Summary
A three-judge Bench held that supporting manufacturers could not claim the same treatment as direct exporters for export-incentive deductions under section 80HHC. The supporting-manufacturer formula lacked the additions provided for direct exporters and remained subject to Explanation (baa). Baby Marine Exports concerned export-house premium, a different issue. The Revenue succeeded; seven connected matters were remanded to let assessees establish that they were also direct exporters.
Issues
- Whether supporting manufacturers could claim export-incentive deductions on the same basis as direct exporters under section 80HHC.
- Whether Baby Marine Exports governed that issue and whether some assessees could establish an independent direct-exporter claim.
Provisions considered
- Section 80HHC(1), (1A), (3), (3A); Explanation (baa), Income-tax Act, 1961The distinct supporting-manufacturer computation under subsection (3A) did not contain the export-incentive additions in subsection (3) and operated with the reduction required by Explanation (baa). (¶¶ 2–4, 6, 8)
Held
- Direct exporters and supporting manufacturers were governed by different statutory formulas. The absence in subsection (3A) of the provisos appearing in subsection (3) prevented parity for export-incentive deductions; supporting-manufacturer business profits were computed subject to Explanation (baa). (¶ 2–4)
- Baby Marine Exports decided inclusion of export-house premium and did not establish parity for the different question of export incentives. The contrary decision in Civil Appeal No. 6437 of 2012, decided on 12 September 2012, was overruled. (¶ 5–6)
- The Revenue’s appeals numbered 4590, 4591, 4592 and 4603 of 2018 were allowed and the impugned judgments set aside. In the seven remaining appeals, the judgments were also set aside but matters remanded to the Tribunal so the assessees could prove they were direct exporters as well and claim on that basis. (¶ 7–8)
Result
Revenue appeals 4590, 4591, 4592 and 4603 of 2018 allowed. Appeals 4593–4599 of 2018 disposed of by setting aside the judgments and remanding to the Tribunal for proof of any direct-exporter status and corresponding entitlement. Supporting-manufacturer parity rejected.