Export proceeds non-realisation and unauthorised value reduction trigger liability under FERA export control rules.

Unauthorised reduction of export value and adjustment of dues against foreign buyers without Reserve Bank permission constituted contravention of the export control requirements under FERA. Where export proceeds were not realised within the prescribed time, the exporter had to show all reasonable steps taken to recover the amounts; in the absence of such material, the statutory presumption of non-realisation was not displaced. Partners and a power-of-attorney holder who were aware of and involved in the export dealings could also be exposed to liability, and penalties may be sustained where no disproportionality is shown.

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Issues: (i) Whether the appellants contravened section 18(2) of FERA, 1973 by reducing the export value and adjusting dues without Reserve Bank permission; (ii) Whether the appellants failed to take all reasonable steps to realise the export proceeds, attracting the presumption under section 18(3) of FERA, 1973; (iii) Whether the appellants were liable under section 68(1) of FERA, 1973 and whether the penalty required interference.

Issue (i): Whether the appellants contravened section 18(2) of FERA, 1973 by reducing the export value and adjusting dues without Reserve Bank permission.

Analysis: The adjustment of dues against the foreign buyers was made without permission of the Reserve Bank. The export invoices showed value below the floor price fixed by the Government, which amounted to an unauthorised reduction of the export value. The record also did not show receipt of the amounts claimed to have been realised through cheque payments or instalments.

Conclusion: The contravention under section 18(2) was established against the appellants.

Issue (ii): Whether the appellants failed to take all reasonable steps to realise the export proceeds, attracting the presumption under section 18(3) of FERA, 1973.

Analysis: Section 18(3) operates where export proceeds are not received within the prescribed time, unless the contrary is proved. On the facts, no material was produced to show what reasonable steps were taken to recover the amounts from the foreign buyers, who were closely connected with the appellant-firm. The explanation based on market recession and delayed delivery was not supported by evidence sufficient to displace the statutory presumption.

Conclusion: The appellants failed to rebut the presumption and were liable for contravention of section 18(2) read with section 18(3).

Issue (iii): Whether the appellants were liable under section 68(1) of FERA, 1973 and whether the penalty required interference.

Analysis: The connected partners and the power-of-attorney holder were shown to be aware of, and involved in, the affairs of the firm and the export transactions. The penalties were also found not to be disproportionate, and no ground for reduction was made out.

Conclusion: Liability under section 68(1) was affirmed and the penalty was not interfered with.

Final Conclusion: The appeals failed on merits and the adjudication order imposing penalties was sustained in full.

Ratio Decidendi: Non-realisation of export proceeds becomes punishable where the exporter fails to take all reasonable steps to recover payment, and unauthorised adjustment or reduction of export value without Reserve Bank permission constitutes contravention of the statutory export control provisions.

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