Export proceeds under foreign exchange law cover export-on-sale transactions and require full repatriation of sale proceeds.

Section 12(2) of the Foreign Exchange Regulation Act, 1947 was construed broadly to cover export-on-sale transactions as well as exports made for sale. The opening words were treated as descriptive of the person accountable for sale proceeds, not as limiting the class of export transactions. Clauses (a) and (b) were read as part of a scheme requiring prompt and full repatriation of foreign exchange earned on exports. Section 10 was held not to govern export proceeds, because section 12 was the specific and complete code. Section 12(6) reinforced this construction by supporting the compliance mechanism and the statutory object of preventing loss or siphoning of foreign exchange.

---

---

Issues: Whether section 12(2) of the Foreign Exchange Regulation Act, 1947 applies only to exports made for sale or also extends to export-on-sale transactions where sale is completed before export.

Analysis: The expression "no person entitled to sell, or procure the sale of, the said goods" was held to be descriptive of the accountable person and not restrictive of the class of export transactions covered by the provision. Clauses (a) and (b) of section 12(2) were read as showing a legislative scheme directed to securing prompt and full repatriation of sale proceeds in all export situations. Section 10 was held not to govern foreign exchange earned from export of goods, because section 12 was treated as the specific and complete code dealing with export proceeds. Section 12(6) also supported this construction, since a narrower reading would weaken the compliance mechanism and defeat the statutory object of preventing loss or siphoning of foreign exchange.

Conclusion: Section 12(2) applies to sale proceeds arising from exports on sale as well as exports for sale, and the challenge to the show-cause notices on the ground of lack of applicability failed.

Ratio Decidendi: Where a provision governing export proceeds is designed to secure full repatriation of foreign exchange and contains an internal compliance mechanism, its opening words should be read descriptively rather than restrictively so as to advance the statutory object and avoid defeating the scheme of the Act.

---