Non-realisation of export proceeds beyond exporter control may avoid contravention, while lack of recovery steps sustains liability.

Non-realisation of export proceeds did not amount to contravention under section 18(2) of the Foreign Exchange Regulation Act, 1973 where the default arose from circumstances beyond the exporter's control, including dispute over inferior quality and buyer claims for discount. The export value was treated as irrelevant to the finding of contravention in one instance where the buyer did not take delivery and the goods were auctioned. Contravention was sustained only for the remaining GRI, because no effective recovery steps or extension request was shown. The penalty was therefore moderated and reduced to a fair amount.

---

---

Issues: Whether the appellant was liable for contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973 for non-realisation of export proceeds in respect of the remaining GRIs, and what penalty was justified.

Analysis: The export covered by one GRI was treated on the same footing as other cases where the foreign buyer did not take delivery and the goods were ultimately auctioned, and the value of the consignment was held to be irrelevant to the finding of contravention. In respect of three GRIs, the non-realisation arose out of a dispute over inferior quality, the buyer had raised claims for discount, and the circumstances showed that the default was not attributable to any act or omission on the part of the appellant. In respect of the remaining GRI, there was no evidence of effective steps taken to recover the outstanding amount or of any application for extension of time, so the contravention was established for that item alone. The penalty earlier imposed for all GRIs was therefore found excessive and was reduced to a fair and reasonable amount in the circumstances.

Conclusion: The appellant was exonerated in respect of all but one GRI, the contravention was sustained only for that remaining GRI, and the penalty was reduced to Rs. 20,000.

Ratio Decidendi: Non-realisation of export proceeds does not establish contravention where the default is attributable to circumstances beyond the exporter's control, but where no effective recovery steps are shown, liability under section 18(2) is sustained and penalty may be moderated to the proved default.

---