Reasonable steps to realise export proceeds under FERA can defeat penalty where recovery efforts were not properly assessed.

Non-realisation of export proceeds under FERA does not by itself establish contravention where the exporter has taken all reasonable steps to repatriate the amount under section 18(3). A change in payment terms from COD to 90 days, without more, did not negate bona fides or show an ulterior motive, and the refusal to realise a reduced value without Reserve Bank permission was not a discreditable omission. Because correspondence and other material indicating recovery efforts were not properly considered, the penalty order was held unsustainable and the matter was remanded for fresh adjudication after full appraisal of the evidence and further opportunity to produce material.

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Issues: Whether the penalty for contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973 was sustainable when the appellants claimed to have taken all reasonable steps to realise the export proceeds and the material correspondence was not properly considered.

Analysis: Non-realisation of export proceeds does not by itself establish contravention where the exporter has taken all reasonable steps to repatriate the amount within the meaning of section 18(3). A change in the payment terms from COD to 90 days, without more, did not show an ulterior motive or negate bona fides. The expression "reasonable steps" must be confined to steps consistent with the statute, and the refusal to realise a reduced value without Reserve Bank permission could not be treated as a discreditable omission. The record contained correspondence predating the show-cause notice and other material suggesting efforts to recover the amount, but those documents were not adequately considered in the adjudication order. Since penalty discretion must be exercised on a full and fair appraisal of all relevant facts, the original order was rendered unsustainable.

Conclusion: The matter was remanded for fresh adjudication after considering the relevant evidence and affording the parties an opportunity to produce further material.

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