Reasonable steps to realise export proceeds rebut the presumption of contravention and defeat penalty under foreign exchange law.

Where an exporter shows that all reasonable and permissible steps were taken to recover unpaid export proceeds, the rebuttable presumption of contravention under Section 18(3) of the Foreign Exchange Regulation Act, 1973 stands displaced. The record showed commercial correspondence, requests for intervention, legal action in Doha, engagement of counsel, and repeated applications for extension before the Reserve Bank of India. On that basis, the non-realisation of the balance proceeds was attributable to circumstances beyond control, so penalty for contravention under Section 18(2) could not be sustained. The appeal succeeded and the penalty was set aside.

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Issues: Whether the appellant had taken all reasonable steps to realise the unpaid export proceeds so as to rebut the presumption of contravention under Section 18(3) and avoid penalty under Section 18(2) of the Foreign Exchange Regulation Act, 1973.

Analysis: The remand proceedings showed that the appellant had pursued recovery through commercial correspondence, intervention requests, legal action in Doha, engagement of counsel, and repeated applications for extension of time before the Reserve Bank of India. On the material on record, the non-realisation of the balance export proceeds was attributable to circumstances beyond the appellant's control. The presumption under Section 18(3) was rebuttable, and the evidence established that the appellant had taken all reasonable and permissible steps to secure recovery. In these circumstances, penal consequence for contravention of Section 18(2) could not be sustained.

Conclusion: The issue was decided in favour of the appellant, and the penalty and impugned order were set aside.

Final Conclusion: The appeal succeeded on merits, with the appellant held not liable for penalty for non-repatriation of the export proceeds.

Ratio Decidendi: Where the exporter proves that all reasonable steps were taken to realise export proceeds, the rebuttable presumption of contravention under Section 18(3) stands displaced and penalty cannot be imposed merely because the amount remained unrecovered.

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