1986 (9) TMI 163 - SC - FEMA

Whether High Court was correct in dismissing the appeal on the findings that the order of the Appellate Authority did not suffer from any error of law? Held that - The findings recorded by the Deputy Director Enforcement and the Appellate Authority leave no room for doubt that the appellant took delivery of goods himself when he was in U.S.A. and sold the same by private sale in a surreptitious manner disregarding the directions of the Reserve bank of India and keeping it in dark about it. The appellant has not proved how much value and foreign exchange he realized by such private sale. In the first place he could not have sold the goods privately in a secretive manner contrary to the directions of the Reserve Bank of India. In the next place he should have candidly come forward to state how much he realized and ought to have repatriated the said amount. Instead of appellant resorted to manipulations to show that the importer had paid only 50% of the value which fact is established to be untrue. The full export value is reflected in the transaction which was made with the foreign buyer at 5976.00 but he has repatriated only 2931.42. He has thus clearly violated Section 12(2). The order under appeal is unassailable. There is thus no escape from the conclusion that the appellant contravened Section 12(2) of the Act. The High Court committed no error in rejecting appellant s submission. The appeal fails is accordingly dismissed.

Summary

Issues:
- Appeal against order of High Court of Delhi under section 23 EE of the Foreign Exchange Regulation Act, 1947.
- Alleged contravention of section 12(2) of the Act by the appellant.
- Defense of the appellant regarding non-repatriation of full export value.
- Adjudication proceedings initiated against the appellant and its partners.
- Orders passed by Deputy Director Enforcement Directorate and Foreign Exchange Regulation Appellate Board.
- Appeal before the High Court challenging the appellate order.
- Interpretation of section 12(2) of the Act regarding export of goods and repatriation of full value.
- Findings of Deputy Director Enforcement and Appellate Authority.
- Allegations of private sale of goods by the appellant in contravention of Reserve Bank of India's directions.
- Failure of the appellant to prove realization and repatriation of full export value.
- Confirmation of contravention of Section 12(2) by the appellant.
- Dismissal of appeal by the High Court.

Analysis:
The judgment pertains to an appeal against the order of the High Court of Delhi under section 23 EE of the Foreign Exchange Regulation Act, 1947, involving an alleged contravention of section 12(2) of the Act by the appellant. The appellant, engaged in exporting goods, failed to repatriate the full value of exported goods, leading to adjudication proceedings initiated against them and their partners. The Deputy Director Enforcement Directorate found the appellant guilty and imposed a fine, which was later reduced by the Foreign Exchange Regulation Appellate Board. Subsequently, the appellant appealed before the High Court, which upheld the decision of the Appellate Authority, leading to the current appeal.

The crux of the matter lies in the interpretation of section 12(2) of the Act, which prohibits exporters from delaying the sale of goods or ensuring payments not representing the full amount payable by the foreign buyer. The appellant's defense regarding non-repatriation of full export value was refuted based on findings that the appellant privately sold the goods in contravention of Reserve Bank of India's directions. The appellant's failure to disclose the full realization and repatriation amount further strengthened the case against them. The judgment emphasizes the importance of prompt sale of goods and repatriation of full value to comply with the Act.

The findings of the Deputy Director Enforcement and the Appellate Authority established the appellant's wrongdoing, as they failed to repatriate the full amount payable by the foreign buyer, despite exporting goods valued at $5976 but repatriating only $2931.42. The appellant's clandestine sale of goods and manipulation of facts to evade repatriation obligations were deemed unacceptable. Consequently, the High Court rightly dismissed the appeal, affirming the contravention of Section 12(2) by the appellant. The judgment concludes that there is no merit in the appellant's submissions, and the appeal stands dismissed.