M/S. BHARAT CARPETS versus DIRECTOR, ENFORCEMENT DIRECTORATE

Citation: [2008] 10 S.C.R. 105 · Decided: 07-07-2008 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Dismissed
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Judgment (excerpt)

[2008] 10 S.C.R. 105 
MIS. BHARAT CARPETS 
v. 
DIRECTOR, ENFORCEMENT DIRECTORATE 
(Criminal Appeal No. 38 of 2003) 
JULY 7, 2008 
[DR. ARIJIT PA5AYAT AND G.5. 51NGHVI, JJ.] 
Foreign Exchange Regulations Act, 1973: s. 18(2) and 
A 
B 
(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 
B 
c 
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 
Indra Makwana for the Appellant. 
M. Chandrasekharan, A.S.G. Manish Pushkarna, Vikas 
Sharma, Sanjeev Bhardwaj and B. Krishna Prasad for the Re-
spondent. 
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-677 411 
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 
t 
foreign bank not to deliver documents of title of goods to M/s 
Rose
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