2001 (8) TMI 1462 - AT - FEMA

Summary

Issues:
- Imposition of penalty under sections 18(2) & 18(3) of Foreign Exchange Regulation Act, 1973
- Request for waiver of pre-deposit of penalty
- Failure of buyer to take delivery leading to non-realization of export proceeds
- Adjudication proceedings conducted ex parte due to partner's illness
- Appellant's actions in trying to realize outstanding export proceeds
- Appellant's compliance with section 18(3) of the Act

Analysis:
The appeal in this case was against an Adjudication Order imposing a penalty on the appellant firm for contravening sections 18(2) & 18(3) of the Foreign Exchange Regulation Act, 1973. The appellant sought a waiver of pre-deposit of penalty citing a strong prima facie case and financial difficulties. The respondent argued that evidence relied upon by the appellant was not adduced during adjudication. The Chairperson decided not to remand the case for re-adjudication due to the penalty amount and proceeded to consider the appeal on merits.

The case involved the appellant's shipment of goods to a buyer who refused delivery, leading to non-realization of export proceeds. Despite the appellant's efforts to resolve the issue with the buyer and find an alternative buyer, the export proceeds were not fully realized. The appellant faced challenges with the bank and Export Credit Guarantee Corporation in obtaining necessary coverage for the new buyer. The new buyer eventually canceled the contract due to non-receipt of documents, demanding a refund of the advance payment.

The Chairperson found that the appellant had taken all reasonable steps to realize the outstanding export proceeds and had successfully discharged the burden of proof under section 18(3) of the Act. The appellant's inability to furnish necessary documents during adjudication due to a partner's illness was considered, and it was noted that the appellant had explained the non-realization and actions taken for recovery. Consequently, the imposition of the penalty was deemed unwarranted, quashed, and the impugned order set aside.

In conclusion, the appeal was allowed in favor of the appellant, highlighting the appellant's compliance with section 18(3) and the circumstances leading to the non-realization of export proceeds, ultimately resulting in the penalty being overturned.