Rebuttable presumption in export realisation penalties defeated where exporters showed reasonable recovery steps and eventual full receipt.

Penalty for delayed realisation of export proceeds under section 18 of the Foreign Exchange Regulation Act, 1973 could not be sustained where the statutory presumption of non-receipt was rebutted. Section 18(3) creates only a rebuttable presumption that the exporter failed to take reasonable steps to recover payment, and non-realisation by itself is not an automatic contravention. Here, the buyer's financial difficulty, the settlement permitted by the Reserve Bank, receipt of promissory notes, extensions granted, a pending further-extension request, and eventual full realisation showed that reasonable steps had been taken. As no specific omission was identified, the penalty order was set aside.

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Issues: Whether penalty for delayed non-realisation of export proceeds under sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 was sustainable when the export proceeds were subsequently realised and the presumption of contravention was rebutted.

Analysis: Section 18(2) does not treat non-realisation of export proceeds, by itself, as a contravention in every case. Section 18(3) raises only a rebuttable presumption that the exporter did not take reasonable steps to receive or recover payment. On the facts, the buyer's financial difficulty, the settlement arrived at with Reserve Bank permission, the receipt of promissory notes, the grant of extension by the Reserve Bank, the pending application for further extension, and the eventual realisation of the entire amount supported the appellants' case. The adjudicating authority did not identify any specific act or omission showing lack of reasonable steps or any basis to conclude that the presumption remained unrebutted.

Conclusion: The presumption under section 18(3) stood rebutted and the penalty could not be sustained.

Final Conclusion: The appeal succeeded and the penalty order was set aside.

Ratio Decidendi: Penalty for delayed export realisation under section 18 of the Foreign Exchange Regulation Act, 1973 cannot be sustained unless the authority shows that the exporter failed to take reasonable steps and the statutory presumption remains unrebutted.

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