Holoflex Ltd & Anr vs Union Of India & Ors - Review of Judgment

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Holoflex Ltd & Anr vs Union Of India & Ors on 23 March, 2026

Author: C. Hari Shankar

Bench: C. Hari Shankar

$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 21 January 2026
Pronounced on: 23 March 2026

                +        LPA 314/2019
                         HOLOFLEX LTD & ANR                              .....Appellants
                                           Through: Mr. Kumarjit Banerjee, Mr.
                                           Gaurav Gupta and Mr. Rupal Gupta, Advs.

                                           versus

                         UNION OF INDIA & ORS                    .....Respondents
                                       Through: Ms. Shiva Lakshmi, CGSC
                                       with Mr. Madhav Bajaj, Adv. for UOI
                         CORAM:
                         HON'BLE MR. JUSTICE C. HARI SHANKAR
                         HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
                                              JUDGMENT %                              23.03.2026

                C. HARI SHANKAR, J.

                A.       The lis 1.       The Union of India1 seeks, by means of this petition, review of
                judgment dated 28 February 2020, whereby we had allowed LPA
                314/2019 and set aside the judgment dated 22 February 2019 passed
                by learned Single Judge in WP (C) 1816/2019.

1 "UOI" hereinafter

1.    We may note two features at the outset.
   

2.    Firstly, as recorded in para 23 of the judgment under review,
               learned Counsel for the UOI had, at that stage, conceded to the
               position in law as advanced by learned Counsel for the appellant
               Holoflex Ltd2. Today, it is being sought to be urged that an erroneous
               concession in law does not bind, and review 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
               Policy3 and the Handbook of Procedures4 2004-2009, we agreed to
               entertain the review petition and reconsider the issue.
   

3.    A second feature which requires to be noted is that the total
               revenue implication in this case is all of ₹ 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.
   

4.    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

                2 "Holoflex" hereinafter
                3 "FTP" hereinafter
                4 "HBP" hereinafter 6.       On 27 January 2005, Holoflex was issued a license under the
                EPCG5 Scheme, contained in Chapter 5 of the FTP, which permitted
                Holoflex to import, duty free, capital goods valued at ₹ 2,17,317.25
                against corresponding export obligation of ₹ 17,38,538. The export
                obligation was required to be discharged on or before 27 January
                2013.

1.   Using the EPCG license issued to it, Holoflex imported capital
               goods, saving customs duty of ₹ 2,11,237, vide Bill of Entry dated 5
               February 2005. The corresponding export obligation which it was
               required to fulfil was ₹ 16,89,896.
   

2.   On 13 December 2007, Holoflex entered into a Product
               Purchase Agreement with Nokia India Pvt Ltd6, a unit situated in the
               Nokia Telecom Special Economic Zone7,Tamil Nadu, for sale of ICA
               Holograms manufactured using the imported capital goods. It is not in
               dispute that, pursuant to the Product Purchase Agreement, holograms
               were in fact sold by Holoflex to Nokia, of a value greater than the
               export obligation which Holoflex was required to discharge under the
               EPCG license, and that payment, thereagainst, was received by
               Holoflex, as required by the EPCG license. By way of proof of
               fulfilment of export obligation, Holoflex filed, with the authorities in
               the office of the Director General of Foreign Trade8 , the invoices
               under which the holograms were sold to Nokia, as well as Bank
   
               5 Exports Promotion Capital Goods
               6 "Nokia" hereinafter
               7 "SEZ" hereinafter
               8 "DGFT" hereinafter
   
                Realisation Certificates9 evidencing receipt of payment, against the
               supplies, from Nokia.
   

3.   The DGFT, however, disputed the entitlement of Holoflex to
               duty exemption under the EPCG license on the ground that proof of
               fulfilment of export obligation was required to be tendered by
               Holoflex by producing Bills of Export10, and that invoices and BRCs
               were not sufficient for the purpose. Holoflex contended, per contra,
               that the supplies by Holoflex to Nokia constituted "deemed exports"
   

under the FTP and that, in respect of deemed exports, Para 5.13(b)11 of
the HBP, issued under the FTP, specified supply invoices
accompanied by BRCs as the documents evidencing proof of
fulfilment of export obligation.
10. We may note, here, that the FTP and the HBP form part of a
composite scheme by which export incentives are made available
under the Foreign Trade (Development and Regulation) Act, 199212,
as held by the Supreme Court in Union of India v. Asian Food
Industries13.

