1996 (12) TMI 407 - Board - FEMA

Export Proceeds Non-Realization: Appeals Allowed, Pre-Deposit Waived, Evidentiary Requirements Emphasized

Knight Exports Versus Director of Enforcement

The appeals were allowed, the impugned order was set aside, and the case was remanded for fresh adjudication. The judge waived the requirement of ... - Issues:1. Imposition of penalties under section 18(2) of the Foreign Exchange Regulation Act, 1973.2. Lack of opportunity for defense due to ex parte order.3. Allegation of inadequate investigation by the department.4. Requirement of pre-deposit for penalties imposed.5. Necessity for the department to prove contravention of section 18(2) and the exporter's reasonable steps for realization of export proceeds.Analysis:1. The judgment concerns appeals against penalties imposed for contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973. The penalties were imposed on the appellants for failure to realize export proceeds, with varying amounts imposed on different parties.2. The appellants argued that they were not given a fair opportunity to defend themselves as the order was passed ex parte without considering their request for an adjournment due to medical reasons. The appellants contended that they had made efforts for realization of export proceeds, which were not adequately considered.3. The appellants further asserted that the department had not conducted a thorough investigation into the matter before issuing the show-cause notice. They claimed that evidence of interactions with the RBI and authorized dealers, including permissions and extensions granted, were not properly considered by the adjudicating authority.4. Considering the lack of opportunity for defense and the incomplete investigation, the judge found merit in the appellants' contentions. The judge waived the requirement of pre-deposit for the penalties imposed, citing undue hardship to the appellants.5. The judge emphasized the necessity for the department to prove contravention of section 18(2) by demonstrating the absence of extensions or indulgences by the RBI. The judgment highlighted that non-realization of export proceeds is not punishable if reasonable steps were taken for realization. The case was remanded for fresh adjudication with observations on the evidentiary requirements and the exporter's obligations under the Act.In conclusion, the appeals were allowed, the impugned order was set aside, and the case was remanded for fresh adjudication, emphasizing the importance of proving contravention and the exporter's efforts in realizing export proceeds.