Export proceeds liability under foreign exchange law fails where non-realisation is not attributable to the exporter.

Liability for non-realisation of export proceeds under section 18(2) of the Foreign Exchange Regulation Act, 1973 depends on the statutory context of goods actually being received by the foreign buyer and payment becoming due in that setting. On the facts, the record showed that several consignments had not been delivered to the foreign buyer and had instead remained with the bank or been dealt with through bank-initiated sale and closure permission, so contravention could not be sustained for those GRIs. For the remaining consignments where delivery had been taken but proceeds were unrealised, the exporter had shown correspondence, complaint material and efforts by the bank, and recovery against the buyer would have been futile. The adverse findings were unsupported by the evidence, the contravention was not established, and the penalty order was set aside.

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Issues: Whether the finding of contravention for non-realisation of export proceeds under section 18(2) of the Foreign Exchange Regulation Act, 1973 could be sustained on the facts of the case.

Analysis: The record showed that in respect of several GRIs the goods had not been delivered to the foreign buyer and were either under the control of the bank or had already been dealt with through bank-initiated sale and closure permission from the Reserve Bank. Section 18(2) was treated as attracting liability only where the goods were received by the foreign buyer and payment or sale proceeds were due in that context. As to the two GRIs for which delivery had been taken and proceeds remained unrealised, the appellants had produced correspondence, criminal complaint material, and evidence of efforts by the bank, while the circumstances indicated that recovery action against the foreign buyer would have been futile. The adverse findings below were therefore unsupported by the evidence on record.

Conclusion: The contravention under section 18(2) was not established, and the impugned order could not stand.

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

Ratio Decidendi: Liability for non-realisation of export proceeds cannot be sustained where the exporter is not responsible for the failure to realise payment and the statutory provision is attracted only in relation to goods actually received by the foreign buyer.

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