TMI Blog2001 (1) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Import and Export Policy 1982-83 (referred to as the 'Policy') and it could not avail of the special facilities granted to eligible export houses under the Policy. An agreement was entered into between an export house and the appellant on 24th Aug., 1982, by which the appellant agreed to export the processed sea food in the name of the export house against purchase orders placed on the export house by foreign buyers so that the export house could claim the benefits under the Policy in consideration for which the appellant would be paid 2.25 per cent of the FOB value of the goods exported. In terms of the agreement, the appellant's processed sea foods were to be sold to the export house after the goods crossed the customs barrier. All formalities of export were to be completed by the appellant but the shipment would be on account of the export house. The letter of credit opened in favour of the export house by the foreign purchase would be endorsed in favour of the appellant. While the benefits from the agreement as far as the export house was concerned were limited to those available under the Policy, the appellant would not only be entitled to the entire sale proceeds realis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctually done by the appellant/assessee and not the export house, the appellant was the exporter within the meaning of s. 80HHC. 6. In the context of these facts, the following question came to be referred to the High Court at the instance of the respondent : Whether, on the facts and in the circumstances of the case, the assessee is entitled to deduction under s. 80HHC of the IT Act, 1961, in respect of exports (not done directly by the assessee) done through export house ? The High Court answered the reference against the assessee and in favour of the Revenue. The decision of the High Court is now impugned before us. 7. It was contended by the appellant, relying on C.T. Ltd. Anr. vs. CTO Ors. (1997) 104 STC 94 (SC) that it was entitled to the benefits of the section because it had, in fact, exported its products by selling them to the export house after the goods had crossed the customs' barrier. According to the appellant, the export applications were in the name of the appellant, the certificate issued by the export inspection agency showed the name of the appellant against the column "Name and address of the exporter"; the bill of charges of shipping was in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of export in question. 9. Sec. 80HHC requires (i) the assessee to export the goods, and (ii) the sale proceeds to be 'receivable' by the assessee in convertible foreign exchange. The foundation of the appellant's arguments, before us, as far as the first requirement is concerned, is the agreement between the appellant and the export house and in particular the clause which provides that the property in the goods would pass to the export house only after they had crossed the customs' barrier. However, as rightly contended by the respondent, the question of title or property in the goods exported is not relevant to s. 80HHC. The section does not in terms require the exporter to be the owner of the goods. Even s. 2(18) of the Customs Act does not include the idea of ownership within the definition of the word 'export'. This may be contrasted with s. 5(3) of the Central ST Act, 1956, where the emphasis is on the transfer of title by a last sale or purchase ........................" preceding the sale or purchase occasioning the export." That is why in C. T. Ltd. Anr. vs. CTO Ors. relied on by the appellant, this Court held that although the State Trading Corporation (STC) was sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on Ferro-Alloys by the foreign buyer was split into two contracts, one between the local supplier and the MMTC and the second between MMTC and Ferro-Alloys. Letters of credit were opened by the foreign buyer in the name of MMTC and were endorsed by MMTC in favour of Ferro Alloys. As in the case before us both Ferro-Alloys and MMTC claimed tax credit certificates under s. 280ZC of the IT Act, 1961. The High Court held that the Ferro-Alloys was the real exporter. This Court reversed the decision of the High Court and held that MMTC was the exporter for the purposes of s. 280ZQ. "All this was done as required by the system of barter. Ferro-Alloys availed of this system presumably because it was to its advantage. In fact, it appears that it was not able to sell the said goods otherwise. Be that as it may, whether by choice or by lack of alternative, it chose to route its goods through MMTC. Is it open to the Ferro-Alloys now to say that all this must be ignored in the name of 'external appearances' and it must be treated as the 'real exporter for the purposes of s. 290ZC. It wants to be the gainer in both the events. A case of 'heads I win, tails you lose' ............ Ferro- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use alone which could have claimed deductions under the section: a right which could be waived in favour of the supporting manufacturer. It was for this reason that the agreement between the appellant and the export house had divided the benefits and obligations obtainable by an exporter between them. Under cls. 7 and 8 of the agreement, the export house was alone entitled to claim the REP import licence benefits and all the benefits accruing to an eligible merchant exporter under the terms of the Import Trade Control Policy. On the other hand, in cl. 10 the export house confirmed that it would not claim "benefits available from the customs and central excise authorities and or any other Government departments in respect of the export of shrimps." It may be that in claiming the deduction under s. 80HHC, the export house has violated this term of the agreement but that cannot make the appellant the exporter. 14. The logical consequence of the Tribunal's view would be that both the export house and the original manufacturer could claim to have exported the goods and be entitled to receive the foreign exchange, and both could consequently claim at different stages deductions under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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