TaxTMI 
TaxTMI 
2026 (3) TMI 1257
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.... of the decision can legitimately be sought. Keeping in mind the fact that the issue involves an interpretation of certain provisions of the Foreign Trade Policy ["FTP"] and the Handbook of Procedures ["HBP"] 2004-2009, we agreed to entertain the review petition and reconsider the issue. 4. A second feature which requires to be noted is that the total revenue implication in this case is all of Rs. 2 lakhs. Again, as review was sought on a point of law, we have not been allowed ourselves to be swayed by the revenue involved. 5. We now proceed to advert to the judgment, of which review is sought. Allusion to facts, would be made only to the extent necessary for deciding this review petition. B. The Judgment under Review 6. On 27 January 2005, Holoflex was issued a license under the EPCG [Exports Promotion Capital Goods] Scheme, contained in Chapter 5 of the FTP, which permitted Holoflex to import, duty free, capital goods valued at Rs. 2,17,317.25 against corresponding export obligation of Rs. 17,38,538. The export obligation was required to be discharged on or before 27 January 2013. 7. Using the EPCG license issued to it, Holoflex imported capital goods, saving custo....
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....ent under review, did not agree, and set aside the judgment of the learned Single Judge. We agreed with the contention of learned Counsel for Holoflex that para 5.13(b) of the HBP applies and that, therefore, supply invoices evidencing supply of holograms to Nokia, accompanied by BRCs evidencing receipt of payment, against such supply, in foreign exchange, sufficed as proof of fulfilment of export obligation. 12. The DGFT, in this Review Petition, contends that, in so holding, the judgment under review, rendered by us, suffers from an error apparent on the face of the record, meriting review. 13. We have heard Ms. Shiva Lakshmi, learned CGSC for the DGFT and Mr. Kumarjit Banerjee, learned Counsel for Holoflex, at length, and have considered the material on record. C. Rival Contentions I. Submissions of Ms. Shiva Lakshmi 14. Ms. Shiva Lakshmi submits that this Court erred in treating supplies, by a unit in the Domestic Tariff Area ["DTA"] to a unit in the SEZ, as "deemed exports". She submits that supplies to the SEZ constitute "exports", and not "deemed exports". Fulfilment of export obligation, via such supplies, she submits, is covered by paragraph 5.13(a)^2, which....
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....This Rule, too, points out Ms. Shiva Lakshmi, clarifies the position that the SEZ Act and SEZ Rules would apply. Rule 30(3)^7 of the SEZ Rules allows admission of goods produced by a Unit or Developer under claim of export entitlements into the SEZ only on the basis of the documents referred to in Rule 30(1)^8 and a BOE filed by the supplier, or on his behalf by the Unit or Developer, assessed by the Authorised Officer before the goods arrive. In the event that the goods arrive before the BOE is filed and assessed, in fact, the Rules do not allow entry of the goods in the SEZ, and the goods have to be retained in an area designated for this purpose. The release of the goods into the SEZ is permitted only after the BOE is completely assessed. Rule 30(6)^9 requires the BOE to be assessed in accordance with the procedure laid down for assessment of export goods. Rule 30(9)^10 - which was later omitted with effect from 19 September 2018 - provided that an endorsed copy of the ARE-1 and BOE would be treated as proof of export. The requirement of a BOE as a necessary document as evidence of proof of export of goods to the SEZ, she submits, also finds place in Circular 29/06-Cus dated 27 ....
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....High Court of Andhra Pradesh in Tirupati Udyog Ltd v. Union of India 2011 (272) ELT 209 (AP). D. Analysis I. The Dispute - Para 5.13(a) or 5.13(b)? 24. If the supplies made by Holoflex to Nokia are physical exports, para 5.13(a) of the HBP would apply, and Holoflex would have to furnish a BOE as proof of fulfilment of export obligation in order to be entitled to EPCG benefits. If, on the other hand, they are "deemed exports", para 5.13(b) would apply, and the supply invoices accompanied by BRCs would suffice as proof of discharge of export obligation by Holoflex. 25. On this, learned Counsel are ad idem. II. Paras 8.1 and 8.2 of the FTP 26. Inasmuch as the entitlement to EPCG benefits arises under the FTP, there can be no manner of doubt that the issue of whether supplies would, or would not, constitute "deemed exports" has pre-eminently to be decided on the basis of Chapter 8 of the FTP, which is entirely devoted to "deemed exports". Paras 8.1 and 8.2 of Chapter 8 read thus: "8.1 Deemed Exports: "Deemed Exports" refers to those transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian....
