Reasonable steps for export proceeds repatriation can sustain contravention, but penalty may be reduced for partial default.

Section 18(2) of the Foreign Exchange Regulation Act, 1973 requires an exporter to take reasonable steps to secure repatriation of export proceeds. On the record, repatriation was proved for one consignment, but the evidence for the other two was found too weak or unrelated to displace the contravention finding. The finding of guilt was therefore deleted for one consignment and sustained for two. Because the established default covered only part of the alleged non-repatriation, the penalty was held excessive and was reduced on a proportional basis.

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Issues: (i) Whether the appellant-firm contravened the obligation to take reasonable steps for repatriation of export proceeds in respect of the three consignments. (ii) Whether the penalty imposed required reduction in view of the extent of the established contravention.

Issue (i): Whether the appellant-firm contravened the obligation to take reasonable steps for repatriation of export proceeds in respect of the three consignments.

Analysis: Section 18(2) of the Foreign Exchange Regulation Act, 1973 creates an obligation on the exporter to take reasonable steps to secure repatriation of export proceeds. The material on record supported repatriation only in respect of one consignment, while the evidence relating to the other two consignments was found not sufficiently relatable or reliable. A bare assertion of due efforts, without convincing proof, was held insufficient to displace the finding of contravention.

Conclusion: The finding of guilt was set aside for one consignment and sustained for the remaining two consignments.

Issue (ii): Whether the penalty imposed required reduction in view of the extent of the established contravention.

Analysis: Since the contravention stood established only in respect of part of the alleged default, the original penalty was considered excessive when viewed against the value of the consignments sustained in the adjudication. The penalty was therefore scaled down on a rough and proportional basis.

Conclusion: The penalty was reduced from Rs. 2,00,000 to Rs. 1,00,000.

Final Conclusion: The adjudication was upheld only in part, with one consignment deleted from the finding of guilt and the monetary penalty correspondingly reduced.

Ratio Decidendi: Where an exporter fails to establish by reliable material that reasonable steps were taken to repatriate export proceeds, contravention under section 18(2) may be sustained, but the penalty may be proportionately reduced when the default is established only in part.

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