9 "BRCs" hereinafter
10 "BOEs" hereinafter
11 (b) For Deemed Exports:

(i) Copy of ARO/Back to back Inland letter of Credit or Advance Licence for Immediate
Supplies
Or
Supply invoices or ARE-3 duly certified by the Bond Officer of EOU concerned showing
that the supplies have been received;

(ii) The licensee shall also furnish the evidence of having received the payment through
normal banking channel in the form given in the Appendix-22B or a self-certified copy of payment
certificate issued by the Project authority concerned in the form given in Appendix-22C.
12 "the FT (D & R) Act" hereinafter
13 (2006) 13 SCC 542

1. The learned Single Judge had, in his judgment dated 22
   February 2019, upheld the rejection, to Holoflex, of duty exemption
   under the EPCG scheme, agreeing with the contention of the DGFT
   that furnishing of a BOE as proof of exports was necessary in order to
   entitle Holoflex to the benefit of the EPCG license and that supply
   invoices accompanied by BRCs would not suffice. We, in our
   judgment 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.

2. 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.

3. 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 Area14 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)15,
                which applies to physical exports, and not para 5.13(b) of the HBP,
                which applies to deemed exports. Para 5.13(a) requires a BOE to be
                furnished as proof of discharge of export obligation. The learned
                Single Judge was, therefore, she submits, correct in upholding the
                rejection, to Holoflex, of export incentive against the EPCG license
                held by it, and we were in error in setting aside [the said decision](https://indiankanoon.org/doc/437310/).

1.   Ms. Shiva Lakshmi submits that "deemed exports" were
               defined in Chapter 8 of the FTP, and that supply of goods from the
               DTA to the SEZ did not fall within the categories of export which
               were regarded as "deemed exports". She further places reliance on
               Section 2(m)(ii)16 of the Special Economic Zones Act, 200517 , which
   
               14 "DTA" hereinafter
               15 5.13   Redemption
   

(a) For Physical Exports:

A consolidated statement of exports made in the form given in 'Aayaat Niryaat
Form', duly certified by a Chartered Accountant and bank evidencing exports and
realisation in freely convertible currency or statements of exports in the form given in
'Aayaat Niryaat Form' for individual banks duly certified by a Chartered Accountant.

However, in case of exports made under irrevocable letter of credit or bill of
exchange is unconditionally Avalised/ Co-Accepted/ Guaranteed by a bank and the same
is confirmed by the exporters bank , realisation of export proceeds would not be insisted
upon.

The EPCG license holder shall submit a copy of the irrevocable letter of credit
or the bill of exchange unconditionally Avalised/ Co-Accepted/ Guaranteed by a bank and
confirmed by the exporters bank for availing of the benefit of the EPCG.
16 (m) "export" means--

(i) taking goods, or providing services, out of India, from a Special Economic Zone, by land,
sea or air or by any other mode, whether physical or otherwise; or

(ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or
Developer; or

(iii) supplying goods, or providing services, from one Unit to another Unit or Developer, in
the same or different Special Economic Zone;

17 "the SEZ Act " hereinafter

                 includes "supplying goods, or providing services, from the Domestic
                Tariff Area to a Unit or Developer" within the meaning of "export".

