Export realisation breach upheld, but penalty reduced for absence of mens rea and mitigating facts.

Failure to realise export proceeds within the prescribed period under the Foreign Exchange Regulation Act, 1973 supported a finding of contravention where no timely application for extension was made and post-expiry follow-up was only belated or formal; the statutory presumption under section 18(3) remained unrebutted, so the violation was upheld. The decision nevertheless treated the absence of criminal intent and mens rea as mitigating factors in fixing penalty, and on that basis reduced the penalty substantially. The result was that liability for breach was maintained, while relief was granted only on the quantum of penalty.

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Issues: (i) Whether the contravention of the export realisation requirements under the Foreign Exchange Regulation Act, 1973 was established and the finding of guilt deserved interference. (ii) Whether the quantum of penalty required reduction on the facts.

Issue (i): Whether the contravention of the export realisation requirements under the Foreign Exchange Regulation Act, 1973 was established and the finding of guilt deserved interference.

Analysis: The appeals arose from adjudication under section 51 of the Foreign Exchange Regulation Act, 1973 for alleged breach of section 18(2) and section 18(3) read with section 68(1). The explanation offered was that the foreign buyer had ceased to exist and that waiver proceedings before the RBI were pending, but the record showed that steps for realisation or extension of time were not taken within the prescribed period. The efforts made after expiry of the time limit were held to be belated and merely formal, and the statutory presumption under section 18(3) remained unrebutted.

Conclusion: The finding of contravention was sustained and upheld against the appellants.

Issue (ii): Whether the quantum of penalty required reduction on the facts.

Analysis: While affirming the breach, the decision took account of the mitigating circumstances, including the absence of criminal intent and the lack of mens rea. On that basis, maximum leniency was considered appropriate in fixing the penalty.

Conclusion: The penalty was reduced substantially in favour of the appellants.

Final Conclusion: The appeals succeeded only to the extent of reduction of penalty, while the finding of violation was maintained.

Ratio Decidendi: Where the statutory obligation to realise export proceeds is not met and no timely application for extension is made, belated or formal follow-up does not rebut the statutory presumption of contravention; however, absence of mens rea may justify substantial reduction of penalty.

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