Export proceeds default and statutory presumption under foreign exchange law: exporter must prove reasonable recovery steps to avoid penalty.

Non-realisation of export proceeds within the prescribed period triggered the statutory presumption under section 18(3) of the Foreign Exchange Regulation Act, 1973 that the exporter had not taken all reasonable steps to secure payment. The exporter had to rebut that presumption by showing timely and effective recovery measures, including approaching the Reserve Bank of India for extension of time or permission to write off the unrealised proceeds where required. On the facts, no reliable evidence showed those steps were taken, and the claim that the default was beyond the exporter's control failed to displace the presumption. The penalty for contravention of section 18(2) was therefore upheld.

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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 export proceeds were not realised and the exporter claimed to have taken all reasonable steps.

Analysis: Non-realisation of export proceeds beyond the prescribed period attracted the statutory presumption under section 18(3) that the exporter had not taken all reasonable steps to receive or recover payment, unless the contrary was proved by the exporter. The exporter failed to discharge that burden. No reliable evidence was produced to show timely approach to the Reserve Bank of India for extension of time or for permission to write off the unrealised proceeds. The record also did not show that effective steps were taken after the shipping agents' notice to ascertain whether the goods had been auctioned, the sale price, surplus, or further steps for recovery and repatriation. On these facts, the plea that the non-realisation was beyond the exporter's control did not rebut the statutory presumption.

Conclusion: The penalty was upheld and the appeal failed.

Final Conclusion: The exporter remained liable for the contravention because the statutory presumption was not rebutted and the required regulatory steps were not shown to have been taken.

Ratio Decidendi: Where export proceeds are not realised within the prescribed period, section 18(3) raises a rebuttable presumption against the exporter, and the exporter must prove that all reasonable steps were taken, including seeking timely Reserve Bank of India permission where necessary.

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