Export proceeds realisation penalty set aside where bona fide recovery efforts and relevant correspondence were not fully considered.

Penalty for alleged contravention of export realisation requirements cannot stand where the exporter shows bona fide efforts to recover export proceeds and the record has not been fully considered. Non-realisation alone does not establish breach if reasonable steps were taken, and a change from COD to deferred payment does not by itself negate those efforts. The Board found that relevant correspondence and surrounding facts had not been properly examined, and the appellants were not given a fair opportunity to produce supporting documents. The penalty order was set aside and the matter remitted for fresh adjudication on the complete material.

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Issues: Whether the penalty for contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973 was sustainable where the exporter claimed to have taken reasonable steps to realise the export proceeds and the adjudicating authority had not considered all relevant correspondence and surrounding facts.

Analysis: Non-realisation of export proceeds does not by itself establish contravention if the exporter has taken all reasonable steps to recover the amount. A mere change in payment terms from COD to deferred payment, without material showing ulterior motive, cannot by itself negate bona fide efforts. Likewise, a proposal to realise a reduced amount without Reserve Bank permission cannot be treated as a legally valid benchmark for judging seriousness. The record showed correspondence and steps taken during the relevant period, but the adjudicating authority had not dealt with all the material and the appellants were not afforded proper opportunity to produce the documents referred to in the correspondence. Since penalty discretion must be exercised on a full and fair consideration of relevant facts, the original order could not be sustained.

Conclusion: The penalty order was set aside and the matters were remitted for fresh adjudication after considering the relevant material and giving the appellants an opportunity to adduce evidence.

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