RBI waiver of unrecovered export proceeds bars penalty where the export transaction is sufficiently identified and covered.

Waiver of unrecovered export proceeds by the Reserve Bank removed the for penalty under section 18(2) read with section 18(3) of the Foreign Exchange Regulation Act, 1973, where the relevant export transactions were sufficiently identified. The Tribunal accepted that the bank letters and waiver documents covered the shipping bills and amounts in question, and held that omission of the amount in one letter was immaterial because the GR number and date identified the transaction and the waiver otherwise applied. On that basis, the alleged contravention was not sustainable, the penalty order was quashed, and the appeals were allowed on merits.

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Issues: Whether the penalty for contravention of section 18(2) read with section 18(3) of the Foreign Exchange Regulation Act, 1973, could survive after the Reserve Bank had granted waiver of the unrecovered export proceeds.

Analysis: Section 18(2) permits the Reserve Bank to grant permission in respect of acts or omissions that would otherwise secure delay or non-realisation of the full export value. The Tribunal accepted that the bank letters and the waiver documents covered the relevant shipping bills and amounts, and held that the absence of the amount in one letter did not matter where the GR number and date were identifiable and the waiver otherwise covered the transaction. On that basis, the foundation for the alleged contravention was found to be absent.

Conclusion: The penalty could not be sustained and the finding of contravention was set aside in favour of the appellant.

Final Conclusion: The adjudication order imposing penalty was quashed and the appeals were allowed on merits.

Ratio Decidendi: Where the Reserve Bank grants waiver in respect of unrecovered export proceeds, a penalty for contravention based on non-realisation of those proceeds cannot be sustained if the relevant export transactions are sufficiently identified and covered by the waiver.

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