"Unit", we may note, is defined in Section 2(zc) of the SEZ Act as
meaning "a Unit set up by an entrepreneur in a Special Economic
Zone and includes an existing Unit, an Offshore Banking Unit and a
Unit in an International Financial Services Centre, whether established
before or established after the commencement of" the SEZ Act, and
"Developer" is defined, in Section 2(g) as meaning "a person who, or
a State Government which, has been granted by the Central
Government a letter of approval under sub-section (10) of Section 3 and includes an Authority and a Co-Developer". Ms. Shiva Lakshmi
further relies on Section 53(1) 18 of the SEZ Act to contend that a SEZ
is, per definition, deemed to be a territory outside India. Ergo, she
submits, supply of goods from a unit in the DTA to a unit in the SEZ
would be an "export" and not a "deemed export". It is for this reason,
she submits, that customs duty is payable on supplies of goods to the
SEZ, whereas no customs duty is payable on "deemed exports".
Inasmuch as the supplies by Holoflex to Nokia took place in 2006-
2007, she submits that the SEZ Act, which was enacted in 2005,
would apply, with the Special Economic Zones Rules, 2006 19 , framed
thereunder. She also points out that Section 51(1) 20 of the SEZ Act
gave it overriding effect over any other law for the time being in force.

18 53. Special Economic Zones to be ports, airports, inland container depots, land stations, etc., in
certain cases. -

(1) A Special Economic Zone shall, on and from the appointed day, be deemed to be a
territory outside the customs territory of India for the purposes of undertaking the authorised
operations.

19 "the SEZ Rules" hereinafter
20 51. Act to have overriding effect. - The provisions of this Act shall have effect notwithstanding
anything inconsistent therewith contained in any other law for the time being in force or in any instrument
having effect by virtue of any law other than this Act.

1.   Rule 2321 of the SEZ Rules makes supplies from the DTA to a
               Unit or Developer for their authorised operations eligible for export
               benefits under the FTP. This Rule, too, points out Ms. Shiva Lakshmi,
               clarifies the position that the [SEZ Act](https://indiankanoon.org/doc/1423589/) and SEZ Rules would apply.
               Rule 30(3)22 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)23 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)24 requires the BOE to be assessed in
               accordance with the procedure laid down for assessment of export
               goods. Rule 30(9)25 - which was later omitted with effect from 19
   
               21 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.
               22 (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.
23 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
undertaking or under any other refund procedure permitted under Goods and Services Tax laws or
Central Excise law, or as duty or tax paid goods under claim of rebate, on the cover of documents
laid down under the relevant Central Excise law for the purpose of export by a manufacturer or
supplier.

24 (6) The Bill of Export shall be assessed in accordance with the instructions and procedures, including
examination norms , laid down by the Department of Revenue as applicable to export goods:

Provided that at the time of assessment, it shall be specifically examined whether the goods are
required for the authorized operations by the Unit or Developer, with reference to the Letter of Approval or
the list of goods approved by the Approval Committee for the Developer.
25 (9) A copy of the Bill of Export and ARE-1 with an endorsement of the Authorised Officer that the
goods have been admitted in full in the Special Economic Zone, shall be treated as proof of export.

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
December 2006.

1. Ms. Shiva Lakshmi submits, therefore, that, while rendering the judgment under review, this Court erred in regarding the supply of goods from Holoflex to Nokia as "deemed exports" and applying, thereto, para 5.13(b) of the HBP, instead of para 5.13(a) thereof.

II. Submissions of Mr. Banerjee

1. Arguing opposite Ms. Shiva Lakshmi, Mr. Banerjee submits
   that the supplies made by Holoflex to Nokia do constitute "deemed
   exports". He refers us to the definition of "deemed exports" in Clause
   8.1 of the FTP, which defines the expression as "those transactions in
   which the goods supplied do not leave the country". Inasmuch as the
   Nokia SEZ is within India, and the goods have not left Indian
   territorial waters, Mr. Banerjee submits that the supplies constitute
   "deemed exports".

2. Mr. Banerjee contests Ms. Shiva Lakshmi's reliance on the SEZ
   Act and SEZ Rules. He submits that the legal fiction created by Section 53(1) of the SEZ Act applies only "for the purpose of
   undertaking authorised operations". As a fiction created for a limited
   purpose, Mr. Banerjee submits that the fiction cannot be carried

                beyond that and applied to fulfilment of export obligation under the
               EPCG Scheme, which is exclusively governed by the FTP and the
               HBP.
   

