Reasonable steps to realise export proceeds can justify penalty reduction where some recovery efforts were made.

Failure to take reasonable steps to realise export proceeds under section 18(2) read with section 18(3) of the Foreign Exchange Regulation Act, 1973 attracted penalty, but the penalty was reduced where the record showed some recovery efforts had been made. Repeated communications to the buyer and requests for assistance from the Consulate General of India showed that the default was not one of complete inaction. The liquidated status of the firm and the exporters' rural background were also considered relevant to mitigation. On that basis, the original penalty was treated as excessive and a token penalty was considered sufficient.

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Issues: Whether the penalty imposed for failure to take reasonable steps to realise export proceeds under section 18(2) read with section 18(3) of the Foreign Exchange Regulation Act, 1973 was liable to be reduced.

Analysis: The Appellant had not taken all reasonable steps to realise the outstanding export proceeds, but the record showed that some action had been taken by sending repeated communications to the buyer and by seeking assistance from the Consulate General of India. The firm had already gone into liquidation, the exporters had a rural background, and the default was not treated as a case of complete inaction. In these circumstances, the existing penalty was considered excessive and a token penalty was found sufficient to meet the ends of justice.

Conclusion: The penalty was reduced from Rs. 50,000 to Rs. 10,000, and the appeal was allowed to that extent.

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