Write-off of unrealised export dues under FERA supported relief where recovery efforts and negligible shortfall were shown.

Non-realisation of export proceeds under the Foreign Exchange Regulation Act was held not to justify penalty on the facts, because the shortfall was limited and the exporters showed recovery efforts, including inability to trace foreign buyers and a write-off recommendation by the authorised dealer. Reading Sections 18(1)(a), 18(2) and 18(3) with the relevant RBI circulars, the Court recognised write-off of unrealised export dues where the shortfall was negligible. The appellants' reversal of duty drawback also supported the absence of misuse of export incentives. The penalty and concurrent adverse orders were therefore unsustainable, and relief was granted.

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Issues: Whether the penalty imposed for non-realisation of export proceeds under the Foreign Exchange Regulation Act, 1973 was sustainable, and whether the appellants were entitled to the benefit of write-off of unrealised export bills in the facts of the case.

Analysis: The export proceeds remained unrealised only to a limited extent, and the appellants had placed material to show efforts taken for recovery, including inability to trace foreign buyers and the recommendation of the authorised dealer for write-off. The Court read Section 18(1)(a), Section 18(2) and Section 18(3) of the Foreign Exchange Regulation Act, 1973 together with the relevant RBI circulars governing write-off of unrealised export dues. It held that the statutory scheme and the circulars recognised write-off in cases of negligible shortfall and that the appellants had also reversed the duty drawback received, showing absence of misuse of export incentives.

Conclusion: The penalty and the concurrent adverse orders were unsustainable, and the appellants were entitled to relief.

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