Export proceeds non-realisation under FERA required timely reasonable steps, while penalty was reduced for mitigating circumstances.

Non-realisation of export proceeds under FERA required the exporter to take genuine and timely reasonable steps, including seeking RBI extension where necessary; repeated follow-up and recovery efforts alone were not enough to displace contravention under section 18(2) read with section 18(3). The Tribunal also noted that delay in shipment and commercial difficulties were relevant background factors, but the absence of timely extension requests meant statutory compliance was not fully met. On penalty under section 51, the Tribunal treated the appellant's recovery efforts and surrounding circumstances as mitigating factors and reduced the penalty substantially.

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Issues: (i) Whether the appellant had taken all reasonable steps for realisation of the outstanding export proceeds so as to avoid contravention under section 18(2) read with section 18(3) of the Foreign Exchange Regulation Act, 1973. (ii) Whether the penalty imposed under section 51 of the Foreign Exchange Regulation Act, 1973 required reduction in the facts of the case.

Issue (i): Whether the appellant had taken all reasonable steps for realisation of the outstanding export proceeds so as to avoid contravention under section 18(2) read with section 18(3) of the Foreign Exchange Regulation Act, 1973.

Analysis: The appellant had made repeated efforts to recover the export proceeds, including telephonic follow-up, personal visits abroad, and attempts to explore legal recovery. The order also noted that delay in shipment and commercial difficulties affected the buyer's ability to pay. However, the appellant had not made timely applications to the Reserve Bank of India for extension of time, and such permission was treated as a substantive safeguard rather than an empty formality. On that basis, the Tribunal held that the appellant could not be said to have fully satisfied the statutory requirement of taking all reasonable steps within the prescribed or extended time.

Conclusion: The issue was decided against the assessee to the extent that the contravention under section 18(2) read with section 18(3) was not displaced.

Issue (ii): Whether the penalty imposed under section 51 of the Foreign Exchange Regulation Act, 1973 required reduction in the facts of the case.

Analysis: Although the statutory breach was maintained, the Tribunal took into account the appellant's efforts for recovery, the surrounding commercial difficulties, and the financial background disclosed on record. On that basis, the original penalty was found to be excessive and was reduced substantially.

Conclusion: The issue was decided in favour of the assessee to the extent that the penalty was reduced from Rs. 1,50,000 to Rs. 50,000.

Final Conclusion: The appeal succeeded only in part, with the finding of contravention maintained but the monetary penalty substantially scaled down.

Ratio Decidendi: For contravention involving non-realisation of export proceeds, statutory compliance requires genuine and timely reasonable steps, including seeking RBI extension where required, while the penalty may still be moderated where the surrounding circumstances show substantial but incomplete efforts at recovery.

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