.

The application is disposed of accordingly. Dated this 05th day of August 2019

Sd/- (Sara Rajendra Kumar) General Manager