Foreign exchange import compliance: no adverse presumption where goods were brought into India and statutory conditions under FERA were unmet.

Foreign exchange acquired for importing specified goods is not treated as misused merely because the importer did not personally clear the goods for home consumption or produce the exchange control copy of the bill of entry. Section 8(4) of the Foreign Exchange Regulation Act, 1973 permits an adverse presumption only where the goods are not brought into India within a reasonable time, or differ in value, kind, quality or quantity from what was specified. Where the goods were in fact imported, warehoused, partly cleared on duty payment, and the balance later auctioned by customs, the statutory conditions for presumption were not met and no penalty could be sustained.

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Issues: Whether foreign exchange acquired for importing goods can be treated as not used for the intended purpose merely because the imported goods, though brought into India and warehoused, were not personally cleared by the appellant for home consumption and the exchange control copy of the bill of entry was not produced.

Analysis: Section 8(4) of the Foreign Exchange Regulation Act, 1973 creates a presumption only where the person acquiring foreign exchange fails to bring goods into India within a reasonable time, or brings goods of different value, kind, quality or quantity from what was specified at the time of acquisition. The provision does not require that the importer must necessarily produce the exchange control copy of the bill of entry as the sole mode of proof, nor does it mandate that the goods must be cleared personally by the foreign exchange purchaser. Where the foreign exchange was admittedly remitted for purchase of specified goods, the goods in fact arrived in India, were warehoused, one consignment was cleared on payment of duty, and the remaining consignments were later auctioned by customs authorities, the statutory ingredients for drawing the adverse presumption were not satisfied.

Conclusion: The foreign exchange was used for the purpose for which it was acquired, and no violation of section 8(4) of the Foreign Exchange Regulation Act, 1973 was made out; the penalty could not be sustained.

Ratio Decidendi: Section 8(4) of the Foreign Exchange Regulation Act, 1973 does not require personal customs clearance or production of the exchange control copy of the bill of entry as the exclusive proof of import, if the importer otherwise establishes that the goods purchased with foreign exchange were brought into India.

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