Millard Filters India Pvt Ltd

(Applicant) In exercise of the powers conferred under Section 15 (1) of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made there under, I pass the following Order The applicant has filed the compounding application dated September 13, 2016 received on September 30, 2016 for compounding of contravention of the provisions of the Foreign Exchange Management Act, 1999 (the FEMA) and the regulations issued there under. The contraventions sought to be compounded are (i) delay in reporting receipt of foreign inward remittances and (ii) delay in submission of Form FC-GPR to the Reserve Bank after issue of shares towards subscription to equity to a person resident outside India in terms of Paragraph 9 (1) (A) and Paragraph 9 (1) (B) of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 of Schedule 1 to Foreign Exchange Management

FED M/s. Millard Filters India Private Limited CA No. HYD 163 (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated 3rd May 2000 and as amended from time to time (hereinafter referred to as Notification No. FEMA 20 /2000-RB). 2. The relevant facts of the case are as follows: a) The applicant is a resident company incorporated as a private limited company under the Companies Act, 2013 on 07.09.2015. The company is engaged in the business to manufacture, import, export and distribution of filters, chemicals and other spare parts for automotive and industrial applications. b) The applicant had received foreign inward remittances from Foreign Company towards advance for subscription to equity shares as indicated below: Sl. Name of Remitter Total Amount Date of Date of No. (`) Receipt Reporting Millard Filters Lberica 1 1,11,401.00 01.12.2015 01.02.2016 S.L Sanchez Vidal Maria 2 70.40 01.12.2015 27.01.2016 Isabel Millard Filters Lberica 3 5,92,160.00 19.05.2016 24.06.2016 S.L Millard Filters Lberica 4 4,04,149.20 19.05.2016 17.06.2016 S.L Millard Filters Lberica 5 9,88,674.69 03.06.2016 21.09.2016 S.L Millard Filters Lberica 6 78,24,691.15 30.06.2016 30.07.2016 S.L Total 99,21,146.44

The applicant reported receipt of remittances towards share subscription amounting to ` 16,92,306.09 to the Regional Office of Reserve Bank of India with delay ranging from 5 days to 2 months 19 days approximately as indicated above. Whereas in terms of paragraph 9 (1) (A) of Schedule 1 to Notification No. FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures in accordance with these FED M/s. Millard Filters India Private Limited CA No. HYD 163 Regulations should report to the Reserve Bank of India as per the prescribed procedure not later than 30 days from the date of receipt of the amount of consideration.

c) The company allotted equity shares and filed Form FC-GPR as indicated below: Sl Name of Date of Number of Amount for Date of No Investor allotment of shares which shares reporting shares allotted allotted (`) Millard Filters 1 9,999 99,990 Iberica S.L. Maria Isabel 29.12.2015 2 1 10 04.02.2016 Sanchez Millard Filters 3 1,141 11,410 Iberica S.L Total 11,141 1,11,410. The applicant filed Form FC-GPR for the above allotment of shares with a delay of 7 days approximately beyond the prescribed 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 FC-GPR along with documents prescribed therein within 30 days from the date of issue of shares to person resident outside India.

3. a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/1054/14.66.003/2016-17 dated November 25, 2016 for further submission in person and/or producing documents, if any, in support of the application.

b) The applicant vide e-mail dated November 28, 2016 has stated that they wish to opt out of personal hearing and requested the disposal of the case based on the compounding application submitted. In view of the foregoing, the application for compounding is, therefore, being considered on the basis of the averments made in the application.

FED M/s. Millard Filters India Private Limited CA No. HYD 163

4. I have given my careful consideration to the documents on record and submission made by the applicant in the compounding application. Accordingly, I hold that the applicant has contravened the following FEMA provisions issued in terms of:

a) Paragraph 9 (1) (A) of Schedule 1 to Notification No. FEMA.20/ 2000-RB due to delay in reporting of receipt of foreign inward remittances towards subscription to equity shares as detailed above. The contraventions relate to an amount of ₹ 16,92,306.09 and the duration of contravention ranges from 5 days to 2 months 19 days approximately.

b) Paragraph 9 (1) (B) of Schedule 1 to Notification No. 20/2000-RB due to delay in submission of Form FC-GPR to Reserve Bank after issue of shares to persons resident outside India and the contravention relates to an amount of ₹ 1,11,410/- and the duration of contravention is 7 days approximately.

5. In terms of Section 13 of the FEMA, any person contravening any provision of the Act shall be liable to a penalty upto 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 20,000/- (Rupees Twenty Thousand Only) will meet the ends of justice. ₹ 6. Accordingly, I compound the admitted contraventions namely, the contraventions of Paragraph 9 (1) (A) and Paragraph 9 (1) (B) of Schedule 1 to Notification No. FEMA- 20/2000-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 ₹ 20,000/- (Rupees Twenty Thousand 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 favor of the "Reserve Bank of India"

FED M/s. Millard Filters India Private Limited CA No. HYD 163 and payable at Hyderabad within a period of 15 days from the date of this order. In case of failure to deposit the compounded amount within the above mentioned period, Rule10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 dated May 3, 2000 shall apply. The application is disposed accordingly. Dated this 7th day of December 2016.

Sd/- (K R K Reddy) Deputy General Manager