Legal principle

Failure to furnish a Bill of Export cannot, by itself, justify denial of EPCG export benefits where supplies to an SEZ unit satisfy the FTP definition of 'deemed export' and are otherwise proved by collateral evidence such as supply invoices and Bank Realisation Certificates.

Court decision

The court dismissed the Review Petition, upholding its earlier judgment in favour of Holoflex: so long as the supplies to Nokia satisfied the definition of 'deemed export' in para 8.1 of the FTP, denial of EPCG benefit merely because no BOE was furnished was unsustainable, given ample proof of supplies and remittance.

Facts

Holoflex imported capital goods duty-free in February 2005 under an EPCG license, saving customs duty of about ₹2,11,237 against a corresponding export obligation. It then sold ICA holograms manufactured from those goods to Nokia, a unit in the Nokia Telecom SEZ in Tamil Nadu, under a 2007 Product Purchase Agreement, and filed supply invoices and Bank Realisation Certificates with the DGFT as proof of discharge of the export obligation. The DGFT rejected the duty exemption claim, insisting that only Bills of Export (BOEs) could prove export obligation fulfilment, and the learned Single Judge upheld that rejection on 22 February 2019. The Division Bench allowed Holoflex's LPA on 28 February 2020, and the Union of India then sought review of that judgment, the total revenue involved being about ₹2 lakhs.

Key provisions

• Section 50, Customs Act, 1962 — Entry of goods for exportation
• Section 2(18), Customs Act, 1962 — Definitions
• Section 16, The Integrated Goods and Services Tax Act, 2017 — Zero rated supply.