M/S. BHARAT CARPETSversusDIRECTOR, ENFORCEMENT DIRECTORATE

                     [2008] 10 S.C.R. 105


                 MIS. BHARAT CARPETS                             A
                              v.
      DIRECTOR, ENFORCEMENT DIRECTORATE
           (Criminal Appeal No. 38 of 2003)
                       JULY 7, 2008
                                                                 B
     [DR. ARIJIT PA5AYAT AND G.5. 51NGHVI, JJ.]

      Foreign Exchange Regulations Act, 1973: s. 18(2) and
(3) - Non-Repatriation of export proceeds - Penalty - Impo-
sition of - Held: Penalty rightly imposed as no material put     c
forth by appellant-exporter for having taken any steps for re-
patriation of the amount involved - s.18(3) creates rebutable
legal presumption against exporter whenever prescribed pe-
riod expires without repatriation of export proceeds that the
requisite steps to obtain repatriation were not taken .
                                                                 D
     A notice was issued against the appellant-Firm and
partners to show cause as to why action be not taken
against them for non realization of export proceeds. The
authorities were not satisfied with the reply of appellant
and imposed penalty of Rs.80,000 on the appellant firm E
and Rs.10,000 each on the 2 partners. Hence the present
appeal.
     Dismissing the appeal, the Court
      HELD: Appellants had placed no material whatso- F
ever as to what steps were taken for repatriation of the
amount involved. According to s.18(2) of Foreign Ex-
change Regulations Act, 1973, the exporter is required to
repatriate the sale proceeds within the prescribed period
of six months. 5.18(3) creates a rebutable legal presump- G
tion against the exporter whenever the prescribed period
expires without repatriation of the export proceeds to the
effect that exporter had not taken requisite steps to ob-
tain repatriation of the payment. [Para 7] [109-C,D & E]
                             105                                 H
    106       SUPREME COURT REPORTS                [2008] 10 S.C.R.


A        CRIMINALAPPELLATE JURISDICTION: Criminal Appeal
    No. 38 of 2003
         From the final Judgment and Order dated 30.1.2002 of
    the Appellate Tribunal for Foreign Exchange, New Delhi in Ap-
    peal No. 372 of 1999
B
          Indra Makwana for the Appellant.
        M. Chandrasekharan, A.S.G. Manish Pushkarna, Vikas
    Sharma, Sanjeev Bhardwaj and B. Krishna Prasad for the Re-
    spondent.
c
          The Judgment of the Court was delivered by·
          Dr. ARIJIT PASAYAT, J. 1. Challenge if.I this appeal is to
    the judgment of the Appellate Tribunal for Foreign Exchange,
    New Delhi (in short the 'Tribunal'). In the appeal before the Tri-
o   bunal challenge was made by three appellants i.e. the present
    appellant and two of its partners to the adjudication order dated
    ~ 5.6.1999 passed by the Assistant Director, Enforcement Di-
    rectorate imposing total penalty of Rs.1,00,000/- i.e. Rs.80,000/
    - against the appellant firm and Rs.10,000/- each against the
E   two partners for alleged violation of Section 18(2) and 18(3) o~ _
    the Foreign Exchange Regulation Act, 1973 (in short the 'Act}
          2.Background facts in a nutshell are as follows:
        A Show Cause Notice (in short 'SCN') No.T-4/340/0/94-
F SCN/DD/8097 to 8100 dated 30.9.1994 was issued to Appel-
  lant M/s Bharat Carpets (a Partnership Firm}and two of its part-
  ners, i.e., (1) Abdul Rasheed; and (2) Abdul Waheed asking
  them to show cause why adjudication proceedings under Sec-
  tion 51 of the Act should not be held against them for non-
G realisation of export proceeds under GR(1) PP No. AA-677411
  dated 2.4.1992 of the value equivalent to Indian Rs.2, 18;833/-
  arid (2) GP-576895 dated 13.5.1991 of the value equivalent to
  Indian Rs.2,93,338/-, i.e. a sum total of Rs.5,12,171/-, within
  the stipulated period of six months or the extended perioc:i of
H RBI, if any, in contravention of the provisions' of Section 18(2)
                      MIS. BHARAT CARPETS v. DIRECTOR,        107
         ;.     ENFORCEMENT DIRECTORATE [DR. ARIJIT PASAYAT, J]

