Export Benefits cannot be Denied for Want of BOE alone: Delhi HC says Collateral Evidence of EO Discharge Sufficient [Read Order]

The Delhi High Court has ruled that export benefits under the EPCG Scheme cannot be denied just because the Bill of Export (BOE) is missing. The court said that if there is clear "collateral evidence" proving the goods were actually exported, such evidence is sufficient.

Holoflex Ltd., the petitioner was denied benefits for holograms it supplied to a Nokia unit in a Special Economic Zone (SEZ). The company had imported machinery duty-free under the condition that they’d export a certain amount of goods.

To prove they met this, they showed supply invoices and Bank Realisation Certificates (BRCs) proving they got paid. However, the Directorate General of Foreign Trade (DGFT) blocked the claim, insisting that without a Bill of Export, the proof was not valid.

The issue was that these supplies were "physical exports" (which require a BOE) or "deemed exports" (which do not).

The Court went through the Foreign Trade Policy (FTP) and decided that since the goods did not technically leave the country but were sent to an SEZ, they qualified as "deemed exports." Because they fell into this category, the invoices and bank records Holoflex provided were more than enough to satisfy the rules.

Justice C. Hari Shankar and Justice Om Prakash Shukla also noted that, while SEZs are legally treated as being "outside" India's customs territory for certain tax reasons, the bench clarified that this "legal fiction" should not be used to strip away an exporter's hard-earned incentives. Further, the definition of “export” under the SEZ Act was held to be confined to that statute and not determinative of entitlement under the FTP framework.

The high court also noted that the FTP and HBP constitute a self-contained code governing export incentives. Once the transaction satisfies the criteria of “deemed exports” under Para 8.1, compliance with Para 5.13(b) is sufficient.

In this case, the existence of undisputed supply invoices and BRCs conclusively established that Holoflex had fulfilled its export obligation. Therefore, denial of benefits solely in the absence of BOEs was held to be unjustified, noted the bench.

Additionally, the Court noted the cases Larsen & Toubro Ltd. v. Union of India, where it was held “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.

Further, in Phoenix Industries Ltd v. Union of India, another Division Bench of the High Court of Bombay confirmed the same position noting, additionally, the issuance of Policy Circular No. 04/2024 dated 3 June 2024 by the DGFT.

Therefore, the bench dismissed the Union of India’s review petition and upheld its earlier order.

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