Penalty Reduced for Foreign Exchange Violation; Tribunal Orders Refund of Excess Pre-Deposit Within Two Weeks.

Radhika Fashion Versus Enforcement Directorate

Radhika Fashion Versus Enforcement Directorate - TMI Issues:
Challenge to adjudication order for contravention of Section 18(2) read with 18(3) FER Act regarding failure to repatriate export proceeds.

Analysis:
The Appellate Tribunal for Foreign Exchange considered an appeal challenging an adjudication order imposing a penalty of Rs. 3,50,000 on the appellant for not taking reasonable steps for repatriation of export proceeds, as required by Section 18(2) read with 18(3) of the FER Act. The appellant had already pre-deposited the penalty amount. The Tribunal proceeded with the final disposal of the appeal on merits.

The Tribunal heard arguments from both parties and reviewed the Show Cause Notice issued to the appellant, alleging failure to repatriate export proceeds. The legal obligation of an exporter under Section 18(2) read with 18(3) of the FER Act was emphasized, stating that if payment for exported goods is not received within the prescribed period, it is presumed that the exporter did not take reasonable steps to receive the payment.

The Tribunal examined the concept of "reasonable" steps required from exporters, citing legal definitions that highlight the need for fairness and suitability in the given circumstances. The Tribunal analyzed the specific export transactions of the appellant, focusing on three sets of Goods Received Intimations (GRIs) with varying outcomes in terms of payment realization.

The Tribunal found that while some GRIs were realized or pending with the RBI for write-off or extension requests, three GRIs remained unrealized. The appellant's argument regarding pending requests for write-off or extension was not considered sufficient to absolve the appellant of the failure to repatriate proceeds. Consequently, the Tribunal held the appellant guilty of contravening Section 18(2) read with 18(3) concerning the price of the three GRIs.

In its decision, the Tribunal partly allowed the appeal, reducing the penalty imposed on the appellant to Rs. 1 lakh from Rs. 3,50,000. The Tribunal directed that the penalty amount could be adjusted against the pre-deposited sum, with any remaining amount to be returned to the appellant by the Enforcement Directorate within two weeks from the date of the order.