RBI write-off of export proceeds defeats alleged FERA contravention where the outstanding amounts were covered by permission.

Where export proceeds had been realised in part and the remaining balances were covered by Reserve Bank of India write-off permissions, the alleged contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973 could not be sustained because the foundational allegation of failure to realise export proceeds no longer survived. The contention that the write-off was conditional on proof of surrender of proportionate cash incentives was rejected, as surrender was not a pre-condition to the write-off itself; the relevant inquiry was whether RBI had granted the write-off. On that basis, the finding of contravention and the penalty imposed on the company were unsustainable.

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Issues: Whether the alleged contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973 could be sustained when the export proceeds had been realised in part and the remaining amounts had been written off by the Reserve Bank of India, and whether the conditional nature of the write-off required proof that cash incentives had been surrendered.

Analysis: The outstanding export proceeds in respect of some GRIs had been realised before the hearing, and the balance in respect of the remaining GRIs had been covered by write-off permissions granted by the Reserve Bank of India. On that basis, the foundational allegation of failure to realise export proceeds could not survive. The contention that the write-off was conditional upon surrender of proportionate cash assistance was rejected as the condition did not operate as a pre-condition to the write-off itself; the relevant inquiry was only whether the write-off had been granted. The reasoning followed the Board's earlier view that the adjudicating authority need not insist on proof regarding surrender of incentives once RBI write-off is shown.

Conclusion: The finding of contravention under section 18(2) could not be upheld, and the penalty imposed on the appellant-company was unsustainable.

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