Export-realisation penalties fail when write-off is pending and later granted; penalty on a dissolved firm is legally vulnerable.

Penalty imposed on a dissolved partnership and on an individual in the wrong capacity was legally vulnerable because the firm had ceased to exist and the individual had become sole proprietor. In relation to export-realisation requirements, non-receipt of export proceeds was not established as a contravention where a write-off application had been pending before the Reserve Bank through the authorised dealer and was later granted. The operative effect was that the contravention finding and consequential penalties were set aside, with the document treating write-off under consideration as incompatible with sustaining enforcement proceedings on unauthorized non-realisation.

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Issues: (i) Whether the penalty imposed on the firm and the partner was legally sustainable when the partnership had allegedly dissolved before the penalty order and the partner had become sole proprietor. (ii) Whether contravention of the export-realisation provisions was established when an application for write-off of export proceeds was pending before the Reserve Bank of India and was later granted.

Issue (i): Whether the penalty imposed on the firm and the partner was legally sustainable when the partnership had allegedly dissolved before the penalty order and the partner had become sole proprietor.

Analysis: The penalty had been imposed on the firm despite the assertion that the firm had ceased to exist on dissolution after the death of one partner. The order also noted that the penalty against the individual partner was vulnerable because it had been levied in his capacity as a partner even though he had become the sole proprietor. The defect in the manner of imposition was therefore recognized as a legal infirmity.

Conclusion: The penalty order was legally infirm insofar as it was made against the non-existent firm and was also questionable as against the individual in the capacity in which it was imposed.

Issue (ii): Whether contravention of the export-realisation provisions was established when an application for write-off of export proceeds was pending before the Reserve Bank of India and was later granted.

Analysis: Liability under the export-realisation provisions required proof that payment for exported goods was not received within the prescribed period because of the exporter's act or omission, and that such non-receipt was without the Reserve Bank's permission. Where a write-off request was pending before the Reserve Bank through the authorised dealer, the issue of unauthorized non-realisation could not be treated as concluded. The correspondence with the bank and the Reserve Bank showed that the request was under consideration, and the subsequent grant of write-off confirmed that the non-receipt could not be treated as a contravention.

Conclusion: No contravention of the export-realisation provisions was made out and the penalties were unsustainable.

Final Conclusion: The finding of contravention and the consequential penalties were set aside, resulting in full relief to the appellant.

Ratio Decidendi: Where realisation of export proceeds is under consideration for write-off by the Reserve Bank of India through the authorised dealer, proceedings for contravention of export-realisation requirements are premature and cannot be sustained once write-off is granted.

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