Pre-FEMA export proceeds disputes are barred by the repeal and saving sunset period for notice and penalty action.

Non-realisation of export proceeds from an export made before FEMA came into force is treated as a contravention under the repealed FERA regime, not FEMA. The note explains that the repeal and saving clause bars an adjudicating officer from taking notice of such a contravention after two years from FEMA's commencement, so proceedings initiated beyond that statutory sunset period were not maintainable. It also notes that the prolonged pendency of the short-realisation dispute with the authorised dealer did not justify continuing penalty action under FEMA, and the penalty order was set aside.

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Issues: Whether proceedings for non-realisation of export proceeds arising from an export made before the commencement of FEMA could be sustained under FEMA, and whether notice taken after the statutory sunset period under the repeal and saving clause was valid.

Analysis: The export in question was made on 29.05.2000, before FEMA came into force on 01.06.2000. The alleged contravention, if any, therefore arose under the repealed FERA regime. Under the repeal and saving provision, no adjudicating officer could take notice of a contravention under the repealed Act after the expiry of two years from the commencement of FEMA. Since the impugned proceedings were initiated long after that period, the action was held to be barred. The Tribunal also accepted that the dispute regarding short realisation had remained pending with the authorised dealer for several years and that the matter did not justify continuation of the penalty proceedings under FEMA.

Conclusion: The impugned penalty order was set aside and the appeals were allowed.

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