Case Note & Summary
The petitioner, Phoenix Industries Limited, engaged in manufacturing and export of non-ferrous metal alloys, obtained an Advance Authorisation (AA) for duty-free import of goods to be used in export of Zinc Alloy Ingots to a Special Economic Zone (SEZ) unit. The petitioner supplied goods to the SEZ unit but inadvertently failed to prepare and file Bills of Export, though other documents such as ARE-1 forms duly assessed by the proper officer were submitted. The export obligation period expired, and the petitioner sought extension and later applied for redemption of the AA. The respondents, including the Union of India and the Directorate General of Foreign Trade (DGFT), rejected the request on the ground that Bill of Export is mandatory for discharge of export obligation. The petitioner challenged this decision before the Bombay High Court. During the proceedings, the DGFT issued Policy Circular No.4/2024 dated June 3, 2024, relaxing the requirement of submission of Bill of Export for supplies made to SEZ units prior to July 1, 2017. The court noted that out of 37 supplies, 29 were covered by this circular, and directed the respondents to issue Export Obligation Discharge Certificate (EODC) for those supplies. For the remaining 8 supplies, the court remanded the matter to the Policy Relaxation Committee for fresh consideration, taking into account the judgment in Larsen & Toubro Limited v. Union of India, which held that refusal to relax export obligations in the absence of Bill of Export is unjustified when other evidence exists. The court allowed the petition in part, setting aside the impugned decisions and directing the respondents to consider the case afresh.
Headnote
A) Foreign Trade Policy - Export Obligation Discharge - Advance Authorisation - Supplies to SEZ - Requirement of Bill of Export - The court considered whether the Policy Relaxation Committee's rejection of the petitioner's request to condone the non-submission of Bills of Export for supplies to SEZ units was justified. The court held that the Policy Circular No.4/2024 dated 3rd June 2024, which relaxes the requirement of submission of Bill of Export for supplies made to SEZ units prior to July 1, 2017, must be applied. For supplies after that date, the matter was remanded for fresh consideration in light of the judgment in Larsen & Toubro Limited v. Union of India. (Paras 8-11) B) Foreign Trade Policy - Policy Relaxation Committee - Power to Condon Procedural Lapses - The court held that the Policy Relaxation Committee has the power to condone technical or procedural lapses, and the refusal to do so in the present case was unjustified, especially when other documents like ARE-1 forms were available. (Paras 10-11)
Issue of Consideration
Whether the refusal to accept supplies made to SEZ units in discharge of export obligation under Advance Authorisation solely on the ground of non-submission of Bills of Export is legally valid when other evidence of export exists.
Final Decision
The court allowed the petition in part. It directed the respondents to issue EODC for 29 supplies covered by Policy Circular No.4/2024 (supplies prior to July 1, 2017). For the remaining 8 supplies, the impugned decisions were set aside and the matter was remanded to the Policy Relaxation Committee for fresh consideration in light of the judgment in Larsen & Toubro Limited v. Union of India and the Policy Circular. The court also directed that the fresh decision be taken within 8 weeks.
Law Points
- Bill of Export is not mandatory for discharge of export obligation under Advance Authorisation for supplies to SEZ units
- Policy Relaxation Committee can condone procedural lapses
- Policy Circular 4/2024 relaxes requirement for supplies prior to July 1
- 2017