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....es are not deemed exports. There is nothing, in Clause 8.2, to indicate that it is exhaustive of the categories of supplies which would qualify as deemed exports. Indeed, if that were so, Clause 8.1 would be rendered superfluous. 28. We, therefore, are of the view that, while the categories of supplies enumerated in clauses (a) to (j) of Para 8.2 would unquestionably qualify as deemed exports, any other supply, which conforms to Para 8.1, would also so qualify. 29. Besides, Para 8.2 deals with supply of goods by contractors or sub-contractors. There is no allegation, by the DGFT, that Holoflex is either a contractor or a sub-contractor. Even on that ground, therefore, Para 8.2 of the FTP would, prima facie, not apply to the supply of goods by Holoflex to Nokia. 30. An SEZ is not located outside the country even if, for certain purposes, supplies to the SEZ are treated as "exports" under the SEZ Act. Mr. Banerjee is, therefore, correct in his submission that the supply of holograms by Holoflex to Nokia satisfy the description of "deemed exports", as contained in para 8.1 of the FTP. 31. Ms. Shiva Lakshmi's submission to the contrary is, therefore, rejected. III. The S....
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....s operations authorised under Section 4(2)^11 and Section 15(9)^12. Sections 4(2) and 15(9) refers to operations which a Developer is authorised to undertake in a SEZ, by the Board of Approval constituted under Section 8(1) of the SEZ Act and the Central Government. 43. It is settled, in law, that a deeming fiction has to be restricted to the purposes for which it is created, especially by the purpose is clearly spelt out in the statute. Inasmuch as Section 53(1) specifically deems a SEZ to be a territory outside the customs territory of India only for purposes of undertaking authorised operations, it is clear that this fiction would not extend to determining whether supplies by a DTA Unit to a unit in the SEZ would constitute "export" or "deemed export". Had the legislature intended to deem the SEZ to be a territory outside the customs territory of India for all purposes, it could clearly have said so. 44. The provisions of the SEZ Act, on which Ms. Shiva Lakshmi relies do not, therefore, advance the case of the DGFT. III. D Re. Rule 23 of the SEZ Rules 45. Proceeding, now, to the SEZ Rules, Rule 23 clearly states that supplies from a DTA to a Unit or Developer for the....
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....d with export incentives available to DTA units. IV. DGFT Policy Circular 04/2024 dated 3 June 2024 50. Incidentally, the DGFT, on 3 June 2024, issued Policy Circular 04/2024, relaxing the requirement of submission of the BOE as evidence of discharge of export obligation for supplies made to SEZ units in case of Advance Authorizations. The Circular read thus: "Government of India Ministry of Commerce and Industry Department of Commerce Directorate General of Foreign Trade Vanijya Bhawan, Akbar Road, New Delhi Policy-4 Division ***** Policy Circular No. 04/2024 Dated: 3rd June 2024 To All Regional Authorities of DGFT All Exporters/Members of Trade All Custom Authorities Subject: Relaxation in the provision of submission of 'Bill of Export' as evidence of export obligation discharge for supplies made to SEZ units in case of Advance Authorisation. Para 4.21 (iv) of FTP specifies that the authorisation holder needs to file Bill of Export for export to SEZ unit/developer/co-developer in accordance with the procedures given in SEZ Rules. As per Para 4.24 (b) of FTP the above Para 4.21....
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....inst supplies made to an SEZ, absent any BOEs, came up for consideration before a Division Bench of the High Court of Bombay in Larsen & Toubro Ltd v. Union of India 2018 (360) ELT 289 (Bom). The High Court held that, so long as there was collateral evidence of discharge of export obligation, failure to furnish BOEs could not be cited as a sole basis to deny export entitlements. The Special Leave Petition preferred against the judgment was dismissed by the Supreme Court. Subsequently, in Phoenix Industries Ltd v. Union of India 2024 SCC OnLine Bom 2704, another Division Bench of the High Court of Bombay reiterated the same position noting, additionally, the issuance of Policy Circular No. 04/2024 dated 3 June 2024 by the DGFT. E. Conclusion 52. No ground, except for failure, on Holoflex's part, to submit BOEs, was raised by Ms. Shiva Lakshmi to seek review of our judgment. 53. We are not satisfied that a case for review is made out. 54. The Review Petition is dismissed. ------------------ Notes: 1. (b) For Deemed Exports: (i) Copy of ARO/Back to back Inland letter of Credit or Advance Licence for Immediate Supplies ....
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....23. Supplies from the Domestic Tariff Area to a Unit or Developer for their authorized operations shall be eligible for export benefits as admissible under the Foreign Trade Policy. 7. (3) The goods procured by a Unit or Developer under claim of export entitlements shall be allowed admission into the Special Economic Zone on the basis of documents referred to in sub-rule (1) of Rule 30] and a Bill of Export filed by the supplier or on his behalf by the Unit or Developer and which is assessed by the Authorised Officer before arrival of the goods: Provided that if the goods arrive before a Bill of Export has been filed and assessed, the same shall be kept in an area designated for this purpose by the Specified Officer and shall be released to the Unit or Developer only after completion of the assessment of the Bill of Export. 8. 30. Procedure for procurements from the Domestic Tariff Area. - (1) The Domestic Tariff Area supplier supplying goods or services to a Unit or Developer shall clear the goods or services, as in the case of zero-rated supply as per provisions of Section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) either under bond or legal un....