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Complainant Evidence

5. PW-1 is complainant/S. C. Adlakha, Chief Enforcement Officer, who deposed on the lines of complaint. PW-1 deposed that accused persons did not take effective steps to realize the outstanding export proceeds and vide communication dated 01.07.1997, 06.09.1997 and 02.06.1999, the authorized dealer i.e. Syndicate Bank submitted details along with documents in respect of outstanding export proceeds along with names and addresses of two partners of accused no. 1 i.e. accused no. 2 and accused no. 3. Letter dated 01.07.1997 is Ex. PW 1/A. Letter dated 06.09.1997, vide which Syndicate Bank submitted the details of outstanding export bills along with photocopies of duly certified GRs, is Ex. PW 1/B. CC No:- 19062/16 Enforcement Directorate v. M/s House of Services & Ors. Page No:- 3 of 36 AKASH Date:

6. PW-2 is Varun Sharma, Assistant Manager, Syndicate Bank, International Business Branch, Connaught Place. He deposed that the aforesaid branch is an authorized dealer in CC No:- 19062/16 Enforcement Directorate v. M/s House of Services & Ors. Page No:- 4 of 36 AKASH by AKASH JAIN JAIN 2022.03.31 17:13:25 +0530 foreign exchange and looks after the payments or remittances in respect of import and export deals. He brought 13 outstanding GR-1 Forms in original in Court, copies of which had already been exhibited as Ex. PW 1/F-1, Ex. PW 1/F-2, Ex. PW 1/F-3, Ex. PW 1/F-7, Ex. PW 1/F-16, Ex. PW 1/F-17, Ex. PW 1/F-18, Ex. PW 1/F-19, Ex. PW 1/F- 20, Ex. PW 1/F-21, Ex. PW 1/F-23, Ex. PW 1/F-26, Ex. PW 1/F-27, which shows that the concerned party failed to realize the outstanding export proceeds as mentioned in aforesaid GR-1 Forms. PW-2 added that RBI had issued the permission to their bank i.e. Syndicate Bank to write off these bills subject to the condition that the party first refund the duty drawback claimed by them from the Customs Department. He further stated that till date the concerned party did not pay back the said duty drawback to the Department which is the mandatory condition, as such, the aforesaid GR-I Forms are still outstanding. During cross- examination PW-2 was shown letter Mark DX-A dated 05.12.2008 and Mark DX-B dated 24.12.2003, to which PW-2 expressed ignorance.

25. It is argued by Ld. Counsel for accused persons that during defence evidence, DW-1 brought on record multiple letters to demonstrate efforts taken by accused persons for recovery of outstanding export dues. The accused no. 1 further made numerous representations to RBI as well as Syndicate Bank CC No:- 19062/16 Enforcement Directorate v. M/s House of Services & Ors. Page No:- 15 of 36 AKASH by AKASH JAIN JAIN 2022.03.31 17:14:48 +0530 for extension, write off, approval of adjustment of export proceeds against import remittances in respect of outstanding GR-1 Forms.

"... To put, it in similar language what section 18(2) provides, insofar as relevant for the purposes of these appeals, is that if the full export value of the goods has not been realised within the prescribed period or if the realisation of full export value of the goods has been delayed beyond the prescribed period, it would amount to contravention of section 18(2) unless the exporter proves that he has taken all reasonable steps to realise the outstanding export proceeds. However, there will be no contravention, even if the export proceeds, in full or in part, have not been realised, if the prescribed period of 6 months or the period extended by the Reserve Bank has not expired. Similarly, there will be no contravention of section 18(2) if the Reserve Bank has granted permission to the exporter by writing off the outstanding proceeds and treated the matter as closed or as in order by directing the release of the concerned GR Forms. It is now judicially settled after the Supreme Court's judgment in Life Insurance Corporation of India v. Escorts Ltd. AIR 1986 SC 1370 that the Reserve Bank is empowered to grant an ex post facto permission under section 18(2) or extension of time under the second proviso to rule 8. It would thus be noted that a mere non- realisation of export proceeds or realisation or export proceeds after the expiry of the prescribed period, by itself, would not amount to contravention of section 18(2), unless the Reserve Bank, if approached, has refused to grant the permission contemplated Section 18(2) or has refused to extend the period as contemplated under Rule 8 of the Foreign Exchange Regulation Rules, 1974. It would therefore follow that if an application seeking extension of time or for permission for writing off the outstanding export proceeds is pending consideration of the Reserve Bank, the question whether there has been a contravention of CC No:- 19062/16 Enforcement Directorate v. M/s House of Services & Ors. Page No:- 25 of 36 AKASH by AKASH JAIN JAIN 2022.03.31 17:15:57 +0530 the provisions of Section 18(2) cannot be determined unless and until the Reserve Bank has refused extension of time or the permission for writing off, as the case may be. If any adjudication proceedings are initiated during the pendency of such applications before the RBI, such proceedings would be pre-mature and without jurisdiction..."