____,'        read with 18(3) of the Act and Notification No.F/67/EC/73-1 &3        A
              both dated 1.1.1974.
                    The noticees gave written reply to the SCN stating that
              with regard to GP No. 576895 dated 13.5.1991 they have been_
         •    continuously in correspondence with the authorized banker for
              the remittance of export proceeds from foreign buyer and final        B
              reply will be submitted after receipt of the same. With regard to
              other GR/PP No.AA-676411 dated 2.4.1992, it was replied that
              the shipment through Japanese Airlines was dispatched.to the
              original consignee, i.e., M/s Rose Carpets. But within a short
              period but before delivery (either of goods or Bill of Lading);       c
              the appellants came to know the weak financial position of con-
              signee; so they requested through their banker to intimate the
              foreign bank not to deliver documents of title of goods to M/s
         t    Rose carpets but to change such document delivery to new
              buyer Mis Roman -Inc., 100, Park Plaza Drives. The authorized         D
              dealer/banker instead of sending the requested communica-
              tion dated 16/17th April, 1992, to the correct office of the for-
              eign bank, sent it to a wrong place and that is why the title docu-
              ments were wrongly handed over despite clear instructions to
              the contrary whereby the consignment was delivered to original        E
              consignee Mis Rose Carpets. In this way, the appellants can-
              not be held guilty of the non-realisation of the export proceeds
              of PP No. AA-677411 dated 2.4.1992 inasmuch as that the
              wrong delivery, despite appellant's timely action, cannot only
              be attributed to the authorized dealer against whom the appel-        F
              lants are pursuing theiT remedies before the Civil Court and
              Consumer Disputes Redressal Forum. Because the financially
              weak original consignee did not pay, the appellants cannot be
              held guilty of.the violations.
                     3. The stand of the appellants before the Tribunal was that G
              consignment exported initially in the name of M/s Rose Car-
              pets was directed to fresh/new consignee Mis Roman Inc. and
              intimation to this effect was given to the authorized banker well
              within time to hand over the Bill of Lading to the new consignee.
              It is because of the misfeasance and malfeasance or negligence H
    108       SUPREME COURT REPORTS                  [2008] 10 S.C.R.
                                                                          ..i.

A of the authorized banker, the Bill of Lading was handed over to
  old consignee enabling him to take delivery of the goods. The
  appellants changed the consignee because of the anticipated
  non-payment by M/s Rose Carpets due to its weak financial
  position, and the negligence of the authorized banker cannot            •
B be   a factor against the appellants and their conduct cannot be
  faulted. It was also contended that the exported goods never
  reached the intended consignee and, therefore, goods in ques-
  tion cannot be termed as exported goods under Section 18 of
  the Act. Further, the initiation of legal proceedings against Mis
c Rose Carpets, whose financial position is too bad, can be of
  little use except to add to the total loss of the appellants who
  had already suffered badly.
        4. On the other hand, learned counsel for the respondent            ,-
  contended that the appellants exported the goods in the year                 '
D 1991-92 and what to say of repatriation of export proceeds
  within six months the export proceeds have not been repatri-
  ated even long after. No extension from RBI was obtained ei-
  ther, so the impugned order is perfectly correct and requires to
  be ,maintained.
E        5. So far as the consignment dated 2.4.1992 is concerned,
  the Tribunal accepted the stand of the appellants before it and
  exonerated them. It was noted, however, by the Tribunal that the
  appellants did not place any materi?I so far as the repatriation        I
  of Rs.2,93,338/- relating to goods exported by PP- 576895
F dated 13.5.1991 and no arguments was advancE:d in the facts
  of the individual liability of the partners. In that view of the mat-
  ter, the Tribunal held that the appellants have been rightly held
  as guilty for having committed violation of Section 18(2) of the
  Act. The penalty amount was, however, reduced \o Rs.60,000/
G - so far as present appellant is concerned. Since deposit of
  Rs.80,000/-had been made by it, the remaining amount of                  )       I



  Rs.20,000/- was directed to be refunded.
          6. In support of the appeal, learned counsel for the appel-
    lants submitted that because of the deficiency in services of the
H
             M/S. BHARAT CARPETS v. DIRECTOR,       109
       ENFORCEMENT DIRECTORATE [DR. ARIJIT PASAYAT, J]

    bank, action has been taken and, therefore, the appellant should        A
    not have been held guilty.
          7. Learned counsel for the respondent on the other hand
    submitted that so far as the goods sent by GR/PP No. AA
    677 411 dated 2.4.1992 is concerned, material was placed by
    the appellants to show that it had taken for all possible score.        8
    Therefore, the Tribunal has held that the appellants are not guilty.
    So far as the other consignment is concerned, as rightly noted
    by the Tribunal, no material was placed relating to repatriation
    of the amount involved. He, therefore, submitted that no inter-
    ference is called for. Additionally, it. is submitted that the appel-   C
    lant had an alternative remedy under Section 54 of the Act which
    has not been availed and, therefore, the appeal should be dis-
    missed. We need not go into the question relating to the alter-
    native remedy. Appellants had placed no material whatsoever
i   as to what steps were taken for repatriation of the amount in-          D
    volved. According to Section 18(2) without general or special
    permission of the Reserve Bank of India, the exporter is re-
    quired to repatriate the sale proceeds within the prescribed
    period of six months. Section 18(3) creates a rebutable legal
    presumption against the exporter whenever the prescribed pe-            E
    riod expires without repatriation of the export proceeds to the
    effect that exporter had not taken requisite steps to obtain re-
    patriation of the payment.
         8. Above being the position, we find no merit in the appeal
    which is accordingly dismissed.                                         F
    D.G.                                           Appeal dismissed.