Bona fide efforts to recover export proceeds can rebut non-realisation presumption and defeat penalty

Bona fide and effective efforts to realise export proceeds, including recovery action against the foreign buyer, approaches to the reserve bank and other agencies, and institution of legal proceedings, were sufficient to rebut the presumption of contravention arising from non-realisation. The record also showed that some assumptions in the adjudication order were incorrect, including the alleged settlement and the timing of litigation. On these facts, the alleged contravention for non-realisation was not established, and the consequential penalty could not survive.

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Issues: Whether the appellants had taken sufficient and effective steps to realise the export proceeds so as to rebut the presumption of contravention under section 18(3) and invalidate the penalty imposed for alleged contravention of section 18(2), and whether the penalty under section 68(1) could survive.

Analysis: The record showed that the appellants pursued recovery efforts with the foreign buyer, approached the Reserve Bank and other agencies, and initiated legal proceedings resulting in a decree in their favour. Certain factual assumptions in the adjudication order were found to be incorrect, including the treatment of the alleged settlement and the timing of legal action. On the evidence, the appellants had taken the steps expected of a prudent exporter and had materially supported their claim that export realisation was being actively pursued. In these circumstances, the presumption attached to non-realisation stood rebutted, and the foundation for penal action was not made out.

Conclusion: The finding of contravention under section 18(2) was unsustainable, and the consequential penalty under section 68(1) also could not stand.

Final Conclusion: The appeals succeeded and the impugned penalties were set aside.

Ratio Decidendi: Where an exporter demonstrates bona fide and effective efforts, including pursuit of legal remedies and other recovery measures, the presumption of contravention for non-realisation of export proceeds stands rebutted and penal consequences for such alleged non-realisation cannot be sustained.

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