Export Benefits Cannot Be Denied To Holoflex For Missing Bill Of Export if Supply Is Proven: Delhi High Court

The Delhi High Court has recently held that export incentives under the Export Promotion Capital Goods (EPCG) Scheme cannot be denied solely on the ground that the exporter failed to furnish a Bill of Export (BOE), where there is otherwise sufficient evidence of supply of goods and receipt of payment.

A Division Bench of Justices C. Hari Shankar and Om Prakash Shukla made the observation while dismissing a review petition filed by the Union of India challenging an earlier judgment granting EPCG benefits to Holoflex Ltd.

“So long as the supplies by Holoflex to Nokia satisfy the definition of 'deemed export' as contained in para 8.1 of the FTP, we are not prepared to uphold the denial, to Holoflex, of the benefit of EPCG export benefits on the basis of Rule 30 of the SEZ Rules, on the ground that they did not furnish a BOE, when there is otherwise ample proof of their having effected supplies to Nokia, and received remittance thereagainst,” the court said.

Holoflex Ltd claimed that it had fulfilled its export obligation under an EPCG licence by supplying holograms to a unit in the Nokia Telecom Special Economic Zone and receiving payment for the same.

The Directorate General of Foreign Trade had denied the benefit on the ground that Holoflex had not produced Bills of Export as proof of export, contending that such documents were mandatory.

Rejecting the Union's contention, the court held that entitlement to export incentives must be determined primarily under the Foreign Trade Policy and the Handbook of Procedures, which govern such benefits.

It held that, in the facts of the case, the supplies made by Holoflex to the SEZ unit satisfied the definition of “deemed exports” under para 8.1 of the Foreign Trade Policy. Consequently, under the applicable provisions of the Handbook of Procedures, supply invoices along with Bank Realisation Certificates evidencing receipt of payment constituted sufficient proof of discharge of export obligation.

The court also noted a subsequent policy circular issued by the Directorate General of Foreign Trade relaxing the requirement of furnishing a Bill of Export for certain export schemes, observing that it would be unreasonable to deny EPCG benefits merely for non-submission of BOEs when other corroborative evidence exists.

Finding no error apparent in its earlier judgment, the Court dismissed the review petition.

For Appellants: Advocates Kumarjit Banerjee, Gaurav Gupta and Rupal Gupta

For Respondent: Shiva Lakshmi, CGSC with  Advocate Madhav Bajaj for UOI