Foreign exchange repatriation rules breached where export proceeds were not fully realised and Reserve Bank directions were ignored.

Section 12(2) of the Foreign Exchange Regulation Act, 1947 prohibited an exporter from securing payment otherwise than in the prescribed manner or from receiving less than the full amount payable, subject to permitted deductions. On the facts recorded by the enforcement authorities, the exporter received only part of the export value, privately disposed of the goods, failed to comply with Reserve Bank directions, and could not show what amount, if any, was realised through the private sale. The defence of a foreign buyer's counter-claim was disbelieved on the evidence, and the transaction value itself indicated that full export proceeds had not been repatriated. Contravention of section 12(2) was therefore upheld.

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Issues: Whether the appellant had contravened section 12(2) of the Foreign Exchange Regulation Act, 1947 by failing to repatriate the full export value of the goods exported to a foreign buyer.

Analysis: Section 12(2) prohibited an exporter from taking any action having the effect of securing payment otherwise than in the prescribed manner or of securing payment of less than the full amount payable by the foreign buyer, subject to any permitted deductions. The findings recorded by the enforcement authorities showed that the appellant exported goods, received only part of the value, privately disposed of the goods, did not comply with the Reserve Bank's directions, and failed to establish what amount, if any, had been realised through the private sale. The defence that the foreign buyer had made a counter-claim was disbelieved on the evidence, and the transaction value itself showed that the full export proceeds had not been repatriated.

Conclusion: The appellant was guilty of contravention of section 12(2) of the Foreign Exchange Regulation Act, 1947 and the finding of liability was upheld against the appellant.

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