Deemed exports for EPCG redemption can be proved by invoices and bank realisation certificates, not only a Bill of Export.

Supplies by a Domestic Tariff Area unit to an SEZ unit were treated as deemed exports under the Foreign Trade Policy when the goods remained within India and payment conditions were satisfied. On that basis, supply invoices and bank realisation certificates were accepted as sufficient proof for discharge of EPCG export obligation. The SEZ Act and SEZ Rules did not displace the Foreign Trade Policy or make a Bill of Export the exclusive evidence for EPCG redemption, because the statutory deeming fiction under the SEZ regime is confined to its own purpose and cannot be extended to rewrite the export incentive scheme.

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Issues: (i) whether supplies made by a Domestic Tariff Area unit to a unit in a Special Economic Zone constituted deemed exports under the Foreign Trade Policy so as to permit discharge of EPCG export obligation by supply invoices and bank realisation certificates; (ii) whether the Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006 displaced the Foreign Trade Policy and required a Bill of Export as the only proof of export obligation discharge.

Issue (i): whether supplies made by a Domestic Tariff Area unit to a unit in a Special Economic Zone constituted deemed exports under the Foreign Trade Policy so as to permit discharge of EPCG export obligation by supply invoices and bank realisation certificates.

Analysis: Paragraph 8.1 of the Foreign Trade Policy defines deemed exports as transactions in which the goods supplied do not leave the country and payment is received in Indian rupees or free foreign exchange. Paragraph 8.2 lists recognised categories of deemed export, but it is not exhaustive of every supply that answers the broader definition in paragraph 8.1. Supplies to a Special Economic Zone unit remain supplies within India and can satisfy the definition of deemed exports when the payment condition is met. The supply invoices and bank realisation certificates therefore constituted adequate proof of discharge of the export obligation.

Conclusion: The issue is answered in favour of the respondent. The supplies were deemed exports and did not require treatment as physical exports for EPCG redemption.

Issue (ii): whether the Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006 displaced the Foreign Trade Policy and required a Bill of Export as the only proof of export obligation discharge.

Analysis: Section 2(m)(ii), Section 51 and Section 53(1) of the Special Economic Zones Act, 2005 operate within the statutory field of the SEZ regime and the legal fiction in Section 53(1) is confined to the purpose for which it is created, namely authorised operations. That fiction cannot be extended to rewrite the EPCG scheme under the Foreign Trade Policy and Handbook of Procedures. Rule 23 of the Special Economic Zones Rules, 2006 recognises export benefits for supplies from the Domestic Tariff Area, and Rule 30 regulates admission and proof within the SEZ framework, but those provisions do not override the export incentive regime governing EPCG redemption. The later DGFT policy relaxation also reinforced that insistence on a Bill of Export was not indispensable where other corroborative evidence existed.

Conclusion: The issue is answered in favour of the respondent. The SEZ provisions did not override the Foreign Trade Policy so as to make a Bill of Export the exclusive proof of fulfilment of export obligation.

Final Conclusion: The review failed because no error apparent on the face of the record was shown in the earlier decision holding that the EPCG obligation could be discharged on the basis of deemed exports supported by supply invoices and bank realisation certificates.

Ratio Decidendi: A statutory deeming fiction is confined to the purpose for which it is created, and where the foreign trade scheme itself treats in-country supplies as deemed exports, compliance may be proved by the documents recognised under that scheme rather than by insisting on a Bill of Export unless the governing law clearly makes it indispensable.

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