Karnataka High Court Remands Advance Authorisation Claim: Bill of Export Not the Only Acceptable Proof for SEZ Supplies

Case Overview

Case Name: K. K. Nag Private Limited Vs Additional Director General Of Foreign Trade (Karnataka High Court)

The Karnataka High Court recently examined a significant question arising under the Advance Authorisation Scheme — specifically, whether the rejection of an exporter's claim solely on account of non-production of a "Bill of Export" could be sustained, given that subsequent policy circulars issued by the Ministry of Commerce and Industry have since permitted corroborative documents to be furnished in its place for supplies made to Special Economic Zone (SEZ) units.

Background of the Case

M/s K.K.NAG PRIVATE LIMITED is a Private Limited Company engaged in the manufacture of Expanded Polyethylene Products. The company imports raw materials predominantly from Japan and Singapore under the Advance Authorisation Scheme. Its manufactured output — primarily packing materials — is supplied to customers who use these materials to pack finished goods intended for export.

Operating under this framework, the petitioner obtained two Advance Authorisations bearing Nos. 0710106618 and 0710106613, both dated 03.09.2014, for the duty-free import of requisite raw materials.

The Dispute: Rejection on Account of Missing Bill of Export

Upon receiving purchase orders from its customer-dealers, the petitioner submitted applications for Advance Authorisation under the Duty Free Scheme. While it claims to have furnished the requisite documents before the Office of the Additional Director General of Foreign Trade, Bengaluru (respondent No. 1), additional documents were subsequently called for by that authority.

The petitioner states that it produced the further documents on 18.06.2018. However, respondent No. 1 proceeded to reject the claim vide order dated 28.06.2018, the principal ground being the petitioner's failure to produce the "Bill of Export" — a document required to establish discharge of export obligation in respect of supplies made to SEZ units.

Aggrieved by this outcome, the petitioner approached the Director General of Foreign Trade (respondent No. 2), seeking condonation of delay or dispensation of the Bill of Export requirement. This application was registered as Case No. 29. Respondent No. 2 affirmed the decision of respondent No. 1 and rejected the petitioner's claim vide order dated 09.10.2018 in Case No. 49, F.No.01/60/162/478/AM19/PRC, PRC Meeting No.18/AM19.

Both sets of orders were challenged before the Karnataka High Court in the present writ petition.

Reliefs Sought Before the High Court

Before the Court, the petitioner prayed for the following reliefs: