Export proceeds non-realisation penalties sustained where recovery efforts were unproven, with only limited relief for one director.

Failure to realise export proceeds was not excused because the appellants did not prove bona fide and effective recovery efforts, such as timely follow-up, a recovery suit, application to the competent authority, or RBI write-off permission; unsupported assertions about the foreign buyer's liquidation were insufficient, so the penalty for contravention of foreign exchange law was sustained. The natural justice objection based on alleged non-issue of notice to certain persons also failed because the notices on record covered the relevant entities. However, the appellate penalty against the individual director was set aside to the limited extent that the adjudication order itself had not imposed a corresponding separate penalty, while the penalties on the other appellants were maintained.

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Issues: (i) Whether the appellants established that they had taken reasonable steps to realise the export proceeds and that non-realisation was beyond their control, so as to avoid penalty for contravention of the foreign exchange law; (ii) Whether the penalty could be sustained when no separate penalty was imposed on the individual director in the manner reflected in the adjudication order, and whether the objection based on want of notice to certain persons affected the validity of the proceedings.

Issue (i): Whether the appellants established that they had taken reasonable steps to realise the export proceeds and that non-realisation was beyond their control, so as to avoid penalty for contravention of the foreign exchange law.

Analysis: The appellants relied on alleged correspondence, visits, and the foreign buyer's liquidation, but no convincing evidence was produced to show timely and effective recovery efforts, filing of a recovery suit, application to the competent authority, or any permission for write-off by the Reserve Bank of India. The material on record did not substantiate the claim that the outstanding export proceeds could not be realised despite due diligence. The adjudicating authority's view that the explanations were unsupported was upheld.

Conclusion: The appellants failed to establish a valid defence to the contravention, and the penalty was sustained on this issue.

Issue (ii): Whether the penalty could be sustained when no separate penalty was imposed on the individual director in the manner reflected in the adjudication order, and whether the objection based on want of notice to certain persons affected the validity of the proceedings.

Analysis: The objection based on natural justice was rejected because the notices issued covered the relevant entities and persons on the record, and the claim regarding non-issuance of notice to certain persons was not sustainable in view of the record. However, the adjudicating authority had itself not imposed a separate penalty on the individual director, so the appellate penalty against that person could not stand on the same footing as the penalties imposed on the firms.

Conclusion: The challenge based on natural justice failed, but the penalty on the individual director was set aside to the limited extent indicated, while the penalties on the other appellants were maintained.

Final Conclusion: The adjudication was substantially affirmed, with only limited relief granted in relation to the individual director, and the remaining penalties were upheld.

Ratio Decidendi: A party resisting penalty for failure to realise export proceeds must prove bona fide and effective recovery efforts and cannot rely on unsubstantiated assertions; a limited appellate interference is warranted where the underlying adjudication does not support a corresponding separate penalty.

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