Export proceeds and RBI write-off: contravention cannot be found on incomplete material or pending permission requests.

Outstanding export proceeds do not by themselves establish contravention under section 18(2) of the Foreign Exchange Regulation Act, 1973 where the exporter has sought, obtained, or is still awaiting Reserve Bank of India permission by way of extension of time or write-off. If write-off is granted, the non-realisation is treated as having RBI permission and no contravention can be found on that basis. Adjudication must be based on the full record, including correspondence with the RBI and the authorised dealer, and selective or incomplete material is insufficient. Where the reply to the show-cause notice indicates pending or granted permissions, the authority must examine that material before concluding contravention.

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Issues: Whether adjudication for alleged contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973 could be sustained where the Reserve Bank of India had granted or was considering write-off or extension of time in respect of the export outstandings, and whether the impugned order required to be set aside and remanded for fresh adjudication.

Analysis: Non-realisation of export proceeds does not by itself establish contravention of section 18(2) where the exporter has sought and obtained, or is still awaiting, Reserve Bank of India permission by way of extension of time or write-off. If the Reserve Bank grants write-off, the non-realisation is treated as being with its permission and no contravention can be found on that basis. The adjudicating authority must have before it all relevant material, including correspondence with the Reserve Bank and the authorised dealer, and should not proceed on selective or incomplete information. Where material placed in the reply to the show-cause notice indicates that write-off permissions or extension applications exist, the authority must examine that material and, if necessary, call for further investigation before concluding that contravention is made out.

Conclusion: The finding of contravention could not be upheld on the material then considered, and the matter was required to be reconsidered after placing the complete record before the adjudicating authority.

Ratio Decidendi: In proceedings under section 18(2) of the Foreign Exchange Regulation Act, 1973, outstanding export proceeds do not constitute contravention so long as the Reserve Bank of India has granted write-off or the request for extension or write-off remains pending consideration, and adjudication based on incomplete material is premature.

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