APPELLATE
TRIBUNAL FOR FOREIGN EXCHANGE, BENCH
Uma Joshi
v.
Enforcement
Directorate
O.P. NAHAR,
chairperson
AND R.N. PODDAR,
member
APPEAL NO. 183
OF 2006
January 3, 2008
Section 18 of
the Foreign Exchange Regulation Act, 1973 - Payment for exported goods -
Respondent imposed penalty against appellant for contravention of section 18(2),
read with section 18(3) on ground that appellant after making exports by two GRIs failed to take reasonable steps for repatriation of
export proceeds within prescribed period of six months or any extended period
by RBI - On appeal, appellant contended that amount in question could not be
recovered as bankruptcy was declared against foreign buyer - It was seen from
records that period between declaration of bankruptcy and export of goods
roughly came to 5 ½ years - Whether first six months
could be discounted towards appellant because appellant had filed a declaration
under section 18(1) for receipt of payment within six months - Held, yes
- Whether, thereafter adverse presumption under
section 18(3) could be raised when export proceeds were not received inasmuch as
that appellant failed to take reasonable steps in repatriation of export
proceeds - Held, yes - Whether since there was nothing on record which
could successfully displace adverse presumption, impugned order was to be
sustained - Held, yes
FACTS
The respondent-enforcement directors imposed a penalty
against the appellant for contravention of section 18(2)d and (3) on the ground
that the appellant after making exports by two GRIs
failed to take reasonable steps for repatriation of export proceeds within the
prescribed period of six months or any extended period by RBI. On instant
appeal, the appellant contended that the amount in question could not be collected
as bankruptcy was declared against the foreign buyer. It was further argued
that the appellant made a request for write off to the RBI in 1996 but RBI failed
either to reject the request or accept the same, thus, in such circumstances, he
could not be held guilty for not taking reasonable steps for repatriation of
export proceeds in violation of section 18(2), read with section 18(3).
HELD
It is legally well-settled that exporter is
obliged in law to take reasonable steps for repatriation of export proceeds whereafter he is absolved from imputation, if otherwise not
guilty of misconduct in any other manner. The obligation is to make best endeavour appropriate in the circumstances for repatriation
of export price but end result of receipt or no receipt of money is not the
criteria. The receipt of price can at best throw light on total quantum of
efforts, if they are reasonable in the circumstances. [
Section 18(3) provides that if exporter does not
receive payment of goods exported within the prescribed period, it shall be
presumed that the exporter has not taken reasonable steps to receive the
payment for the exports. Rule 8 of the Foreign Exchange Regulations Rules 1974
provides that the amount representing the full export value of goods exported
shall be realized and be paid to the authorized dealer on the due date for
payment or within six months from the date of shipment of goods whichever is
earlier. However, the presumption under section 18(3) is rebuttable
and one needs to look at the facts with deep consideration if the steps taken
can possibly displace the
statutory presumption. [
This was an admitted position that the appellant
exported the goods in 1990 under the cover of two GRIs.
The first GRI was sent on 30-4-1990 and second GRI on 21-6-1990. However, on
9-8-1995 the appellant wrote a letter to US Bankruptcy Court, placing its claim
of payment of the export proceeds. Thus, it could be said that bankruptcy came
into being or became a little bit feasible around or at the start of the year
1995. The period between the declaration of bankruptcy and export of goods
roughly came to 5 ½ years. The first six
months could be discounted towards appellant because appellant had filed a
declaration under section 18(1) for receipt of payment within six months.
Thereafter, adverse presumption under section 18(3) was raised when export
proceeds were not received inasmuch as that the appellant had failed to take
reasonable steps in repatriation of export proceeds. In the above situation,
the appellant was required to displace the adverse legal presumption. There was
nothing on record which could successfully displace the adverse presumption.
The reliance of the appellant on the pendency of
request of write off with RBI at the time when impugned order passed was hardly
of any use to the appellant. Even today the appellant had not come out with a
write off. Moreover this was not on the question of displacement of adverse
presumption of not taking
reasonable steps. [
The appellant had failed to take reasonable
steps within or outside the period of six months till the foreign buyer reached
bankruptcy after about more than 5 ½ years. Therefore, the bankruptcy
proceedings of the foreign buyer would also not come to the help of the
appellant because it had come into being too late before which the appellant
was well-expected to take reasonable steps. There was no error in the impugned
order, hence, the same was to be sustained and maintained. [
For the reasons stated above, instant appeal was
dismissed having no merits. The penalty amount was just equal to the amount
involved in contravention, hence, it could not be
termed as harsh and excessive by any standards. Thus, the impugned order was
sustained and maintained. [