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Radhika Fashion v/s Enforcement Directorate

    Appeal No. 193 of 1993

    Decided On, 12 August 2008

    At, Appellate Tribunal For Foreign Exchange New Delhi

    By, O.P. NAHAR
    By, CHAIRPERSON

    Rajesh Gulati for the Appellant. Dr. Shamsuddin for the Respondent.



Judgment Text

1. The following order of the Appellate Tribunal for Foreign Exchange is delivered by Shri O.P. Nahar, Chairperson:


2. By this appeal the appellant has challenged adjudication order No. SDE(R)III/20/93 dated 19.2.1993 passed by Special Director, Enforcement Directorate imposing a penalty of Rs. 3,50,000 against the appellant for contravention of Section 18(2) read with 18(3) FER Act on the reasons that appellant after exporting goods for the value of Rs. 15,87,724 failed to take reasonable steps for repatriation of export proceeds of the goods sent through 12 GRIs. The appellant has already pre-deposited the amount of penalty on 22.1.07. This statement of the appellant is confirmed by Dr. Shamsuddin, DLA. Presently this appeal is taken up by final disposal on merits.


3. We have heard Shri Rajesh Gulati, Advocate, on behalf of the appellant and Dr. Shamsuddin, DLA, on behalf of the Enforcement Directorate. Shri Rajesh Gulati, Advocate, has also filed written submissions which are taken on record.


4. A Show Cause Notice No.T-4/14-D/92 SCN-I dated 8.4.92 was issued to the appellant asking him why adjudication proceeding should not be held against him on the reasons that appellant after exporting goods in the year 1988-90 of the value of Rs.2450357 failed to take reasonable steps for repatriation of export proceeds. The appellant had filed reply controverting the allegations but not agreeing adjudication proceedings were held and impugned order is passed holding the appellant guilty with regard to 12 GRIs of the value of Rs. 15,87,724.


5. The legal obligation of the exporter is to take reasonable steps as provided in Section 18(2) read with 18(3) FER Act which reads as under Section 18 Payment for exported goods :-

(1) ---------------------


(2) Where any export of good, has been made, no person shall, except with the permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing :-


(A)....


(a) that payment for the goods ?


(i) is made otherwise than in the prescribed manner, or,


(3) where in relation to any goods to which a notification under Cl. (a) of sub-section (1) applies the prescribed period has expired and payment therefore has not been made as aforesaid, it shall presumed, unless the contrary is proved by the person who has sold or is entitled to sell the goods or to procure the sale thereof, that such person has not taken at reasonable steps to received or recover the payment for the goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of sub-section (2).


6. Further Sub-section (3) of Section 18 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. The Rule 8 of 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. Hence we are required to look at the facts with deep consideration if the steps taken can possibly displace the statutory presumption.


7. At this stage we are required to ascertain the meaning conveyed by word "reasonable" which is the prescribed standard of legal duty of the exporter and whether steeps taken by appellants achieve that standard. In Advanced Law Lexicon by P. Ramanand Aiyar (3rd Edition, Vo. 4 page 3959 and 3968) the word "reasonable" has been described as follows:

"(i) what is 'fair' and proper under the circumstances


(ii) the expression "reasonable is not susceptible of a clear and precise definition. A thing which is reasonable in one case may not be reasonable in another. Reasonable does not mean the best, it means most suitable in a given set of circumstances.


(iii) There is no point on which a greater amount of decision is to be found in Courts of law and equity than as to what is reasonable. It is impossible a priori to state what is reasonable as such in all cases. You must have the particular facts of each case established before you can ascertain what is meant by reasonable under the circumstances - Lord Romilly. M.R. Labouchere v. Dawson (1872), LR 13 Eq. CA 325.


8. This is an admitted fact that appellant exported goods through 7 GRIs to foreign buyer M/s Satin Petals Ltd., London whose payment equivalent to Rs. 6,38,633 is not received whereafter the appellant approached RBI for write off. With regard to another GRI of an amount of Rs. 2,24,000 goods were exported on 19.6.1990 but a part payment is received leaving balance behind of Rs. 1,05,687.


9. Of total exports there are three sets of GRI of whose price of the exported goods is required to be received. The first set of GRI is 7 in number whose value described is Rs. 6,38,623 and the next set consists of 1 GRI whose value is Rs. 2,24,000. About these 8 GRIs the impugned order has exonerated the appellant, hence, there remains nothing to discuss in this appeal so far as these exports are concerned. The third set consists of 12 GRIs whose total value 158724.


10. The third set of export consist of 12 GRIs. The first two GRIs are argued as having been covered by receipt of the price through another bank and foreign inward remittance certificates are sent by concerned bank i.e. Canara Bank to RBI when the RBI regularized this receipt by letter dated 15.10.1991. Similarly the third No.776748 is realized and Canara Bank testified to this effect by letter dated 30.8.1991.


11. The case argued for GRI at serial No. 7 is that request of write off is pending with RBI. Similarly extension request is stated to be pending with RBI with regard to GRI No. 10 and 12. Learned counsel has pleaded exoneration on the basis of earlier order passed by this Tribunal in (i) Om Devils Corporation v. Additional Director, Enforcement Directorate 2001 (78) ECC 232 (ATFFE) and (ii) SP Yarns v. Assistant Director, Enforcement Directorate 2000 (69) ECC 467 (FB).


12. It is also a fact that 4 GRIs i.e. (i) No.463417, (ii) No.463413, (iii) No.430801 and (iv) No.430808 are realized as demonstrated from the Canara Bank's letter dated 21.4.92. Similarly GRI No.463337 and No.430828 are also realized as described by Canara Bank's letter 25.7.92.


13. Thereafter 3 GRIs remained unrealized i.e. (i) No.463471 of the value of Rs. 30000 (ii) No. 430811 and (iii) No. 430814 with regard to them the appellant applied for write off to RBI and also for extension of time. The two GRIs No.430811 and No.430813 are realized as can be seen from two letters of the Canara Bank of dated 8.2.94 and 12.3.94. Though these two GRIs are received after lapse of considerable period but the receipt of the export price by itself will at least displace the adverse pesumption to certain extent if not completely.


14. Looking towards the factual position in above paragraphs it becomes quite clear that appellant has failed to realize export proceeds of 3 GRIs.


15. This is an admitted position that export price of 3 GRIs is not received and other price though received but after expirty of the extended period by RBI. The pendency of request of extension or write off can hardly make this case favourable to the appellant because pendency by itself cannot be treated as grant of write off or extension. This legislature

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has chosen RBI as delegate to exercise this power who has not exercised this power so the appellant is required to be held guilty so far as price of the 3 GRIs is concerned. Therefore this appeal is required to be allowed partly but the appellant is held guilty for contraventin of the Section 18(2) read with 18(3) with regard to price of the 3 GRIs. Hence, the penalty is required to be reduced to Rs. 1 lakh from the present penalty of Rs. 3,50,000. 16. For the reasons stated hereinabove, this appeal is partly allowed. The impugned order is sustained and maintained so far as conclusion of holding guilty is concerned but penalty is reduced to Rs. 1 lakh. The penalty can be appropriated towards the pre-deposited amount whereafter the Enforcement Directorate return the remaining amount if any to the appellant within two weeks from the date of this order.
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