Kerala High Court
Ameena Enterprises vs Commissioner Of Income Tax on 4 February, 2005
Equivalent citations: (2005)195CTR(KER)265, [2005]275ITR8(KER), 2005(3)KLT465
Author: C.N. Ramachandran Nair
Bench: K.S. Radhakrishnan, C.N. Ramachandran Nair
JUDGMENT C.N. Ramachandran Nair, J.
1. Same questions of law are raised in these appeals filed by the assessee against the common order of the Tribunal for the asst. yrs. 1992-93, 1996-97 & 1997-98. The main question raised for all the three years is whether the Tribunal was right in confirming disallowance of assessee's claim for exemption on export profits under Section 80HHC of the IT Act. The other question pertains to the confirmation of disallowance of assessee's claim for deduction under Section 80I of the Act for the two asst. yrs. 1996-97 & 1997-98.
2. We have heard Sri Kochunni Nair, counsel appearing for the assessee, and Sri P.K.R. Menon, senior counsel appearing for the IT Department. The first question pertains to disallowance of exemption under Section 80HHC of the Act. All the three authorities below found against the assessee holding that the assessee which has exported goods through export houses is not entitled to exemption under Section 80HHC(1A) of the Act for the years 1992-93 and 1997-98, as no disclaimer certificate was produced from the export houses in Form 10CCAB and the certificate produced for the year 1996-97, with a lapse of over six years was unacceptable. It is to be seen that the assessee made direct export of marine products to foreign buyers and the assessee was granted exemption under Section 80HHC(1) of the Act. However, disallowance was in respect of income on exports made through export houses under Section 80HHC(1A) of the Act, which includes incentives in Indian rupee paid to the assessee by export houses. Even though counsel for the assessee contended before us that the assessee is not a supporting manufacturer and the assessee's exports are direct exports and in this connection he relied on the definition of "export" under Section 2(18) of the Customs Act. We are unable to accept this argument for more than one reason. The assessee has conceded having received amounts from export houses in the form of premium or commission for exports made through export houses and the three authorities below gave a concurrent finding that the exports in question were made by the assessee through export houses and in relation to such exports, the assessee is only a supporting manufacturer which can be granted exemption strictly on the basis of disclaimer certificate to be obtained and produced from the export houses in Form No. 10CCAB in terms of Section 80HHC(4A) of the Act which the assessee failed to produce. Counsel for the assessee argued before us that the agreement between the assessee and the export houses provided for transfer of goods on board the vessel after the vessel crossed the customs frontiers and so much so, according to him, the assessee's sales are direct export sales in respect of which the assessee is entitled to exemption under Section 80HHC(1) of the Act, without the requirement of disclaimer certificate from the exporter. We are unable to accept this contention of the assessee because the assessee himself has conceded that the exports to foreign buyers were through export houses and the shipping documents clearly indicate that the goods are shipped by the assessee on account of the export houses. There is and there can be only one export from Indian exporter to the foreign buyer and that export is done by the export houses. If the assessee's argument is accepted, then in respect of the same shipment there is one export sale by the assessee to the export house and another export sale by the export house to the foreign buyer. There cannot be two exporters in India in respect of the very same consignment and since the exports were in the name of the export houses, then the assessee who arranged the goods and shipped on board the same is only a supporting manufacturer. The assessee's reliance on the terms of the agreement providing for transfer of goods after the vessel crosses the customs frontiers based on Section 2(18) of the Customs Act is, therefore, not tenable. Going by the concurrent findings of facts by the authorities below, we have to hold that the assessee's exports are through export houses and the assessee after receiving consideration from the export houses for arranging such exports in addition to sales consideration cannot even raise a contention to the contrary, which is self-contradictory.
3. So far as the issue on merits is concerned, that is whether the assessee is entitled to exemption on export under Section 80HHC(1A) is concerned, the issue is squarely covered against the assessee by virtue of decision of the Supreme Court in Sea Pearl Industries v. CIT (2001) 247 ITR 578 (SC), wherein the Supreme Court has held that exemption under Section 80HHC(1A) can be granted to the supporting manufacturer only based on the disclaimer certificate issued by the export house. It is conceded that the petitioner has not produced disclaimer certificate under Section 80HHC(4A) from the export houses for two years for claiming exemption under Section 80HHC(1A) of the Act and for the other year, the certificate produced was hopelessly time-barred and the AO declined to accept it. The scheme of Section 80HHC is to provide exemption on export profits to promote exports. The foreign exchange earner in respect of exports is the eligible person to get the benefit. However, provision is made for the export houses which are not engaged in manufacture and export of goods to issue disclaimer certificate so that supporting manufacturer of the exported goods who otherwise is ineligible for the exemption gets the benefit. The scheme is to promote integrated activity between manufacturers and exporters to promote exports but at the same time retaining the benefit of income-tax exemption on export profits. While the actual exporter, that is the export house, is entitled to the benefit, they are free to pass on the benefit to the supporting manufacturer by issuing a disclaimer certificate prescribed in Form No. 10CCAB under Rule 18BBA(2) prescribed under Section 80HHC(4A) of the Act. The purpose of disclaimer certificate is to prevent the exporter as well as the supporting manufacturer claiming exemption leading to double exemption on the very same exports. Therefore, if the assessee has not obtained or was unable to produce disclaimer certificate from the export houses, the settled presumption is that the export house which was eligible for claiming exemption on export profits would have got the benefit. Going by the above Supreme Court decision, the petitioner who is proved to be supporting manufacturer is not entitled to claim exemption without production of valid disclaimer certificate in time issued by export house in Form 10CCAB. Therefore, we uphold the decision of the Tribunal on this question based on the decision of the Supreme Court above referred.
4. The other question raised for the years 1996-97 and 1997-98, pertains to deduction under Section 80-I in respect of industry engaged in fish processing and packing which is also covered against the assessee by the two decisions of the Supreme Court in CIT v. Relish Foods (1999) 237 ITR 59 (SC) and CIT v. Venkateswara Hatcheries (P) Ltd. (1999) 237 ITR 174 (SC). The Tribunal has rejected the assessee's claim based on these decisions and we do not find any ground to deviate from the same. Consequently, we answer the questions referred against the assessee and in favour of the Revenue and dismiss the appeals.