1986 (9) TMI 356 - SC - FEMA

Supreme Court Upholds High Court Decision on Foreign Exchange Violation

The Supreme Court upheld the High Court's decision under section 23EE of the Foreign Exchange Regulation Act, 1947, finding the appellant guilty of ... Appeal made under section 23EE of the Foreign Exchange Regulation Act, 1947 dismissed - Held that:- Appeal dismissed. There is no escape from the conclusion that the appellant con travened section 12(2) of the Act. The High Court committed no error in rejecting the appellant's submission. Issues:- Appeal against order of High Court under section 23EE of the Foreign Exchange Regulation Act, 1947.- Alleged contravention of section 12(2) of the Act by the appellant.- Defense raised by the appellant regarding non-repatriation of full export value.- Findings of Deputy Director and Appellate Authority.- Appellant's failure to follow Reserve Bank of India's directions.- Imposition of penalty under section 23(1)(a).- Appeal before the High Court and dismissal of the same.Analysis:The Supreme Court heard an appeal against the High Court's order under section 23EE of the Foreign Exchange Regulation Act, 1947. The appellant, engaged in exporting goods, failed to repatriate the full value of goods exported to a foreign buyer in the United States, leading to a show-cause notice under section 12(2) of the Act. The appellant claimed that the buyer raised a counter-claim due to devaluation of the Indian rupee, preventing full repatriation. However, the Deputy Director rejected this defense, finding no evidence of a counter-claim. The appellant also did not follow the Reserve Bank of India's advice to return the goods or seek embassy intervention. The Deputy Director held the appellant guilty under section 12(2) and imposed a fine, later reduced by the Appellate Board. The appellant appealed to the High Court, which upheld the decision, leading to the current appeal.The Court examined section 12(2) of the Act, which prohibits actions delaying sale or payment for exported goods. Non-repatriation of the full amount payable by the foreign buyer constitutes a contravention. The appellant's failure to repatriate the full amount, resorting to private sale in the U.S.A., disregarding Reserve Bank directions, and concealing the transaction details, violated section 12(2)(b). The Court found the appellant's actions in selling the goods privately and not repatriating the full export value to be in clear violation of the Act. The findings of the Deputy Director and the Appellate Authority supported this conclusion, leaving no doubt about the appellant's contravention of the Act.The Court dismissed the appellant's argument of no contravention of section 12(2) and upheld the decision of the High Court. The appellant's failure to follow legal procedures, including Reserve Bank directions and non-disclosure of transaction details, established the contravention beyond doubt. The Court affirmed the imposition of the penalty under section 23(1)(a) and upheld the dismissal of the appeal. Consequently, the Court concluded that the appellant contravened section 12(2) of the Act, and the appeal was dismissed, finding no error in the High Court's decision.