3.  Mr. Banerjee further submits that the words "customs territory"
   

in Section 53(1) of the SEZ Act cannot be equated to the territory of
India. He submits that there can be more than one customs territory
within a country. He further submits that no customs duty is
chargeable on supplies from the DTA to a unit in the SEZ.
21. Accordingly, submits Mr. Banerjee, Ms. Shiva Lakshmi is in
error in seeking to interpose, into the FTP and HBP, the legal fiction
created by Section 53(1) of the SEZ Act.

1.  It is further submitted that the requirement of furnishing a BOE
               would arise only if an act of "export" within the meaning of [Section
               2(18)](https://indiankanoon.org/doc/1481076/) of the Customs Act, 1962, takes place as it is only in that
               circumstance that a BOE would be issued in terms of [Section 50](https://indiankanoon.org/doc/681964/) of the
               Customs Act. Inasmuch as the supply of goods by Holoflex to Nokia
               does not constitute "export", there is no question of any BOE.
   

2. In support of his submissions, Mr. Banerjee has placed reliance
   on paras 63 and 64 of the judgment of the Supreme Court in Union of
   India v. Agricas LLP26 and para 26 of the judgment of the High Court
   of Andhra Pradesh in Tirupati Udyog Ltd v. Union of India27.

26 (2021) 14 SCC 341
27 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.

1. On this, learned Counsel are ad idem.

II. Paras 8.1 and 8.2 of the FTP

1. 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
rupees or in free foreign exchange.

8.2 Categories of Supply The following categories of supply
of goods by the main/ sub-contractors shall be regarded as
"Deemed Exports" under this Policy, provided the goods are

manufactured in India:

(a) Supply of goods against Advance Licence /
Advance Licence for annual requirement/DFRC under the
Duty Exemption /Remission Scheme;

(b) Supply of goods to Export Oriented Units (EOUs)
or Software Technology Parks (STPs) or Electronic
Hardware Technology Parks (EHTPs) or Bio Technology
Parks (BTP);

(c) Supply of capital goods to holders of licences under
the Export Promotion Capital Goods (EPCG) scheme;

(d) Supply of goods to projects financed by multilateral
or bilateral agencies/funds as notified by the Department of
Economic Affairs, Ministry of Finance under International
Competitive Bidding in accordance with the procedures of
those agencies/ funds, where the legal agreements provide
for tender evaluation without including the customs duty;

(e) Supply of capital goods, including in unassembled/
disassembled condition as well as plants, machinery,
accessories, tools, dies and such goods which are used for
installation purposes till the stage of commercial production
and spares to the extent of 10% of the FOR value to
fertilizer plants;

(f) Supply of goods to any project or purpose in respect
of which the Ministry of Finance, by a notification, permits
the import of such goods at zero customs duty;

(g) Supply of goods to the power projects and refineries
not covered in (f) above;

(h) Supply of marine freight containers by 100% EOU
(Domestic freight containers-manufacturers) provided the
said containers are exported out of India within 6 months or
such further period as permitted by the customs;

(i) Supply to projects funded by UN agencies; and

(j) Supply of goods to nuclear power projects through
competitive bidding as opposed to International
Competitive Bidding.
The benefits of deemed exports shall be available under paragraph

(d), (e), (f) and (g) only if the supply is made under the procedure
of International Competitive Bidding (ICB)."

1. We are not inclined to accept Ms. Shiva Lakshmi's submission
   that, because supplies to an SEZ are not covered under any of the
   clauses of Para 8.2 of the FTP, such supplies 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.

2. 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.

3. 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.

4. 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.

5. Ms. Shiva Lakshmi's submission to the contrary is, therefore,
   rejected.

III. The SEZ Act and SEZ Rules

1. We still have to examine, however, whether the effect of para-
   8.1 of the FTP would in any way be diluted or eliminated by the SEZ
   Act or SEZ Rules.

2. Ms. Shiva Lakshmi has cited Section 2(m)(ii), 51(1) and 53(1) of the SEZ Act and Rules 23, 30(3), 30(6) and 30(9) of the SEZ Rules.

