Reasonable steps to realise export proceeds rebut statutory presumption, leading to reduction of foreign exchange penalty.

Non-realisation of export proceeds was not treated as punishable where the exporter proved reasonable steps to realise and repatriate the funds. The Tribunal accepted correspondence with foreign buyers, approaches to the Indian Embassy, efforts through bankers and authorised dealers, attempts to secure RBI permission for write-off or price reduction, and other mitigating factors such as foreign bank fault, customs auction and market recession; on that basis, the statutory presumption of contravention was rebutted for the covered export transactions. Because the finding of contravention could not stand to that extent, the penalty based solely on non-realisation was reduced to the amount already recovered.

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Issues: (i) Whether the appellants had taken all reasonable steps to realise and repatriate the export proceeds so as to rebut the statutory presumption of contravention under the foreign exchange law. (ii) Whether the penalty imposed for non-realisation of export proceeds was sustainable in full or required modification.

Issue (i): Whether the appellants had taken all reasonable steps to realise and repatriate the export proceeds so as to rebut the statutory presumption of contravention under the foreign exchange law.

Analysis: Non-realisation of export proceeds by itself was not treated as punishable; the material question was whether the exporter had taken all reasonable steps in the facts of the case. The Tribunal accepted the evidence of correspondence with foreign buyers, approaches to the Indian Embassy, efforts through bankers and authorised dealers, attempts to obtain RBI permission for write-off or price reduction, auction by US Customs in some cases, and difficulties arising from foreign bank fault and market recession. On those facts, the presumption of contravention was treated as rebutted.

Conclusion: The appellants were held to have taken reasonable steps, and the finding of contravention was not sustained for the covered GRIs.

Issue (ii): Whether the penalty imposed for non-realisation of export proceeds was sustainable in full or required modification.

Analysis: Since the evidence showed reasonable efforts in respect of the disputed export transactions, the original penalty based solely on non-realisation could not stand in full. The Tribunal considered the efforts made for obtaining RBI permission and other mitigating circumstances and found that a reduction in penalty was justified.

Conclusion: The penalty was reduced to the amount already recovered, namely Rs. 1,10,000.

Final Conclusion: The appeal succeeded in part, with the penalty substantially reduced on the basis that the appellants had shown reasonable efforts to realise the export proceeds and had rebutted the statutory presumption to that extent.

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