Non-realisation of export proceeds: statutory presumption applies unless exporter proves diligent recovery efforts and may still face reduced penalty.

Non-realisation of export proceeds under the Foreign Exchange Regulation framework attracts the statutory presumption of contravention unless the exporter proves, with appropriate evidence, that all reasonable and efficacious recovery steps were taken; mere correspondence or absence of negligence is insufficient, and the presumption under Section 18(3) remains unrebutted where payment is still outstanding. The document also notes that a natural justice objection failed because due opportunity of hearing had been given, while the penalty was considered excessive on the facts and was reduced in light of the overseas buyer's liquidation and resulting hardship.

---

---

Issues: (i) Whether the adjudication order suffered from violation of the principles of natural justice for want of reasonable opportunity of hearing; (ii) whether failure to realise export proceeds attracted the statutory presumption of contravention and whether the exporter had rebutted it by showing reasonable efforts; (iii) whether the penalty required substantial reduction.

Issue (i): Whether the adjudication order suffered from violation of the principles of natural justice for want of reasonable opportunity of hearing.

Analysis: The impugned order disclosed that the appellant had been afforded due opportunity to defend himself and to be heard. The adjudicating authority had considered the show-cause material, the appellant's reply, and the correspondence relied upon by him. No further evidence or submission was offered before the appellate forum after being given the opportunity to do so.

Conclusion: The objection based on violation of natural justice was rejected.

Issue (ii): Whether failure to realise export proceeds attracted the statutory presumption of contravention and whether the exporter had rebutted it by showing reasonable efforts.

Analysis: The exports were made under 22 GRI forms and the export proceeds remained unrealised, except for a small part payment. Under Rule 8 of the Foreign Exchange Regulation Rules, 1974, export value had to be realised within the prescribed period, and no extension had been granted by the Reserve Bank of India. In those circumstances, the presumption under Section 18(3) of the Foreign Exchange Regulation Act, 1973 applied. The correspondence produced by the appellant was found insufficient to show that he had taken all reasonable and efficacious steps that a prudent exporter would take to recover the outstanding amounts.

Conclusion: The finding of contravention under Section 18(2) was sustained and the presumption under Section 18(3) was not rebutted.

Issue (iii): Whether the penalty required substantial reduction.

Analysis: Although the failure to realise the export proceeds was established, the appellate forum took into account the liquidation of the overseas buyer and the resulting hardship to the appellant. On a consideration of the overall circumstances, the original penalty was found excessive.

Conclusion: The penalty was reduced from Rs. 1.5 crore to Rs. 1 crore.

Final Conclusion: The appellant succeeded only to the extent of reduction in penalty, while the finding of contravention remained intact.

Ratio Decidendi: To displace the statutory presumption arising from non-realisation of export proceeds, the exporter must prove by appropriate evidence that all reasonable and efficacious steps were taken to recover the payment; mere absence of negligence or some correspondence is insufficient.

---