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TMI BlogFILING OF BILL OF EXPORT FOR THE SUPPLY OF ‘SEZ’ UNITS – MANDATORY?X X X X Extracts X X X X X X X X Extracts X X X X ..... FILING OF BILL OF EXPORT FOR THE SUPPLY OF ‘SEZ’ UNITS – MANDATORY? - By: - Mr. M. GOVINDARAJAN - Customs - Import - Export - SEZ - Dated:- 30-8-2024 - Export Obligation Export Obligation is to be fulfilled by the authorization holder only by exporting goods, which are manufactured using the said machinery. Export obligation cannot be fulfilled by the export of alternate products not mentioned on the EPCG License. An export obligation period of an Authorization must be valid on the date of export. However, Advance Authorization ( AA for short), Export Promotion of Capital Goods ( EPCG for short) Authorization holder(s)may continue to export post the export obligation period at their own risk and responsibility. Issue The issue to be discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in this article is as to whether filing of Bill of Export is mandatory for the supply of SEZ units for the fulfillment of export obligation with reference to decided case laws. Case laws In LARSEN TOUBRO LIMITED, VERSUS UNION OF INDIA - 2017 (10) TMI 40 - BOMBAY HIGH COURT , the High Court was of the view that in the facts and circumstances of this case, the petitioner having duly supplied the copies of the ARE-1 forms, it is only a further technical objection, of the said form not mentioning the advance authorization number in the initial copies of the same but supplied later on, could have been condoned. It is not as if ARE-1 s have not been filed. It is not as if there is a doubt about the copy of ARE-1 s or the authenticity or genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness thereof. It is not anybody's case that there are no ARE-1 forms on record. Therefore, these forms were available. Therefore, the stand that there is no proof of export obligation being discharged, could not have been maintained once the petitioner was told to approach the Policy Relaxation Committee and it was empowered to relax any of the technical requirements or procedural matters. Equally, it was empowered to clarify in the facts of this case at least that the documents forwarded by the petitioner can be accepted as proof of export. The Union of India filed special leave petition before the Supreme Court against the order of High Court which was dismissed. This judgement was followed in subsequent cases. In PHOENIX INDUSTRIES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LIMITED VERSUS THE UNION OF INDIA, THE DIRECTOR GENERAL OF FOREIGN TRADE, NEW DELHI, THE ADDITIONAL DIRECTOR GENERAL OF FOREIGN TRADE, MUMBAI, THE COMMISSIONER OF CUSTOMS, MAHARASHTRA - 2024 (8) TMI 965 - BOMBAY HIGH COURT the petitioner is engaged in the business of manufacturing, refining and export of non-ferrous alloys metal in Dadar Nagar Haveli in Silvassa. The petitioner had received orders from Ideal Fasteners (India) Private Limited, in Special Economic Zone ( SEZ for short) for manufacture and supply of Zinc Alloy Ingots Zamak 5. For this purpose, the petitioner obtained Advance Authorization ( AA for short) for duty free import of goods that are used to export of final products to its customers in SEZ. The petitioner was permitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to import goods of CIF Value of Rs.3.74 crores against which export obligation of FOB value of Rs.4.36 crore. As the export obligation period expired the petitioner sought an extension which was granted. The validity of licence period was extended to 23.12.2017. Vide letter dated 26.11.2018 the petitioner filed an application for the redemption of AA. For this purpose, the petitioner submitted all the relevant documents. The petitioner received deficiency memos for two times. For the first memo the petitioner cured the defect vide letter dated 21.02.2019. In the second deficiency memo the petitioner was directed to attend the personal hearing if the deficiency was not cured. The personal hearing was given to the petitioner on 12.06.2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner submitted that the supply to the SEZ unit was under the invoices and the said invoices along with ARE-1 be considered as evidence of export in lieu of Bills of Export and requested to the issue of and Export Obligation Discharge Certificate ( EODC for short). The request of the petitioner was not accepted. The petitioner received an order by way of minutes of the meetings held on 21.06.2022 and 26.06.2023. The petitioner filed the present writ petition before the High Court challenging the legality and validity of the decisions taken by the Policy Resolution Committee in the meetings held on 21.06.2022 and 26.06.2023. The petitioner submitted the following before the High Court- The supply of goods to units located in SEZ is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed export and to be treated as a valid discharge of export obligation for the purpose of AA. The action on part of Respondents in not accepting the supplies made by Petitioner to units located in the SEZ in discharge of EO against AA issued to Petitioner solely on the ground of non-submission of Bills of Export , notwithstanding other evidence on record substantiating Petitioner s claim of export, is bad in law. the Directorate General of Foreign Trade ( DGFT ) has relaxed the provisions of submission of Bill of Export as evidence of export obligation discharge for supplies made to SEZ Unit in case of AA vide circular dated 03.06.2024. According to this circular the exporter may submit the following corroborative evidence in lieu of Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll of Exports - ARE 1 (showing the Advance Authorization No./DFIA File No.) duly attested by the jurisdictional central excise/GST authorities of AA holder/DFIA exporter; Evidence of receipt of supplies by the recipient in SEZ; Evidence of payment made by the SEZ unit to AA/DFIA exporter. The High Court observed that other than Bill of Export, the petitioner had supplied all other documents including the application in ARE-1 duly assessed by proper officer having jurisdiction over the factory of Petitioner and authorized officer having jurisdiction over the units located in SEZ have been submitted. The High Court held that if the party is able to show the proof of supply to SEZ Unit, then non-submission of Bill of Export cannot be treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s non-discharge of proof of EO. The failure to produce a copy of the assessed bill of export in respect of the supplies made to SEZ, would not necessarily result in holding that there was a failure to discharge export obligation where one is able to establish supplies made to SEZ by production of copies of ARE-1 . The petitioner agreed that he would submit the required documents as stipulated in the circular within 2 weeks from the date of the order. The High Court directed the Department that if the documents are in order the EODC should be issued within 4 weeks of the submissions of the documents. If the Department is having any query in this regard, they should give a personal hearing to the petitioner and decide the same. - Scholarly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... 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