III.A Re. Section 2(m)(ii) of the SEZ Act

1. Section 2(m)(ii) merely defines "export" for the purposes of the SEZ Act. A definition clause has no independent existence of its own,
   and has meaning only when read in conjunction with a substantive
   provision in the statute which employs the defined expression.

2. Besides, the definition of "export" in Section 2(m)(ii) is
   exclusively for the purposes of the SEZ Act, and cannot be read into
   the FTP.

III.B Re. Section 51 of the SEZ Act

1. Section 51 states that the SEZ Act would have overriding effect
   over anything to the contrary contained in any other law for the time

                being in force. There can therefore be no doubt about the fact that if,
               by operation of the [SEZ Act](https://indiankanoon.org/doc/1423589/), the petitioner were not to be entitled to
               export incentives under the EPCG license, that dispensation would
               override any entitlement to such benefits which may flow from the
               provisions of the FTP.
   

2. We, therefore, have to ascertain whether the SEZ Act disentitles
   Holoflex from EPCG benefits. If they do, Holoflex would not be able
   to fall back on the FTP or the HBP to press its claim.

III.C Re. Section 53(1) of the SEZ Act

1. The third, and last, provision of the SEZ Act, cited by Ms.
   Shiva Lakshmi, is Section 53(1).

2. Section 53(1) deems a SEZ to be a territory outside the customs
   territory of India for the purposes of undertaking authorised
   operations.

3. Mr. Banerjee has sought to submit that there is a distinction
   between the "customs territory of India" and "India" per se. He
   submits that Section 53(1) only deems the SEZ to be a territory
   outside the customs territory of India, and not outside India.

4. In the first place, Section 53(1) does not deem a SEZ to be a
   territory outside India, but only a territory outside the customs

                territory of India. The SEZ, therefore, remains in India, despite [Section 53(1)](https://indiankanoon.org/doc/110992639/).
   

5.  Secondly, the deeming fiction created by [Section 53(1)](https://indiankanoon.org/doc/110992639/) is for a
               specific purpose, which is for undertaking authorised operations.
   

"Authorised operations" are defined in Section 2(c) as operations
authorised under Section 4(2) 28 and Section 15(9) 29. 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

                28 4.   Establishment of Special Economic Zone and approval and authorisation to operate to,
                Developer.

---

                        (2)       After the appointed day, the Board may, authorise the Developer to undertake in a Special
                        Economic Zone, such operations which the Central Government may authorise.
                29 15.  Setting up of Unit.

---

                        (9)       The Development Commissioner may, after approval of the proposal referred to in sub-
                        section (3), grant a letter of approval to the person concerned to set up a Unit and undertake such
                        operations which the Development Commissioner may authorise and every such operation so
                        authorised shall be mentioned in the letter of approval.

Provided that the Administrator (IFSCA) may, after approval of the proposal referred to
in sub-section (3), grant the letter of approval to the person concerned to set up any Unit and
undertake such operations, requiring recognition, registration, license or authorisation by the
International Financial Services Centres Authority:

Provided further that relevant information regarding such Units shall be shared by the
Administrator (IFSCA) with the Development Commissioner of the SEZ on a monthly basis or as
may be required from time to time.

outside the customs territory of India for all purposes, it could clearly
have said so.

1. 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

1. Proceeding, now, to the SEZ Rules, Rule 23 clearly states that supplies from a DTA to a Unit or Developer for their authorised operations would be eligible for export benefits under the FTP. In the absence of any material to discredit the supply invoices, or the BRCs produced by Holoflex, the fact that holograms were, in fact, supplied by Holoflex to Nokia, and that payment against such supplies was received from Nokia aganst such supplies, cannot be disputed. Rule 23 would, therefore, ipso facto entitled Holoflex to export benefits, consequent on receipt of remittance from Nokia, rather than the contrary.

