2008 (7) TMI 1114 - AT - FEMA

Summary

Issues:
1. Appeal against penalty imposed for failure to realize and repatriate outstanding export proceeds.
2. Interpretation of Sections 18(2) and 18(3) of FER Act, 1973.
3. Application of legal principles regarding regulatory offenses and purposive construction.

Analysis:
1. The appeal was filed against a penalty imposed on the appellant for failure to realize and repatriate outstanding export proceeds, contravening Section 18(2) and 18(3) of the FER Act, 1973. The appellant, a partner of M/s S.K. Works, exported garments to U.S. buyers but could not recover payments due to various reasons, including the foreign buyer's bankruptcy. The appellant contended that all reasonable steps were taken to recover the outstanding proceeds, including approaching the RBI for write-off. The respondent argued that the appellant continued exporting goods without taking steps to recover the payments, establishing a contravention of the Act.

2. Section 18(2) of the FER Act prohibits actions that delay payment for exported goods without RBI permission. Section 18(3) creates a presumption of non-compliance if payment is not received within the prescribed period. The Tribunal noted that substantial amounts were still outstanding, and the appellant's argument that certain GRs were eligible for write-off under RBI circular was not tenable in the proceedings. The appellant's argument that contravention must be deliberate for penalty imposition was rejected, citing various case laws.

3. The Tribunal emphasized the regulatory nature of the FER Act, aimed at conserving foreign exchange resources. It highlighted the need for a purposive construction of the Act to protect the Indian economy. Referring to legal precedents, the Tribunal emphasized that penalties under the Act do not require deliberate contravention but strict compliance. The Tribunal dismissed the appeal, upholding the penalty and directing the appellant to pay the balance amount within a specified period, failing which enforcement action would be taken.

This detailed analysis covers the issues raised in the judgment, including the interpretation of relevant legal provisions and the application of regulatory principles in deciding the appeal against the penalty imposed.