Fair opportunity to defend and rebuttable presumption on export proceeds can defeat a FERA contravention finding.

A denial of a fair opportunity to defend, including an adjournment request sent on medical grounds before the hearing but not placed before the adjudicating authority, vitiates the adjudication and justifies reconsideration. In relation to contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973, the department must first show absence of RBI extension, write-off, or similar indulgence before relying on the presumption under section 18(3); that presumption can then be rebutted by evidence that the exporter took reasonable steps to realise export proceeds. Non-realisation alone is not enough. On the record described, the penalty order was set aside and the matter remanded for fresh adjudication.

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Issues: (i) Whether the adjudication order was liable to be set aside for want of adequate opportunity to defend. (ii) Whether contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973 was established in the absence of consideration of RBI permission and the appellants' efforts to realise export proceeds.

Issue (i): Denial of a fair opportunity to defend, particularly where an adjournment request on medical grounds was sent before the hearing and was not brought to the adjudicating authority's notice, vitiates the adjudication and warrants reconsideration.

Analysis: The request for adjournment was made in time and supported by medical material. In such circumstances, the appellants could not be faulted for the non-placement of that request before the adjudicating authority. The record therefore disclosed inadequate opportunity to present the defence.

Conclusion: The adjudication was liable to be reopened on this ground and fresh adjudication was warranted in favour of the appellants.

Issue (ii): What is required to prove contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973, and whether the statutory presumption under section 18(3) stands displaced by evidence of reasonable steps taken to realise export proceeds.

Analysis: To sustain a charge under section 18(2), the department must first show that there was no extension of time, write-off, or other indulgence granted by the Reserve Bank of India. Only then can the presumption under section 18(3) be invoked. Even then, the presumption may be rebutted by evidence that the exporter took reasonable steps to realise the proceeds. Non-realisation by itself is not punishable; the relevant test is what a prudent exporter would do in the circumstances.

Conclusion: The matter required fresh adjudication because the available materials indicated that the appellants' conduct and RBI permissions had not been properly examined, and the charge could not be finally sustained on the existing record.

Final Conclusion: The appeals succeeded to the extent that the impugned penalty order was set aside and the matter was sent back for reconsideration in accordance with law, with interim relief from pre-deposit.

Ratio Decidendi: For contravention of section 18(2), the department must establish the absence of RBI indulgence and may rely on the presumption under section 18(3) only until rebutted by proof of reasonable steps taken to realise export proceeds.

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