III.E Re. Rule 30 of the SEZ Rules

1. Though the link between the sub-Rules of Rule 30 of the SEZ
   Rules, to which Ms. Shiva Lakshmi alludes, and the issue before us, is
   more proximate, Rule 30, too, does not directly deal with the
   documents which would entitle an EPCG licence holder to the
   benefits of the licence. Rule 30(3) deals with the documents which are
   required to be furnished for goods, under claim of export entitlement,

                to enter the SEZ and Rule 30(6) refers to the manner in which the
               BOE would be assessed. Rule 30(9) - as it then existed - stipulated
               that endorsed copies of the BOE and ARE-1 would be treated as proof
               of export.
   

2. That said, 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.

3. Rule 30 would not be entitled to the coverage, provided in Section 51(1) of the SEZ Act, over all other laws for the time being in
   force. That coverage, by Section 51(1), extends only to the provisions
   of "this Act" - meaning, the SEZ Act. The SEZ Rules cannot enjoy
   that privilege.

4. Besides, the Supreme Court, as we have already noticed, clearly
   held, in Asian Food Industries, that the aspect of export entitlements
   and incentives was governed by the FT (D & R) Act, the FTP, and the
   HBP. Disallowing export incentives which are otherwise available as
   per the provisions of the FTP and HBP by reference to provisions
   contained in the SEZ Rules would, therefore, be unjustified. Besides,
   the SEZ Act and SEZ Rules essentially govern the functioning of

                SEZs, and are not primarily concerned with export incentives
               available to DTA units.
   

IV. DGFT Policy Circular 04/2024 dated 3 June 2024

1. 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

---

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 shall apply to
DFIA also.

1. In line with above FTP provision, in case of supplies made to SEZ units under Advance Authorisation/DFIA, Sl. No.2(a)(ii) of 'Guidelines for Applicants' in ANF-4F (Application for Redemption) and Sl. No.5(b) of 'Guidelines for Applicants' in

ANF-4G (Application for Transferable DFIA) prescribe the
following documents:

"...EP copy of the shipping bill(s) containing details of
shipment effected or bill of export in case of export to
SEZ..."
3. This Directorate is in receipt of representations from
Industry highlighting hardships to Exporters in complying with this
requirement. This issue has been examined. In exercise of powers
vested with the Competent Authority in terms of Para 2.59 of the
FTP, it has been decided to relax this requirement of submission of
'Bill of Export' in case of exports made to SEZ unit/developer /co-
developer under Advance Authorisation/DFIA, for all such
supplies made prior to 01.07.2017.

1. Accordingly, for the purpose of fulfillment of export obligation, under Advance Authorizations/DFIA Schemes, in case of supplies made to SEZ unit/developer/co-developer prior to 01.07.2017, the exporter may submit the following corroborative evidence in lieu of 'Bill of Exports':

a. ARE-1 (showing the Advance Authorisation
No/DFIA file No. and) duly attested by jurisdictional
Central Excise/GST Authorities of AA holder/DFIA
Exporter

                              b.     Evidence of receipt of supplies by the recipient in
                              SEZ

                              c.   Evidence of payment made by the SEZ unit to the
                              AA/DFIA exporter as per para 4.21 of FTP.

1. This Policy Circular is issued with the approval of DGFT.

Sd/-03.06.2024
(KM Harilal)
Joint. Director General of Foreign Trade"

The Advance Authorization scheme is similar to other export
incentive schemes and is, in a sense, a successor thereto. The DGFT
having noticed the difficulty in obtaining BOEs for availing Advance
Authorization benefit and having, therefore, relaxed the requirement

retrospectively for all exports made prior to 1 July 2017, we are of the
view that it would be unreasonable to deny EPCG benefit to Holoflex
merely because it did not submit BOEs as proof of discharge of export
obligation.

V. Larsen & Toubro and Phoenix Industries

1. The entitlement of an Advance Authorization holder to the benefits thereof against 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 India30. 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 India31, 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

1. No ground, except for failure, on Holoflex's part, to submit BOEs, was raised by Ms. Shiva Lakshmi to seek review of our judgment.

30 2018 (360) ELT 289 (Bom)
31 2024 SCC OnLine Bom 2704

1.  We are not satisfied that a case for review is made out.
   

2.  The Review Petition is dismissed.
   

C. HARI SHANKAR, J.

OM PRAKASH SHUKLA, J.

MARCH 23, 2026